Pepsi is increasing media spend to better rival Coke

Pepsi is struggling to keep pace with Coke — and is hoping a bump in ad dollars will help turn its fortunes around.

Parent company PepsiCo plans to invest more into marketing its namesake soda business, which has taken a hit as of late. The soda giant’s North American beverage unit — home to brands including Pepsi, Gatorade, and Mountain Dew — experienced a 1% sales dip during PepsiCo’s first quarter, marking the unit’s third straight quarter of sales declines.

During PepsiCo’s first quarter earnings call, chief executive Indra Nooyi pinned the blame on “recent losses in cola market share in North America.” Moving forward, she said the company plans to “step up” its advertising of Pepsi to better keep up with archrival Coke.

“Despite moderately increasing our media on trademark Pepsi over the past three years, our share of voice has fallen dramatically relative to our key competitor, who has substantially stepped up their media spending on colas over the past two years,” she said. “If it's a question of media spending to make sure that the consumer understands that Pepsi is still a strong, vibrant brand, we are going to spend on media.”

Nooyi said the company will “substantially and sustainably” continue to support its ‘Pepsi Generations’ campaign, which launched ahead of the Super Bowl earlier this year. The campaign promotes the full Pepsi portfolio, which includes Pepsi, Pepsi Zero Sugar and Diet Pepsi.

According to Nooyi, the effort is already resonating with consumers.

“We are already seeing positive results from the campaign, with research telling us that the campaign is driving higher advertising recall, higher brand recall and higher brand regard with consumers,” she noted.

The increased investment in Pepsi marks a shift in PepsiCo’s overall marketing strategy, which last year largely focused on pushing the company’s healthier offerings, like its Lifewtr bottled water brand.

The shift comes as Coca-Cola enjoys gains from its recently revamped Diet Coke, which now comes in sleeker cans and different flavors. On its first quarter earnings call earlier this week, the Atlanta-based company said Diet Coke's redesign spurred quarterly volume growth for the first time since 2010.

Overall, PepsiCo — which also owns Frito-Lay and its portfolio of snacks including Dorito’s Tostitos — posted a 4% revenue increase for its first quarter. Growth was bolstered by strong performance in the company’s international markets and its Frito-Lay division.

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