In an effort to win over the French public, Pepsi – which markets itself on its taste – is changing its recipe. The US parent is dismissing the global implications of the move but if it succeeds, we may all be drinking ‘new’ Pepsi in the very

We are doing this because people are used to drinking Coke and we have given them no real reason to switch.” With those words Michael Aidan (MW May 1), Pepsi Cola’s French marketing director, admitted – perhaps unwittingly – that Pepsi needs to do more than respray its can to improve its performance outside the US.

First quarter results published last week show that while profits from PepsiCo’s US beverages division have increased by a relatively small $7m (4.3m), its non-US operations made losses of $27m (16.8m). And although the beverages division showed an improvement on the end of last year’s figures, it is still causing headaches for the PepsiCo management, led by chairman and chief executive Roger Enrico.

France, at least, is preparing to make a change more fundamental than last year’s 320m Project Blue – it is changing Pepsi’s taste. Pepsi, which has always used its blind taste survey the “Pepsi Challenge” as its most potent marketing weapon, is as good as confessing that it must go back to the drawing board and change the product.

Some would argue that Aidan’s statement addresses the real issue at the heart of the cola war and one that should have been addressed last year – that spending millions on changing the colour of the can is not going to make people fall head over heels in love with the drink. In the past 12 months, Pepsi has introduced Project Blue into 20 non-US markets, according to Pepsi sources. France is not one of them .

The decision to change the taste – described as a mere “enhancement” – of Pepsi’s main brand cola in France is only part a relaunch across the entire Pepsi range in France, which includes new packaging featuring a crushed ice effect on a royal blue background, with the words “new taste” for the main cola; graffiti-style lettering on the Pepsi Max version and gold lettering on the caffeine-free variety.

But why has Pepsi not simply rolled out Project Blue in the French market? It was, after all, seen as the answer to all Pepsi’s prayers in other markets only 12 months ago. The French packaging has been on test in two US cities for almost 12 months.

The new taste will be supported by a Ff50m (5m) ad campaign, which breaks this month, and national sampling. Preliminary tests have already shown that 54 per cent of those who have sampled the new taste prefer it to Coca-Cola.

The campaign is a concerted effort to encourage the French to see past the glamorous, celebrity-soaked image of Pepsi and actually try the drink, says a spokeswoman for Pepsi in France. Coke claims to outsell other soft drinks in France by four-and-a-half to one, its closest competitor being a French own brand, which places Pepsi at best in third place in a market which grew by only two per cent last year. Aidan puts Pepsi’s comparatively poor performance in France down to a “psychological blockage” – a force of habit which it has failed to break.

The long-running “Pepsi Challenge” revealed that consumers in blind product tests like the sweeter taste of Pepsi better. It has been argued that although people prefer a sip of sweet Pepsi, they don’t actually prefer a whole can, which would explain why more people buy Coke.

The formula for the syrup in France will not change, but more of it will be added to every can and bottle to make the taste more potent, enhancing the sweetness that has won Pepsi its triumph in the famous taste tests.

Pepsi in the UK and US categorically deny that the company will roll out the revised taste globally, dismissing the idea that the change is a trial for a new worldwide version of the drink. But if that is true it surely means that Pepsi, a global brand, is taking the unprecedented measure of developing local versions.

Tom Blackett, group deputy chairman at the branding company Interbrand, says: “I don’t think Pepsi will change the taste in just one of its markets, because it is a global brand and that would be a very unorthodox thing to do with a global brand. It looks like a precursor to a global change.

“Project Blue may have been the first stage in a complete overhaul/evolution of the brand. Perhaps it did not move the needle on market share [enough]. I suspect it is moving on from Project Blue and thinking ‘let’s test this in France and, if we’re confident, roll it out’.”

Blackett argues that Pepsi has not spent enough money on fighting Coke but believes it is slowly catching up. And Pepsi Cola’s general manager of Europe and sub-Saharan business Wayne Mailloux will be watching the French situation closely to see what can be learnt and adopted in the other markets for which he is responsible.

But when asked if the move will eventually be a global one, Brad Shaw, New York-based world wide spokesman for Pepsi, insists “absolutely not”. And UK spokesman Oliver Wheeler takes a similar stand.

“This is not at all for global consideration,” says Shaw.”We are not changing the formula for France, we are just delivering more of the same Pepsi taste.”

The question now being asked is why a brand which has always traded on tasting better than Coke is changing its taste in just one of its 190-plus markets. Does the French market stand alone in proving that difficult?

Pepsi is displaying its best sales figures in the UK for years. A promotional tie-up around the re-issue of Star Wars has resulted in the best share of stock on shelves in two years and March saw its highest monthly UK cola market share since December 1995. Similarly, the brand’s performance in the US in the first quarter of 1997 shows volume and value growth.

Internationally, Coke outsells Pepsi more than four to one globally, according to most estimates, although the two are much closer in the US. While Pepsi’s total beverage sales by volume slipped three per cent in 1997’s first quarter compared with the same period last year, Coke reported volume sales leaping 11 per cent over the same period.

However, changing the taste did not work for Coke back in 1985 – one of the greatest relaunch disasters of that decade or maybe, of all time. Ironically, New Coke was a direct response to the Pepsi Challenge. In its attempt to meet Pepsi’s challenge, Coke changed the taste – something it had claimed to have avoided for 99 years – and launched an overnight worldwide publicity splash.

The public and media alike hated it. And an embarrassed Coke backed down after just four months. The old recipe was swiftly reintroduced under the “Classic Coke” label, which was soon outselling the new version by three to one.

Which raises the question of whether Pepsi has learnt from Coke’s mistake and is slowly, and discreetly, introducing the new flavour, one country at a time, to avoid the same embarrassment its rival suffered 12 years ago.

Perhaps Pepsi should look instead to distribution. Part of the secret of Coke’s success is its widespread distribution. Former Coke president Robert Woodruff pledged many years ago to put the drink “within an arm’s reach of desire” everywhere and, although it is a slightly exaggerated objective, the company has not let him down.

Is Coke anticipating tougher competition from Pepsi? Coke UK spokeswoman Louise Terry says: “Our main competitors are tea, coffee and water. We see the market in broader terms. People say to themselves ‘what shall I have to drink’ not ‘what carbonated soft drink shall I have to drink’. As market leader, we do not pay an awful lot of attention to what our competitors are doing.”

Coke may claim to be indifferent about Pepsi’s latest move but the cola giant must be asking itself exactly what it will be competing against this decade. It certainly paid “an awful lot of attention” in 1985.

Is this simply a desperate attempt by Pepsi to boost flagging sales in France, where “psychological blockage” seems to be creating a major headache for the company? A satisfactory performance means that the company need not introduce such drastic measures in the UK. But, if the new taste brings Pepsi closer to Coke in what is recognised as a very difficult market, the company has every reason to deploy this potent weapon in the global cola war.


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