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Company aims to fight Coke with Diet Pepsi Max, SoBe Life Water
By Joe Guy Collier
Cox News Service
Published on Sunday, Mar 09, 2008
BOCA RATON, FLA.: PepsiCo Inc. will make a strong pitch this year for its Diet Pepsi Max and SoBe Life Water beverages to counter moves by Coca-Cola, which is aiming to win consumers with its Coke Zero no-calorie soda and Glaceau line of enhanced waters.
At a recent Consumer Analyst Group conference, Pepsi, the world's second-largest soft drink maker behind Coke, reaffirmed 2008 projections of 3 percent to 5 percent case volume growth and mid- to high single digit revenue growth. It also expects earnings per share of $3.72, about a 10 percent increase over 2007.
Pepsi is watching the economy for signs of a slowdown and dealing with higher raw material prices, said its chairman and chief executive, Indra Nooyi.
''We are well aware of the challenges in 2008, and we know full well it's going to take more than a single action or initiative to address these challenges,'' Nooyi said.
Global power
Pepsi, though, has a solid foundation of global brands, she said. ''We do expect the resiliency of our categories and the strength of our brands to be a substantial source of advantage,'' Nooyi said.
In 2007, Pepsi revenue rose 12.3 percent to $39.5 billion, and net income rose 2.1 percent to $3.4 billion. Pepsi earnings per share increased 12.7 percent excluding one-time items, which included $129 million in noncash tax benefits in 2006.
Much like Coca-Cola, Pepsi's growth has been spurred by overseas sales. Beverage volume grew at double-digit rates in the Middle East, China, Brazil, Argentina and India.
In North America, beverage volume has been flat with gains in noncarbonated drinks, such as Gatorade and Lipton teas, offsetting declines in carbonated soft drinks.
Unlike Coca-Cola, though, Pepsi also has food divisions, Frito-Lay and Quaker, which contributed to revenue and operating profit gains in 2007. Pepsi expects continued growth abroad for carbonated beverages. Pepsi executives also said they see growth in health-conscious beverage and snack categories the company calls ''better for you'' and ''good for you'' segments.
Pepsi recently broadened its Gatorade lineup with G2, a low-calorie sports drink, and Tiger, a Gatorade extension built around golfer Tiger Woods.
Response to Coke
In addition, Pepsi is responding quickly to two new product areas that are boosting Coke sales — Coke Zero, a no-calorie drink aimed at winning male consumers to diet colas, and Glaceau, a company bought last year by Coke that makes Vitaminwater and Smartwater.
Pepsi will step up marketing efforts for Diet Pepsi Max, a no-calorie cola packed with ginseng and extra caffeine, and SoBe Life Water, a line of vitamin-enhanced beverages.
Marketing push
Diet Pepsi Max was launched a year ago and SoBe Life Water in 2006, but Massimo d'Amore, chief executive of PepsiCo Americas Beverages, said the real push started with the Super Bowl.
Both drinks had their own Super Bowl ads. The SoBe Life Water ad featured model Naomi Campbell and a line of lizards, which are part of SoBe's logo, dancing to Michael Jackson's Thriller.
The ads created awareness and are driving sales, d'Amore said.
Pepsi is following the Super Bowl ads with broader campaigns that include online marketing and distribution displays, d'Amore said.
''The Super Bowl ads are not the endgame,'' he said. ''What they are is the beginning of a dialogue with consumers.''
BOCA RATON, FLA.: PepsiCo Inc. will make a strong pitch this year for its Diet Pepsi Max and SoBe Life Water beverages to counter moves by Coca-Cola, which is aiming to win consumers with its Coke Zero no-calorie soda and Glaceau line of enhanced waters.
Get the full article here.
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