PepsiCo to renew effort to boost sales of soft drinks - East Valley Tribune: Business

PepsiCo to renew effort to boost sales of soft drinks

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Posted: Friday, October 10, 2008 9:05 pm | Updated: 11:35 pm, Fri Oct 7, 2011.

 NEW YORK - PepsiCo, the nation’s second-largest beverage company, said Friday it was launching a new marketing campaign to refocus attention on soft drinks, which have seen lagging sales.

Carbonated soft drinks are “an important part of the franchise,” Chief Executive Indra Nooyi told the trade publication Beverage Digest. “So rejuvenating CSDs is important.”

In recent years, as consumers grew more health conscious, demand shifted from soda to bottled water, energy drinks and juices. Bottled water sales also slowed recently as concern grew over how much waste was created in the bottling and shipping of water.

“This is a multiyear commitment. We realize we have to stick with it, and the identity change is just the first step,” she said. The company plans new logos for Pepsi, Mountain Dew and Sierra Mist in the first phase of a multiyear campaign. The move to shift some marketing attention to soft drinks comes in a week when investor concern led to a massive global sell-off in stocks after the credit crisis crippled the economy. The announcement was made at a meeting with bottlers held Monday to Wednesday.

Slowing sales of carbonated soft drinks — which are generally cheaper than energy drinks and other soda alternatives — have been dragging down results even as the PepsiCo’s Frito-Lay and overseas sales grow.

Nooyi said in July that U.S. soft drinks sales were in an “unprecedented slowdown” that has also hit the company’s Aquafina bottled water business. But she said she was optimistic that soft drink sales would eventually return to growth of 1 percent to 2 percent.

“With the decline in water, I think there’s a decent chance the right kind of activity can certainly get some interest back in carbonated soft drinks,” Beverage Digest Editor John Sicher said. “I think Pepsi is betting on that.”

PepsiCo spokeswoman Nicole Bradley said the new promotions will launch at the start of the year. It will be focused on the U.S. initially.

“The campaign is going to be totally different,” Nooyi was quoted as saying in a special edition of Beverage Digest published Friday. “How we connect with consumers is going to be totally different, how we launch innovation, all of that is going to be radically different going into next year.”

In the second quarter, weak sales of carbonated soft drinks hurt the company’s Americas beverages unit, which posted

1 percent revenue growth as volume fell by 1 percent. At the time, Goldman Sachs analyst Judy Hong called those results “especially disappointing.”

To deal with falling U.S. demand, a bottler for Coca-Cola Co., which is PepsiCo’s bigger rival in the North American drinks market, announced a price hike in July.

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