While it’s a challenge for any traditional carbonated soft drink brand to grow with today’s sugar- and calorie-conscious consumers, Pepsi is mastering the art of refining its approach to branding and marketing with an eye toward what consumers are looking for and how they want to engage with the brands they love.
Pepsi’s biggest sales growth initiative of the year was the global PepsiMoji campaign, a Millennial-focused effort that rolled out more than 100 five-second ads online and on TV across the US, along with global creative and various local executions around the world. More than one billion emoji-clad cans of Pepsi were produced with a fun array of emojis reflecting different moods and emotions so people could share their feelings (and a beverage) with their friends.
The PepsiMoji designs were also available as part of the brand’s exclusive global launch partnership of Promoted Stickers on Twitter. “I knew emojis had hit a new level of mass when I got one from my great aunt,” commented Chad Stubbs, Pepsi’s Vice President of Marketing. “It appeals to everyone.”
— PEPSI Canada (@PepsiCanada) August 15, 2016
Pepsi is also inviting customers into its home — a new 5,000-square-foot “brand home” in New York City’s Meatpacking District it’s calling Kola House. The hybrid restaurant-bar-event-experiential marketing space (which was announced in the spring) had its official opening last week after hosting private parties during New York Fashion Week, and a year of popping up on the road at a handful of brand activations.
Located on West 15th Street, it’s an ode to the kola nut that forms the foundation of Pepsi’s iconic carbonated soft drink, combines an American shareables-with-a-global-influence menu by Executive Chef Jon Feshan and an innovative cocktail menu developed by resident “flavor chemist” Alex Ott. Found throughout the food and beverage menu is the kola nut, “an emerging ingredient in modern food culture that provides a natural source of caffeine and rich flavor, and has long been seen as a symbol of hospitality.”
The official opening follows a pop-up preview at Milan Design Week and a road tour that brought a mini version of the concept to the Sasquatch Music Festival this summer.
Kola House’s interior was led by Lenny Kravitz’s Kravitz Design firm in partnership with PepsiCo Design. Pepsi’s description: “Anchored by a copper-pipe Kola bar, Kola House is a unique blend of raw industrial materials juxtaposed against elevated design elements. Concrete, blackened steel, and vintage red brick meet paneled American walnut walls, herringbone wood floors, and hand-knotted silk carpets.
The space is meant to be inviting, yet sophisticated. The muted color scheme serves as the perfect backdrop for surprising infusions of color, introduced through large-scale vibrant artwork by notable figures like Japanese contemporary artist Tomokazu Matsuyama. Tomokazu was identified by Swizz Beatz, Kola House’s art curator, and will be the first contemporary artist featured throughout the space.”
The venue officially opened on September 20 with a surprise performance by New York indie band LCD Soundsystem and a glitzy opening night party attended by taste-makers including Beatz and Public School designers Maxwell Osborne and Dao-Yi Chow. The buzz-making space has quickly become a social hub as well as a customer-facing testing ground for new products inspired by the ingredient at the heart of the Pepsi brand.
As its manifesto notes, it’s about the journey, not the destination, and a mindset of exploration and experimentation. “This isn’t a pop-up,” said Seth Kaufman, PepsiCo’s Chief Marketing Officer for Beverages in North America, about the permanent brand experience. “This is something much bigger than that.”
— Kola House (@kola_house) September 12, 2016
One of the new products Pepsi is showcasing at Kola House is 1893, its new “mixology” premium soda brand that debuted earlier this year, allowing the options be combined with liquor or imbibed on its own. “The concept tested extremely well—in the top 10 percent of all soda innovation concepts that we tested in the past decade,” said Jenny Danzi, Senior Marketing Manager for PepsiCo.
Meanwhile, ongoing sponsorship deals with major US leagues including the National Football League, Major League Baseball, National Basketball Association and the National Hockey League are still paying dividends for Pepsi in its home market.
Sales of traditional carbonated soft drinks are assailed by increasing consumer wariness of sweeteners, whether sugar or artificial ingredients. Even an attempt by Pepsi to switch to sucralose from its previous sweetener in Diet Pepsi, aspartame, fell flat as fans lobbied for the return of aspartame, so now Diet Pepsi comes in two different versions by sweetener.
Credit to PepsiCo CEO Indra Nooyi and her executive team for creatively battling the carbonated soft drinks headwinds, including a “snackification” strategy of creating more eating occasions worldwide and supporting them with PepsiCo brand extensions and innovative new products—especially those carrying premium positioning and pricing—a strategy that has been paying dividends for a few years now.
The company keeps raising its sales and overall financial outlook as the CPG giant is increasing its focus on Frito-Lay salty snacks as well as on better-for-you brands including Quaker Oats, Aquafina bottled waters and Naked Juice beverages.
“In the second quarter, PepsiCo was once again the largest contributor to food and beverage retail growth in the US, accounting for more growth at retail than all other $5-billion-plus food and beverage manufacturers combined,” Nooyi told analysts.
About 9 percent of PepsiCo revenues during the period came from new non-beverage products launched in the past two years.
In beverages, premium new products also included Aquafina Sparkling Water to compete with the popular Sparkling Ice brand; a new line of cold-pressed juices from Naked that attempts to play in the “cleansing” fad; organic versions of Gatorade; and Mountain Dew Black Label, which Nooyi described as “a deeper, darker Dew, made with sugar and crafted with dark berry and herbal bitters.”
“Product innovation and portfolio transformation are enabling us to provide consumers the delicious and convenient products they want and to satisfy their constantly evolving demands across a broad spectrum of occasions and need states,” said Nooyi.
Not only that, but PepsiCo has been growing its business in the US, where economic growth has been erratic at best, and also in some key overseas markets including China, Mexico, and Egypt, while battling volatility and recession in other foreign markets including the UK, Brazil, and Russia.