Pepsi vs. Coke, 3rd Quarter 2008

With the recent talk about Pepsi redesigning their logo and repositioning their classic carbonated soft drinks, one wonders what prompted all this movement. You only need to look at the 3rd Quarter results of the big soft drink players to figure it out.

In short, Coke is doing well and Pepsi is not.

On Tuesday, Pepsi reported that income was down:


PepsiCo, a beverage and food company based in Purchase, N.Y., posted third-quarter net income of $1.58 billion, compared to $1.74 billion in the same period a year ago… a 9.6 percent decline. [Source]

Meanwhile, Coke’s income was up:

The Coca-Cola Company

Atlanta-based Coca-Cola Co. on Wednesday reported a 14 percent increase in third-quarter net income to $1.9 billion as international markets drove growth at the world’s largest beverage firm. [Source]

PepsiCo as a conglomerate did well internationally, with their snack food and beverage businesses up 4% and 11%. However, here in North America, the beverage side tanked, Frito-Lay was only up a little, and Quaker Foods was down.

Coke relies solely on beverages percent, with international growth of 7%. In North America, however, they were down 2%. The one bright spot is Coke Zero, which saw 30% growth.

That note about Coke Zero is telling, as the carbonated soft drink sector drops, Zero is showing growth… though it’s hard to tell if that is new business or pulling from other brands, like Coke or Diet Coke.

As a result, Pepsi is cutting 3,300 jobs and refocusing their product line. It’s interesting how they are going to give Diet Pepsi Max new life with a new name (Pepsi Max). In my opinion, that’s the one beverage they should have been promoting more like Coke Zero as a “third option” between the regular and diet drinks. Being muddled with the Diet Pepsi brand just can’t help there.

In fact, earlier this year Coke laid out their Red-Black-Silver strategy to push their their flagship brands… and it seems to be paying off. Meanwhile, Pepsi’s move to push Diet Pepsi Max has met with mixed results (renaming a beverage can’t be good) and Sobe Life Water can’t seem to catch a break against Coke’s VitaminWater.

It’s going to be interesting to see how this all plays out in the coming months, that’s for sure!