By Kenneth Hein

The fighting’s gotten fierce on the battleground of non-carbonated beverages. How fierce? Consider Coca-Cola’s recently reformulated Powerade. Coke decided that adding two more electrolytes to the formula entitled it to slam PepsiCo’s Gatorade as an “incomplete sports drink” in ads from Ammirati. Lawyers for the gator bit back, and now the matter’s in the hands of the FTC.
Why have things gotten so nasty? The non-alcoholic beverage category was down 2 percent in 2008. In case that doesn’t sound like much, consider that it was the first volume dip ever recorded by Beverage Marketing Corp., which has compiled the data for the last 38 years. If your market share was circling the drain, you’d get nasty, too.
And the news hasn’t gotten much better since. Coming off the 2008 launches of G2 and Tiger, Pepsi saw this year’s sports-drink volume decline in double digits (though its “What’s G?” ads via TBWA\Chiat\Day, Playa del Rey, Calif., succeeded in garnering attention for the repackaged brand.)
At the Coke camp, Vitaminwater svp-marketing Eric Berniker relates that the company’s put “marketing muscle” behind the launch of its 10-calorie formula and dubs Vitaminwater10 a “game-changer.” PepsiCo, meanwhile, spared no expense (a Super Bowl ad and $9M in Q1 media spend) promoting SoBe Lifewater.
But does anyone remember when beverages used to be…carbonated? For its part, Pepsi has vowed to spend $1.2 billion over three years on marketing as a way to kick-start its sputtering North American soft-drink sales. Pepsi’s volume plunged 6.5 percent last year, per Beverage Digest.
Meanwhile, Mountain Dew (which these days goes by “Mtn Dew”) bucked the category trend by actually growing—if only by 0.2 percent. But Diet Dew (with strong ad support via BBDO, New York) leapt ahead by 1.6 percent. How? According to Frank Cooper, CMO of sparkling beverages for Pepsi-Cola North America Beverages, “We’re using brand value to generate immediate consumer benefits while building brand equity for the long term.” A summer promo features two new Dew flavors packaged as “Game Fuel” for the World of Warcraft video-game franchise.
For its part, Coke has gone the musical route with “Open Happiness,” a jingle for its new Weiden+Kennedy campaign that popped up on the iTunes Top 40. More happy news: Coke Zero’s volume grew a whopping 25 percent in the first quarter.
According to Beverage Business Insights editor Gerry Khermouch, the soft marketplace has forced beverage marketers to get smarter in how they market both core and niche categories. “They’re spending their media and marketing dollars more efficiently,” he says, “so that they can adequately support both sides of the portfolio.”

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