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Pepsi Pitch Brief

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PepsiCo has started a digital agency review for brand Pepsi in North America. The incumbent shop is Cheil Worldwide-owned Barbarian Group, which is trying to rebuild after a wave of personnel departures.
It is unclear if Barbarian Group is defending the business. A PepsiCo spokeswoman declined to comment on the review. Barbarian Group representatives did not return requests for comment.
Barbarian Group CEO Peter Kim left the shop on Sept. 1 after less than a year in the post. He took the helm last December, when former chief executive Sophie Kelly stepped down. His departure followed that of numerous Barbarian Group executives over the last six months. Cheil Worldwide President of International and CEO of Greater China Aaron Lau is serving as Barbarian Group's interim CEO.

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Pepsi Pitch Brief

  1. 1. NEW BUSINESS PITCH The Joy of Pepsi-Cola
  2. 2. NAME BRAND PITCH TYPE Digital Agency MARKET DATE September 17 , 2016 The Data You Need to Win This Pitch DESCRIPTION PepsiCo has started a digital agency review for brand Pepsi in North America. The incumbent shop is Cheil Worldwide-owned Barbarian Group, which is trying to rebuild after a wave of personnel departures. It is unclear if Barbarian Group is defending the business. A PepsiCo spokeswoman declined to comment on the review. Barbarian Group representatives did not return requests for comment. Barbarian Group CEO Peter Kim left the shop on Sept. 1 after less than a year in the post. He took the helm last December, when former chief executive Sophie Kelly stepped down. His departure followed that of numerous Barbarian Group executives over the last six months. Cheil Worldwide President of International and CEO of Greater China Aaron Lau is serving as Barbarian Group's interim CEO. Brand Pepsi Begins a Digital Agency Review th North America
  3. 3. PepsiCo, Inc. is a worldwide food and beverage company. Its Frito-Lay North America segment offers Lay's potato chips, Doritos tortilla chips, Cheetos cheese-flavored snacks, Tostitos tortilla chips, branded dips, Ruffles potato chips, Fritos corn chips, and Santitas tortilla chips. The company's Quaker Foods North America segment provides Quaker oatmeal, grits, rice cakes, oat squares, and natural granola; and Aunt Jemima mixes and syrups, Quaker Chewy granola bars, Cap'n Crunch cereal, Life cereal, and Rice-A-Roni side dishes. The company's PepsiCo Americas Beverages segment provides beverage concentrates, fountain syrups, and finished goods under the Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, 7UP, Diet Mountain Dew, Tropicana Pure Premium, Sierra Mist, and Diet 7UP brands; and ready-to-drink tea and coffee, and juices. FINANCIAL OVERVIEWCOMPANY BACKGROUND MAIN COMPETITORS 2015 Net Revenues (mil) 2015 Employees Employee Growth Percent Assets (mil) Net Income Growth Percent Sales Growth Percent 63,056 271,000 - - -5% - Mr. Jeff Dec Senior Director of Marketing, Trademark Pepsi Mr. Mic Zavarella Senior Marketing Director, Pepsi Brand DECISION MAKERS by jeff.dec@pepsi.com mic.zavarella@pepsico.com Client Profile / Market
  4. 4. Soft Drink Industry $43 Billion ANNUAL GROWTH 2011-2016 -1.4% - ibisworld.com - - ibisworld.com - 42.5% PepsiCo 27% Coca-Cola SOFT DRINK MARKET SHARE IN 2015 REVENUE IN 2015 CARBONATED SOFT DRINKS Dr. Pepper Snapple 17% Cott 4% National Beverage 3% Other 6.5% - Statista.com -
  5. 5. Soft Drink Industry 1 0 Nonalcoholic Beverages: Volume Growth by Category (2015) 2% 3% 4% 5% 6% -1% -2% -3% 7% VolumeGrowth(%) Coca-Cola PepsiCo North America Beverages Dr Pepper Snapple Sparkling Beverages Still Beverages MARKET SHARE OF CARBONATED SOFT DRINKS AMONG LIQUID REFRESHMENT BEVERAGES 2015 2012 38.4% 42.4%
  6. 6. Fast Food industry in numbersGrowing Aversion for Soda in the U.S. LOWEST LEVEL SINCE 1986 674 EIGHT-OUNCE PER PERSONA PER YEAR CSD CONSUMPTION IN 2014 SERVINGS Thinking about the food you eat, for each of the following please say if it is something you actively try to include in your diet, something you actively try to avoid or something you don’t think about either way. How about soda or pop? AMERICANS’ DIETARY HABITS OF DRINKING SODA 41 36 23 51 63 61 25 24 23 13 22 16 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Specified regular vs diet soda or pop in 2015, regular soda findings shown - GALLUP - % Include % Avoid % Don’t think about
  7. 7. Fast Food industry in numbersBack To Basics Bottled water's core characteristics – healthful, natural, zero-calorie – are increasingly resonate with U.S. consumers ENERGY DRINKS AND, ESPECIALLY, READY-TO-DRINK (RTD) COFFEE. U.S. LIQUID REFRESHMENT BEVERAGE MARKET CHANGE IN VOLUME BY SEGMENT (2014 - 2015) SEGMENTS % CHANGE 2014 / 2015 Ready-to Drink Coffee 16.5% Energy Drinks 9.8% Bottled Water 7.9% Value-Added Water 7.5% Ready-to-Drink Water 6.1% Sports Beverages 5.5% CSDs -1.5% Fruit Beverages -2.1% TOTAL LRB 2.8% Source:BeverageMarketingCorporation Gary Hemphill, managing director and chief operating officer of research at the Beverage Marketing Corporation, expects bottled water to surpass carbonated soft drinks by early 2017. NON SPARKLING BOTTLED WATER ACC0UNTED FOR 95.8% OF TOTAL 2014 WATER BOTTLES VOLUMES
  8. 8. PepsiCo. PEPSICO’S REVENUES IN 2015 WERE CLOSE TO • • $63 BILLION • • • PEPSI-COLA • NATIONAL MEDIA SPENDING (2015) • • $231.4M • • 30% of total PepsiCo’s 2015 media spending. 53% FOOD BEVERAGE 47% 56% U.S. OUTSIDE U.S. 44% MIX OF NET REVENUES TOP BEVERAGE BRANDS PERFORMANCE + 11.4% + 5.2% - 1.0% - 3.9%
  9. 9. Fast Food industry in numbersHealthier Options They’re marketing these smaller portions as better choices because of their reduced quantity and fewer calories. These smaller packages also benefit the companies since they have higher margins Pepsi switched from aspartame to sucralose in it’s Diet Pepsi products ASPARTAME FREE The new product will have seven ingredients: water, organic cane sugar, citric acid, organic natural flavor, sea salt, sodium citrate and potassium chloride. The line, called G Organic, will come in Lemon, Strawberry and Mixed Berry flavors. DIET PEPSI SMALLER PORTIONS NON-GMO TROPICANA ORGANIC GATORADE PepsiCo started promoting its Tropicana brand as being GMO Free. (even though Nasdaq pointed out that GMO oranges have never been available.)
  10. 10. Fast Food industry in numbersIntroducing the 1893 Line “Craft is not a fad. It is here to stay. We think craft is a critical growth space and we hope this is something we will be talking about for years to come.” Scott Finlow, VP of Innovation & Insights for Global Foodservice @PepsiCo "We were inspired by the mixology craze. We absolutely see this as a perfect standalone beverage or a perfect complement to cocktails." Chad Stubbs, VP of marketing for the Pepsi Trademark THE COLA WITH CRAFT VIBESThe 1893 cola is made with natural ingredients Premium kola nut extract Real sugar Sparkling water Premium kola nut extract Real sugar Sparkling water Real Ginger
  11. 11. Fast Food industry in numbersCraft Soda Trend PEPSICO’S CRAFT SODAS In late 2014, PepsiCo launched Caleb Kola, a craft soda containing sparkling water, fair-trade cane sugar, and kola nut extract This PepsiCo’s craft soda contains natural flavors and sugarcane instead of high-fructose corn syrup embraces more offbeat flavors like agave vanilla cream, black cherry with tarragon, and lemon berry açai 60% 33% 34% 44% of US adults agree that carbonated soft drinks made with natural ingredients are a better choice than drinks with artificial ingredients of US adults currently drink craft sodas are interested in carbonated soft drinks with additional benefits such as proteins, vitamins, minerals of non–craft drinkers are keen on trying craft products. - Mintel - - Mintel - - Mintel - - Mintel -
  12. 12. NATURAL SODA CONSUMERS QUICK DEFINITION: Natural Soda Consumers prefer better-for-you alternatives to regular and diet sodas. These consumers place importance on natural or real ingredients and are interested in seeing carbonated soft drinks with added benefits, such as protein, vitamins or minerals. 10% 20% 0 30% 13-17 • • • ••• 18-24 25-34 35-44 45-54 55-69 64% FEMALE 42% SINGLE 36% WITH CHILDREN FOODIES 177.9 ART APPRECIATORS 144.0 BEAUTY & WELLNESS AWARE 170.2 FASHION LOVERS 140.0
  13. 13. 38% NATURAL SODA CONSUMER Compare the Natural Soda Consumer Demographic with Pepsi’s Female Audience Pepsi Cola’s audience overlaps with our Natural Soda consumer demographic by 38% in interests, including: Food, Art, Beauty and Fashion
  14. 14. PEPSI AUDIENCE CROSSOVERS Pepsi’s audience are food enthusiasts (foodies 178.9) but are not interested in healthy options. They stand out as Snackers, interested in Food-to-go and are fans of Fast Food. They are not interested in cooking. Indeed food related websites score low in popularity (46.6). NATURAL SODA CONSUMERS: FOOD THOUGHTFUL EATERS 191.0POPULARITY GRAINS & PASTA 190.0POPULARITY VISIT FOOD RELATED WEBSITES 30% CLICK HERE TO SEE TOP FOOD RELATED WEBSITES
  15. 15. PEPSI AUDIENCE CROSSOVERS NATURAL SODA CONSUMERS: BEAUTY & WELLNESS Interest in Beauty & Wellness is just slightly above the average among Pepsi consumers. They don’t emerge as Active & Fit people but they are Cosmetic Connoisseurs (pop 141.5) and are interested in Face Care products. 188.7 COSMETIC CONNOISSEURS SKIN CARE 184.5 ATHLETIC APPAREL 130.5 TOP SKIN CARE BRAND KNOW MORE 163.2 ACTIVE & FIT DISCOVER THEIR FAVORITE FITNESS ACTIVITIES Burt’s Bees
  16. 16. PEPSI AUDIENCE CROSSOVERS NATURAL SODA CONSUMERS: ART Pepsi audience is not at all interested in Art (46.0 pop index). However, drilling down into the book interests, Comics turned out to be a form of art gathering much interest among Pepsi consumers. ART APPRECIATORS 144.0 COMIC BOOK READERS 172.3 MUSEUM & ART GALLERIES 112.3 COLUMBUS MUSEUM OF MODERN ART KNOW MORE FAVORITE MUSEUMS DISCOVER THEIR FAVORITE ARTISTS DISCOVER THEIR FAVORITE ART EVENTS
  17. 17. PEPSI AUDIENCE CROSSOVERS Pepsi consumers are Swayable Shopaholics; thus they are interested in fashion but don’t invest much time staying ahead of the curve. They are interested in Footwear (pop 150.0) and and Athletic Apparel (pop 137.9) NATURAL SODA CONSUMERS: FASHION LOVERS EYEWEAR 153.3 HANDBAGS & PURSES 160.2 ACCESSORIES ADDICTED 187.5 • • • • • • DISCOVER THEIR FAVORITE RETAIL STORIES CLICK HERE TO SEE THE FAVORITE FASHION BRANDS
  18. 18. CONSUMER INSIGHTS SUITE Discover the Pepsi consumer TRY NOW FOR FREE > on Cubeyou Consumer Insights Suite

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