PepsiCo CEO says company lost share of voice despite media spend increase

PepsiCo has posted a revenue of US$12.5bn for the first quarter ended 24 March 2018 (Q1 18), a 4% increase from US$12bn during the same period last year. The category North America Beverages, comprising brands such as Pepsi, Mountain Dew, Gatorade and Lipton Tea, generated a revenue of US$4.4bn, a 1% drop from the same period last year.

According to chairman and CEO Indra Nooyi while most of PepsiCo's businesses are performing well, the recent losses in cola market share in North America have led to subpar top and bottom line performance over the past three quarters. This is despite the company “moderately increasing” media spend flagship brand Pepsi over the past three years.

“Our share of voice has fallen dramatically relative to our key competitor, who has substantially stepped up [its] media spending on colas over the past two years," Nooyi added. Pepsi said that it has also tightened and elevated brand communications by launching the Pepsi Generations campaign, which supports all brands under the Pepsi umbrella such as Diet Pepsi and Pepsi Zero Sugar. This led to the company "more effectively" leveraging media investment across its full Pepsi portfolio.

According to Nooyi, the company is already seeing positive results from the campaign, which has driven higher ad and brand recall, as well as higher brand regard with consumers.

"These are the important first steps and as we sustain the campaign, we anticipate it will translate to further improving sales and market share results," Nooyi said. She added that the company plans to "substantially and sustainably" support the campaign throughout the year.

“These are the important first steps and as we sustain the campaign, we anticipate it will translate to further improving sales and market share results," Nooyi said.

Meanwhile, the net revenue for Asia, Middle East and North Africa (AMENA) witnessed a 7% increase from US$970 million to US$1,037 million. Other international markets - Latin America and Europe Sub-Saharan Africa - have also witnessed a revenue increase of 14% and 15% respectively. Nooyi said that the strong international results are in part a reflection of initiatives to leverage scale, by increasing the coordination of commercial activities across markets and sectors. For example, the Pepsi Generations campaign was launched across 55 markets, while its Lay's Smile campaign to support children born with a cleft lip or cleft palate, was unveiled in 14 markets worldwide.

Meanwhile on the competitor front, The Cola-Cola Company reported a 16% decline in net revenue to US$7.6 billion for the first quarter ended 1 April 2018.  But the company's consistent focus on the One Brand strategy for trademark Coca-Cola led to a 4% increase in volume, fuelled by a 3% growth in brand Coca-Cola, and a double-digit growth in Coca-Cola Zero Sugar.

This performance, along with driving profitability within sparkling through revenue growth management initiatives, led to 6% growth in global retail value for Trademark Coca-Cola, the financial statement read. Following a full brand revamp which saw the introduction of four new flavours, a contemporary and sleek packaging and "innovative marketing", Diet Coke also saw volume growth in North America during the quarter.

James Quincey, president and CEO, said the company has the "right strategies" in place and will continue its evolution as a consumer-centric, total beverage company.