![]() ![]() ![]() "I'm not sure just the flavors and the packages will get us there, but it's certainly going to be a good step in the right direction." "We would love to at least stop declining, if not get into growth," CEO James Quincey told analysts last week. "We're making the brand more relatable and more authentic."Ĭoca-Cola spent two years on the relaunch. "Millennials are now thirstier than ever for adventures and new experiences, and we want to be right by their side," Rafael Acevedo, the group director for Diet Coke in North America, said in a statement about the new look and flavors. The campaign was aimed at a younger crowd: The new flavors, like Ginger Lime and Zesty Blood Orange, call to mind different variations of trendy La Croix seltzers. In January, Coke announced new Diet Coke flavors and a sleek new can. PepsiCo CEO Indra Nooyi recently told investors that a new, nostalgia-focused Pepsi Generations marketing push, playing up successful ad campaigns of the past, will help boost sales.ĭuane Stanford, executive editor of Beverage Digest, thinks Pepsi can win back customers by beefing up advertising for its core brands. And soda is cheaper to make than other beverages. Related: Coca-Cola's new CEO: 'We've got to experiment'Ĭarbonated soft drinks still accounted for $81 billion in sales in North America in 2016, according to Beverage Digest - way more than growing categories like water ($23 billion) and sports drinks ($9.4 billion). "They got very distracted for the last few years on cola," she said. While it was branching out, Pepsi took its eye off its namesake product, said Caroline Levy, a research analyst who covers beverages for Macquarie Capital. PepsiCo merged with Frito-Lay and now owns Quaker Oats, Tostitos and other food brands. Evolving tastes and sugar taxes have encouraged brands like Coke ( KO) and Pepsi ( PEP) to invest in healthier alternatives.īoth companies have diversified their product lineups, but the stakes in cola are higher for Coke. Montague’s interpretation: This prefrontal activity represented the higher-thinking functions of the brain associating the soda with ad campaigns and, in effect, overriding the taste buds.People are turning away from sugary drinks and empty calories. By contrast, in a nonblind test, Coke was more popular and was also associated with increased activity in the medial prefrontal cortex. In blind taste tests, most people preferred Pepsi, and Pepsi was associated with a higher level of activity in an area of the brain known as the ventral putamen, which helps us evaluate different flavors. When Read Montague of Baylor College Medicine performed a version of the Pepsi Challenge with subjects hooked up to an fMRI machine, he found something interesting. Researchers intrigued by the paradox have suggested that Coke’s ads actually rewire the human brain. Coke’s victory is a triumph of branding over flavor, and a clear sign that consumer companies should invest lots of money in advertising. One theory of this “Pepsi Paradox,” described by Lone Frank in Scientific American, is that we should take the Pepsi Challenge at face value. It really is true that blind taste tests suggest that people like it better than Coke. It’s a frustrating place for the company to be, because the Pepsi Challenge wasn’t just an ad gimmick. Over time, the “new” Coke was phased out, and Coca-Cola Classic became just, well, Coke once again-a product so culturally iconic that across a significant swath of the United States it serves as a generic term for what decent people call “soda” and Midwesterners call “pop.” They reintroduced the original formula under the name “Coca-Cola Classic” and sold it in parallel with New Coke for a while. And they executed a strategic pivot that’s kept them on top of the rivalry ever since. Pepsi recorded the fastest year-on-year sales growth in the company’s history during New Coke’s first month, while a consortium of Coca-Cola bottlers decided to sue the company for changing the product.īut then Coca-Cola’s senior leadership did something tough: They admitted that they were wrong. Despite declining market share, Coke was still by far the market leader over Pepsi-and the company’s millions of loyal customers weren’t looking for a new flavor. The backlash was fast and furious, with over 400,000 letters of complaint pouring in to the company. ![]()
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