After decades of fighting Coca-Cola to be the nation’s favorite soda, Pepsi dropped to third place, after Dr Pepper. Now PepsiCo needs to win back soda drinkers . WSJ’s Laura Cooper reports that after years of focusing on potato chips and energy drinks, the company’s new beverage head Ram Krishnan is trying to refocus PepsiCo on drinks, in part with an agreement to purchase prebiotic soda brand Poppi. Allison Pohle hosts. Further Listening: - ‘It Came out of Nowhere’: The Rise of Dr Pepper - The Fight to Kick Soda Out of Food Stamps - PepsiCo’s New Healthy Diet: More Potato Chips and Soda Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Who are the hosts and guests on this episode?
Hey, it's Kate, here to say that my colleague, Alison Poley, has stepped in to guest host today's episode. Enjoy.
You don't want me to open my Pepsi on here? I can do it. You want to hear it?
Wait, yes.
Oh my God, it's exploding. I'm covered in Pepsi over here. Oh my God.
I recently sat down with my colleague, Laura Cooper, who covers Soda Pop. So, importantly, do you say soda or pop? Soda. I'm from New York. It's all soda to me. I say pop. Where are you from? I'm from Cleveland. I was a big pop drinker growing up. If you're from the Midwest, I'm going to assume probably Pepsi. Yeah, there are a lot of Pepsi products and placements in the Midwest, for sure.
Pepsi wasn't just a part of my life growing up. There was a time when those classic blue cans were embedded in the American zeitgeist. When would you say Pepsi was at its coolest?
I mean, I look back and think that they were the coolest when Britney Spears was selling it back in the early 2000s.
But today, the magic of Pepsi seems to have fizzled. Pepsi, which has almost always been the number two cola in America after Coke, dropped to number three behind Dr. Pepper last year. And now, PepsiCo is reckoning with the fact that Pepsi might not be as cool anymore.
I do think it's an inflection point. And I do think that it's a really emotional issue for everyone who's ever worked at PepsiCo and really loves Pepsi. So PepsiCo needs to save Pepsi. Yes. And they're working on it.
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Chapter 2: What is Pepsi's historical rivalry with Coca-Cola?
It wasn't just Pepsi sales that were dropping. As of last year, beverage sales across PepsiCo's U.S. business were down. With their most prestigious soda in the number three slot, the company told Laura that maybe they'd lost their focus. The man hired to turn those numbers around for Pepsi and for all beverage sales was Ram Krishnan, PepsiCo's new head of beverages in the U.S.,
Ram joined and he really had a big job to do. He's told me that his marching orders were to regain share for Gatorade and Mountain Dew and Pepsi. And he set out to do that. Here's Krishnan speaking at a conference.
The consumer's expectation is every time I interact with a retailer or brand, you know me and you know me well.
He's been on the road trying to talk to people, trying to look at shelves in places like 7-Eleven and really understand the consumer and where the brand is. He spends time with local sales teams. He goes and meets managers. And these are stores we all know, like Walmart or Dollar General. And the idea is, let's walk through the aisles. Let's make sure the shelves are full. Let's make sure that...
The PepsiCo drinks we need are highlighted the way they're supposed to be highlighted. You know, he's an extremely high up executive and he's traveling four days a week across the country doing this.
One of the big things that came out of Krishnan's work was how the drinks got into stores. And the company did that by leaning on its food business.
And PepsiCo Foods are known to have a very robust distribution strategy and be very, frankly, just to be very good at that.
PepsiCo decided to unite their food and beverage distribution operations under the same leadership. Krishnan also wanted to bring more attention back to the company's core product, Pepsi. So he launched a new marketing campaign.
So in advertising, the company has really positioned to only really market it as Pepsi goes better with food. Food deserves Pepsi. And the positioning is like Pepsi is better than Coke or any other beverages for pairing with food because of a unique mix of spices, the level of carbonation, and the sweetness in Pepsi, it actually goes well with most foods.
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