Scroll To Top

By Dick Maggiore and Mark Vandegrift

Pepsi No Longer #2

Big Brand News! Pepsi No Longer #2; Dr. Pepper Rises

If you’re familiar with the term “Cola Wars,” you’re young enough to know that it has always been and was always supposed to be: Coke v. Pepsi. The Taste Test. New Coke. Mean Joe Greene. Michael Jackson. The Polar Bears. Tina Turner. The Super Bowl Half-Time Show. But … Pepsi is no longer #2!

Beverage Digest reported a week ago that Dr. Pepper and Pepsi are at 8.3% market share, and that Dr. Pepper had technically moved ahead of Pepsi. Coke remains the comfortable market leader with 19.2%. Rounding out the top five are Coke’s other signature brands: #4 Sprite at 8.1% and #5 Diet Coke at 7.8%. Things look even worse for Pepsi, as both Sprite and Diet Coke are trending up while Pepsi continues to trend down. We could potentially see Pepsi in fifth place in the not-too-distant future. That’s just a little hard to fathom. Sit down and drink a Poppi, (since it’s healthy for you) if you need to take this all in.

A Lack of Advertising?

Some are asking if Pepsi just spent too little on advertising. The answer: no. PepsiCo still maintains a healthy $3 billion or more advertising budget, although that is spread across a diverse portfolio of products. We don’t know the exact amount of ad spend on Pepsi and its flavor varieties, and other than a minor blip in 2020 during the pandemic, PepsiCo has kept up with its rival beverage companies.

A Lack of Category Interest?

Others are asking if this is the ultimate path for all legacy soft drinks. From ice teas to sparkling waters, and the arrival of so many “healthy” options such as Poppi, Olipop, Culture Pop, and more, traditional sodas are losing overall beverage market share across the board. Perhaps Pepsi is simply seeing the trajectory of the category and giving up the ghost?

If this is the case, is it wise? While the traditional soda market is shrinking, the soft drink market size is still huge. The global soft drinks market was valued at $413.46 billion in 2021, and it is anticipated to reach $621.66 billion by 2030. That’s a compounded annual growth rate of 5.23%. PepsiCo investors probably don’t want to hear that Pepsi is giving up the ghost. So what could it be?

A Lack of Positioning?

If you’ve participated in an Innis Maggiore Appreciative Discovery®, you’ve likely heard the classic positioning tale of Coke versus Pepsi. Coke is the original soft drink. Pepsi is the new soft drink. Pepsi positioned itself for those who are hip and have a young point of view, regardless of age. We knew their slogan well: “the choice of a new generation.”

It was such a positioning power move that as Pepsi gained market share, Coke responded with New Coke, one of the all-time flops in product development history. As positionists, we teach that you can’t be all things to all people, and you certainly can’t be two incongruous concepts at the same time: legacy/original and new/hip. Coke had been the original and the leader in soda since 1886. Pepsi became the drink of a new generation in 1984. Pepsi’s positioning play was brilliant … until it wasn’t.

For those who can quote Pepsi’s slogan on-demand — the choice (or drink) of a new generation — can you also cite the last time Pepsi used this unbelievably brilliant and well-positioned product expression?

You might be surprised that it was 1991! Yes, over 30 years ago. Why do we who are 40+ still remember it? Because it leveraged the power of perfect positioning. It re-positioned the competition (Coke) as the “old” option and positioned Pepsi as the “hip” option. Who wants to be “old?” And who wants to be “hip?”

Since then, Pepsi (and Coke, for that matter) have used dozens of different slogans and taglines. “The Choice/Drink of a New Generation” was only used from 1984-88 and 1990-91. It shows us that brand executives get bored with their own work, so they make change for change's sake instead of putting a new skin on a great position. Not only did they position themselves perfectly, they poured it on with advertising. They drafted some of the biggest names in entertainment, including Michael Jackson, who launched the campaign. Others included David Bowie, Lionel Richie, Tina Turner, Gloria Estefan, and Michael J. Fox.

The obvious answer to this negative brand trend is to bring back the slogan. But wait, there’s more … to this story! Pepsi let the trademark on this slogan lapse in 2006. And who picked it up? Better Oats. Here’s a quote from an article in The Daily Mail about this transaction: “How did a small oatmeal startup manage to scoop up one of the most iconic soft drink slogans right under the nose of its former owner? As it turns out, they had a man on the inside. Better Oats was originally owned by MOM Brands (formerly known as Malt-O-Meal), whose CEO at the time was a former marketer at PepsiCo/Frito Lay.”

You probably can’t imagine that this position hasn’t been expressed since 1991, but it goes to show the power of positioning. Even today, as we ask our Appreciative Discovery participants what Pepsi stands for, they can all answer the same, “the choice/drink of a new generation.” That’s the power of positioning! But that run appears to be ending, over 30 years later. It makes you wonder where they would be today if they had stuck with it?

Avoid the Pepsi positioning predicament!

If you’re stuck with a legacy brand and aren’t sure how to course correct from a downward spiral, contact Innis Maggiore today! Or just call us to discuss old commercials – we love that too! Here’s a fun YouTube video compilation of 40 years of Pepsi commercials: 1960-1999.

In a future PositionistView®, we’ll discuss Dr. Pepper’s rise to #2. In the meantime, if you’re a Dr. Pepper drinker, we’d love to hear from you as to why you love the brand so much.