Bubble bursts for $500m Pepsi refit

Initial figures for sales since Pepsi’s much-lauded Project Blue relaunch show a rise of only 0.1 per cent. Rivals, and much of the media, gloated over its ‘failure’, but Pepsi’s statistics reveal a different story.

Pepsi called on props as diverse as the Russian space station and Claudia Schiffer in its bid to “remake the international soft drink landscape” with its Project Blue relaunch on April 2. So it’s hardly surprising that market share figures showing less than stratospheric gains were greeted with derision by commentators and rivals alike as few resisted the temptation to compare the hard data with the hype.

Figures compiled by market research company Nielsen and obtained by Marketing Week show Pepsi Cola’s volume share of the take-home carbonated soft drinks market rose by only 0.1 per cent from mid-April, two weeks after the brand was relaunched, to mid-May (MW May 31). During the same period Coca-Cola slipped 0.1 per cent but remains streets ahead of Pepsi with a 13.9 per cent share of the market.

The figures for all Pepsi brands were little better, showing a 0.3 per cent rise during the same April to May period.

Pepsi’s rivals, along with much of the media, take the view that the figures mean the $500m (330m) relaunch for its new blue livery has been a failure.

Part of the reason for the response is a backlash to the over-hyped launch. All Pepsi did was change the colour of its cans from red, white and blue to blue with a little less red and white. There has been no change in the product itself. Yet Pepsi couched the launch in self-important, earth shattering, cancer-curing terms.

“Project Blue represents a quantum leap into the future and redefines how the Cola Wars will be fought and won in the 21st Century,” said John Swanhaus, Pepsi’s senior vice-president of international sales and marketing.

New advertising was devised by Pepsi’s agency BBDO Worldwide which duly came up with the strikingly unsnappy endline “Change the script” to replace the long-running and by now distinctly leaden-sounding “Choice of a New Generation”.

Pepsi inteprets the slogan differently. “It speaks to teenagers’ universal desire to shake-up the status quo and encourages them to look at and think about Pepsi in a whole new way,” says the company. So when the first indications are that teenagers are not listening to the Pepsi message it’s hardly surprising that commentators and rivals alike gloat.

Pepsi is fighting the after-effects of its self-generated hype. It says the Nielsen figures are an example of “cherry-picking” some figures at the expense of other information which gives a broader picture. But accusations of selective use of statistics abound in the cola market.

Pepsi says first quarter figures from independent research company Canadean, covering all sectors of the UK market, show its brands now command a 22 per cent share of the cola market, up two share points on the last quarter of 1995.

However, since these figures cover only the first three months of the year and Pepsi’s blue relaunch took place in April they cannot indicate the success or otherwise of Project Blue. Even Pepsi assurances that some of the new blue cans were on sale in the last two weeks of March means little.

The issue is whether or not the multimillion dollar relaunch has put Pepsi in a position from which it can seriously challenge Coke’s dominance.

Armed with separate statistics from Nielsen, Pepsi says it reached record sales volumes in mid-May, up by 18.6 per cent on mid-April. It uses the same figures – showing growth of 14.6 per cent in the total cola market – to claim that it outpaced its major competitors, including Coke.

Pepsi claims other Nielsen data shows that its share of the total cola take-home market has increased by 0.6 per cent in the two months since the launch of blue, to take 17.9 per cent of the market. However, additional Nielsen figures, obtained by Marketing Week , are less comforting as they show Pepsi’s share of the same sector in May last year stood at 20.5 per cent – it had a 1995 average share of 19.1 per cent.

Equally, Pepsi is not shy about supplying AGB figures showing its share of the take-home market up to the first week of May at 15.3 per cent, up from 11.8 per cent in the same period last year.

That is not to mention research showing consumer perceptions of the brand changing for the better, claiming just over half of those asked think that Pepsi is “becoming more popular”. But that would be a reasonable assessment of anybody who saw both the Daily Mirror and Concorde turn blue on the same day.

Judged against the high-profile stunts arranged by Pepsi’s public relations company Freud Communications, it seems a pretty unimpressive result.

Freud, however, says it has done what it has been asked to do. “Our brief was to put Pepsi on the news agenda and we have achieved that,” says Freud managing director Nick Wiszowaty.

“I do not know whether it has spent more [this year], the company spends a lot of money each year. This year the difference is that we put a strong spin on things.”

So is Pepsi on course or not? Do the figures supplied by Pepsi and obtained from independent sources tell the whole story?

“They are a snapshot. Quarter-on-quarter figures will change according to a variety of factors like the timing of promotions and price campaigns. The key thing is what is going to happen to Pepsi’s long-term share in the UK and it’s too early to say how that’s progressing,” says one City analyst.

The point about Project Blue is that it has nothing at all to do with the product or the price of the product, it’s all about using image man-ipulation to change consumer perceptions of the brand.

Coke tried a new product when it changed the taste of Coca-Cola in 1985 before hurriedly changing back to the old formula in the face of consumer hostility. Pepsi introduced Pepsi Max, its full-taste sugar-free cola in 1993, and has drawn on its success and its predominantly blue packaging as its inspiration for Project Blue. No other innovations had been introduced before the arrival of the blue can.

One thing both Coca-Cola and Pepsi agree on is that they do not want to compete on price. It has been suggested that Pepsi has never fully exploited its success in the Pepsi taste challenge because if it did so too effectively Coke might respond by competing on price which is just the kind of competition both companies wish to avoid.

Both Pepsi and Coca-Cola have weathered the storm in the UK caused by the introduction of own-label colas at the start of the decade. Virgin Cola and the other wannabees now account for an estimated 20 per cent of the take-home cola market.

Despite having lost share in some markets, overall sales are up for both of the big players as they use their phenomenal muscle to increase distribution. Pepsi says it has increased its trade listings by 2,000 new outlets in the take-home sector in the first quarter of the year.

Changing perceptions of any well-established brand undoubtedly takes time. Initial results appear poor – the depth of the poverty depends on which statistics and for which period you study.

But while Pepsi refuses to re veal what its final or even interim market share objective is for Project Blue it will have to live with the growing belief that a $500m respray on its can is not enough to shift perceptions.

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