In recent years, PepsiCo Inc. has been busy touting the its healthier offerings, but the healthier image has come at the expense of the company's flagship product, Pepsi-Cola. Last year, Pepsi sank to No. 3 in soda sales behind Coke and Diet Coke, a “huge embarrassment in a cola war that traces its roots to the 19th century,” says The Wall Street Journal.
Analysts and investors blamed the decline on PepsiCo chairman and CEO Indra Nooyi, who took the reins five years ago. Rather than focusing on PepsiCo’s soda brands, Nooyi pushed for a more health-conscious image, emphasizing products like fruit juice, oatmeal, and Gatorade, and set a goal of doubling revenue of nutritious items to $30 billion by 2020. Back in 2005, PepsiCo spent $348 million on soda ads in the U.S.; by last year, the company was spending just $153 million.
Now, PepsiCo is preparing to launch a new ad campaign to bring the focus back on its star beverage. The company plans to spend about 30 percent more this year on TV advertising for its North American beverages, with a focus on soda. In addition to the “Summer Time Is Pepsi Time” campaign, which the company was “scrambling” to finish just last week, says the WSJ, PepsiCo has also launched commercials for Diet Pepsi and Pepsi Max, and signed a $60 million sponsorship deal with Simon Cowell’s X Factor.
So far, the surge in ad spending has been paying off. North American beverage sales volume rose 2 percent in the first quarter of 2011 from a year earlier, including a 20 percent surge in Gatorade sales. Although cola products still lag, says the WSJ, other sodas Mtn Dew and Diet Mtn Dew were among only a few big brand sodas whose sales grew last year.