PepsiCo pours in the stars

By IRENE CHAPPLE marketing writer

PepsiCo is trying to shore up its slender slice of the New Zealand carbonated drinks market with the help of a celebrity-driven campaign.

Last night's Auckland premier of teen movie Crossroads, starring pop idol Britney Spears, was a PepsiCo promotion, says the company's New Zealand marketing manager, Michelle Lee.

Many members of the audience won tickets during an Easter Show competition, she says.

The promotion piggybacks on the singer's association with PepsiCo Beverages International.

Spears was signed up by PepsiCo in 2000 to promote its products in a deal worth "more than a bread basket and less than the cost of a Boeing 747", according to New York-based spokesman Charles Nicolas.

PepsiCo New Zealand also intends to seduce its target young market with backstage passes to an expected tour next month by the company's latest signing, Colombian singer Shakira.

Marketing the product in New Zealand is an uphill battle: Pepsi holds less than 10 per cent of the carbonated drinks market, worth, according to ACNielsen figures, $171.8 million annually. Coca-Cola is the local giant with between 50 and 70 per cent of sales.

In the United States, PepsiCo has more than 30 per cent of the market, challenging heavyweight Coca-Cola's share of about 44 per cent.

PepsiCo's marketing dollars appear to be unlimited in the United States. While Nicolas will not even hint at international marketing spend, latest ventures must have dented the budget.

In February Spears endorsed Pepsi in a coveted 90-second advertising slot during the Superbowl. Advertising time during the United States' equivalent of the World Rugby Cup was reportedly worth US$2 million ($4.47 million) for 30 seconds during last year's game, but is understood to have been slightly cheaper this year.

PepsiCo followed up with a spot during last month's Academy Awards' ceremonies (not screened in New Zealand) in which supermodel Cindy Crawford swigged Diet Pepsi in a take-off of an award-winning commercial run in 1991.

Then last week PepsiCo replaced Coca-Cola as the official soft drink sponsor of the National Football League - American football - in a deal worth US$160 million ($365 million) over five years.

"There's a lot of good news going on," says Nicolas.

New Zealand, as part of the company's Asia Pacific market, is "important" for the company. "We'll be aiming to make sustainable progress in every market where we have a reasonable business proposition." he says.

He believes Spears and Shakira "transcend country borders ... and enable us to make a meaningful connection with consumers".

New Zealand marketing manager Lee, who also consults with the international office since an organisational revamp about two years ago took marketing directives back to the company's head office, says the New Zealand market is still immature.

With a relatively small advertising budget - believed to be about $5 million a year - PepsiCo New Zealand won't be changing the mindset of a "juice and milk" drinking population.

"In the United States", Lee sighs, "they have soft drink with breakfast."

Globally, PepsiCo works on two platforms: music and football, she says. However, much of the overseas advertising is irrelevant to the New Zealand market.

She says the key to attracting New Zealanders aged 15 to 29 is through grassroots marketing.

"New Zealanders do respond to the celebrity thing, but there there needs to be some discovery for them. For the youth market, it's the discovery process rather than showing glossy ads.

"We are interacting with the consumer more."

That is the logic behind quietly introducing New Zealanders to the company's star promoters through competitions in supermarkets, text messaging and internet promotions.

It's getting the basics right, says Lee, before consumers are hit with "a full-on media explosion with Britney Spears and Shakira".

Treats such as backstage passes, available since the marketing realignment, are the carrot, she says.

"We are trying to provide an experience that money can't buy."

PepsiCo sales have increased by about 10 per cent a year, according to its distributor Frucor Beverages' general manager sales and distribution Kim Willoughby.

However, measured against AC Nielsen figures, that growth is in line with the 10.4 per cent growth of carbonated drinks last year.

In New Zealand, agrees Lee, there's plenty of room for growth.

Willoughby and Lee have set themselves high targets: Lee believes the local market could eventually reflect the market in the United States, and Willoughby wants Pepsi to overtake Coca-Cola as New Zealand's market leader.

"We want to topple Coke in the local market," says Willoughby.

"That's the aspiration."