Al Carey concedes that PepsiCo may have under-invested in advertising and marketing for its beverage operations in recent years, but a more pivotal problem is lack of focus. The chief of the company’s Americas beverage business says there was an emphasis on building too many brands at once, so it was “guilty” of spreading efforts too thin.
Now, 2012 in North America is targeting its efforts to fortify the leading trio of Pepsi Cola, Gatorade and Mountain Dew. That’s not to say the company is simply reapportioning budgets. Instead, partly to resuscitate the 114-year-old Pepsi flagship, it’s planning to boost overall marketing by 40% for its big three.
By overreaching, inadequate investments were made with “some of the biggest brands, so now the focus is on the three” large ones, Carey told investors this week.
“We spread it over too many things, and at one point, I think we had 20 priorities instead of three priorities,” he says. “That’s something that we really missed on.”
Carey took over as CEO of PepsoCo Americas in 2011 after leading Frito-Lay North America. At least with the Pepsi brand, he is charged with a turnaround and says there is a lot to be done. On the marketing front, so far that’s been highlighted by a new “Live For Now” campaign, while zeroing in on music and sports themes popular with youth. (The same strategy Coke is pursuing.)
There is some evidence of early tailwinds, he says, citing figures showing that revenues for single-serve offerings for Pepsi are growing for the first time in quite a while, up 4% over the first 20 weeks of 2012. "I’m encouraged at least at this stage of the game,” Carey says.
Gatorade is up 8% and Mountain Dew has posted a 6% increase.
Pepsi, however, has had problems in the grocery store channel, where pricing issues have been an unsettling drag. Mountain Dew, with the continued rise in energy-type drinks, “probably has significantly more potential than anything in the shop,” Carey says.
The brand maypole aimed at a male 16-to-34 demo is “exhilaration,” with action sports as the creative propeller. Gatorade continues to be positioned as “fuel for athletes.”
“What’s really important is that we understand what each of the brands stand for and what they don’t stand for,” Carey says. “And then what we need to do is put a campaign in place that stays for a while. We continually tell the same message to consumers over and over again, so that it makes an impact on their purchase.”
Looking beyond this year, Pepsi will have to prep for a shift in consumer thirst where Carey says flavored carbonated drinks could outsell colas. He says the company is well-positioned for a cola migration, with brands such as Mountain Dew, Gatorade, Lipton, Starbucks and Naked.