Coca-Cola, Pepsi back on sales drive, step up ad spend

Coca-Cola, Pepsi back on sales drive, step up ad spend

The fizz is back in the cola business and the consequent froth can be seen in the advertising spends of the two large cola firms Coca-Cola India Inc. and PepsiCo India Holdings Pvt. Ltd.

In the first seven months of 2007, the two companies have spent 15-19% more on advertising compared with the same period last year.

A Coca-Cola spokesperson said that the company’s sales are up 12% in the second quarter of 2007 compared with the previous quarter. PepsiCo did not comment on its sales growth.

So, even with the festival season a few weeks away, PepsiCo has already spent more in 2007 than the Rs80 crore it did in all of 2006. According to Mindshare Insights, the research division of Mindshare, a media buying agency that manages the PepsiCo account, the company has spent around Rs95 crore between January and July.

Coca-Cola, that had adopted a low profile in terms of advertising after the pesticides-in-cola controversy broke in August 2003, spent more than Rs70 crore in the first six months of 2007, according to a media buyer familiar with the number, who did not wish to be identified. The amount Coca-Cola spent on advertising last year is not known.

The increased ad spends are reflected in the visibility of the two companies on television. According to TAM Media Research, a Mumbai-based media research agency, between January and July, Coca-Cola was the third largest (with 4,000 seconds) and PepsiCo, the sixth largest (3,170 seconds) advertiser among fast- moving consumer goods (FMCG) companies on television. In the same period last year, Coca-Cola and PepsiCo occupied the fifth (with 2,205 seconds) and seventh (1,995 seconds) slots, respectively.

In a shift from their earlier approach, the two companies have recently embarked on a corporate advertising strategy; previously, they would advertise individual products.

Coca-Cola had recently launched a campaign called ‘Drops of Joy’, which projects the company and all the 11 products it sells in India. Similarly, PepsiCo’s latest campaign ‘One Quality Worldwide’ talks about the entire bouquet of products that the company offers.

“Through these advertisements, Coca-Cola wants to convey that it is a wholesome company—that it doesn’t just sell sugared water (that is) considered unhealthy, but also a whole range of healthy products such as juices and water," said Sanjay Nayak, president, McCann WorldGroup, the agency that handles the Coca-Cola account.

Rohit Ohri, managing partner, JWT India Ltd., PepsiCo’s agency, said the ‘One Quality Worldwide’ ad “is an effort by PepsiCo to position" itself as “a beverage company that manufactures a range of products". “Consumers today have a unidimensional perception of PepsiCo because of its brand Pepsi; the ad showcases the range of products they manufacture other than Pepsi," Ohri added.

Marketing experts said companies usually use this advertising approach, the so-called mother branding, when they either have too many brands in their portfolio or if the mother brand itself needs to be strengthened.

“The two companies are trying to re-establish the bonds with consumers, which got ruptured because of repeated controversies around them," said C.V.L. Srinivas, an independent media analyst who has worked with the Coca-Cola brand in the past. “In fact, the only (other) time these companies ran an umbrella campaign was when they appealed to the consumers to not pay any heed to the allegations regarding pesticides in their products," Srinivas added.