Tuesday, December 27, 2005

Things Go Better With Pepsi

Ever since I wrote The Revenge of Brand X a few years back, the most controversial chapter has been the one in which I identified ten brands that should be doing a whole lot better than they are. In fact, to the shock and dismay of too many people, I went so far as to accuse Nike and Coca-Cola as being two incredibly over-rated and ineffective brands.

Mind you, I never said they weren't successful brands. I just said they weren't good brands at all, for the simple reason that nobody - and I mean nobody, including their executives, customers and retailers - could consistently explain why either of them were "the only solution" to their markets' problems. Even if you don't accept my own theorem on a brand being "the only solution to their problem," it's pretty disconcerting to know that even while your brand has high awareness and great sales, nobody can figure out why.

You don't have to look much further than the taglines of each brand's advertising to see how instantly forgettable and ineffective each is. Generic, say-nothing phrases that supposedly mean something to everyone, but in reality, mean nothing to anyone.

This week I'm vindicated in my prognostications, because December, 2005, was the milestone event that, according to the industry "experts", was never going to happen. The great, big, undefeatable Coca-Cola was quietly eclipsed in market value by none other than its nemesis, Pepsi.

Yes, you read that right. As of this writing, Pepsi is bigger than Coke.

Now, before you jump to any conclusions, you have to understand that the valuations to which I refer describe the entire holdings of each company. That means it includes all the subdivisions and sub-brands owned by each. In Pepsi's case, that includes food and other products. In Coke's case, it doesn't mean much, because 80% of Coca-Cola's holdings are in beverages while Pepsi maintains its beverage component to about 20%.

To make matters even more bleak, Coca-Cola shares of stock have barely nudged one per cent over the last twelve months, while Pepsi's have surged close to 15%. Gee, is it starting to make sense why Coca-Cola can''t get its act together? Any clues as to why it took months and months to fill the CEO's role? Why Coke stock continues to languish? Why, despite repeated attempts at incredibly stupid zero-calorie products, Coke still can't come up with a winner?

How about this: Coke has no brand. I said it then and I'll say it again. Coke has no brand.

If Coke did have a brand, they'd have been able to extend it to other products, whether they be beverages or food. They can't. If Coke really had a brand strategy, they'd have been able to select from a bevy of CEO candidates just drooling for the chance to take the helm. They didn't. If Coke knew how to articulate and execute a brand strategy, they wouldn't be sitting on their hands, watching their stock circle the drain while Pepsi ate their lunch.

Of course, none of this will be read by, or acted on, by the Coca-Cola powers that be. As long as the golf club memberships are covered and next quarter's numbers are eked out, there's still time for lunches with other non-branded heroes, like the geniuses from K-Mart or Kodak or Maytag.

It's a pity. A real shame. And it's too bad that there's nothing you and I can do about it. Oh wait. There is.

Short your Coke.


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