Shop Talk

Check Out Line: PepsiCo offers up to $5 million for amateur Super Bowl ads

Check out how you can earn $1 million by wearing an electric dog collar.

Okay, not exactly. That was the punch line of a successful amateur ad this year created for PepsiCo’s Super Bowl commercial contest, which the food and beverage company is running again for the 2011 Super Bowl with a prize pool of up to $5 million.

Makers of the best ads for zero-calorie Pepsi Max soda and Doritos chips can win $1 million for an ad that scores No. 1 on a USA Today ad poll, $600,000 for No. 2 and $400,000 for the third spot. A sweep of all three spots earns a $1 million bonus for each winner.

Pepsi ran four ads during the 2010 Super Bowl. A 30-second spot during the National Football League championship game tends to run about $3 million. That electric-collar ad — in which a man winds up with the collar around his neck while the dog makes off with his bag of Doritos — was ranked one of the best of the Super Bowl in many post-game surveys.

You could put up with getting shocked a few times for that, right?

Also in the basket:

Check Out Line: Coke’s secret lab looking for newest drinks

Check out Coke’s scientists concocting the beverage maker’s next blockbuster.

With carbonated drinks sales fizzling, companies like Coca-Cola and PepsiCo have for years been exerting great efforts to find the next home run drink.  Bottled waters, energy drinks and sports drinks are now commonplace, with new variations popping up that claim to boost relaxation, health, beauty, anti-aging, muscle repair, mood and immunity.

At its Atlanta headquarters, Coke has a team of scientists feverishly working away like the Muppet Show’s  Dr. Bunsen Honeydew and Beaker, toying with new beverage formulations. And they have to be creative. Look how weird the world of drinks has gotten: some of the unusual products out on the market now include chunky aloe vera drinks and spicy drinks like those made by Prometheus Springs, with flavors like Lychee Wasabi and Pomegranate Black Pepper.

Coke is not taking any chances. It’s Venturing and Emerging Brands unit functions as a sort of in-house VC firm and invests in independent brands like Honest Tea and Zico coconut water, and developing its own drinks, like a new carbonated dairy drink called Vio.

Also in the basket: - Alberto Culver posts stronger-than-expected profit - Lorillard beats expectations - Jones Apparel signs license deal with Inter Parfums

(Reuters photo)

Check Out Line: Earnings to quench investors’ thirst

Check out the latest quarterly earnings for signs of a recovery.

Whirlpool and PepsiCo both reported better-than-expected quarterly profits and pointed to improving trends, lending hope to optimists that the economy is slowly improving.

While citing continuing macroeconomic challenges, PepsiCo, which makes Tropicana juice, Frito-Lay snacks and Quaker Oats in addition to its namesake cola,  posted stronger-than-expected results and affirmed its earnings per share growth target for the fiscal year.

“We are benefiting from both the acquisition of our anchor bottlers earlier this year and from improving trends across our global business.  As planned, we have stepped up incremental investments around the world to capitalize on untapped consumer demand,” Chief Financial Officer Hugh Johnston said in a statement.

Meanwhile, Whirlpool beat profit and sales estimates on strong demand in Asia and Latin America, prompting the world’s largest appliance maker to raise its outlook for the year.

Nevertheless, pessimists have their data points. Unemployment continues to weigh on consumers and U.S. homebuilder confidence fell to a 15-month low in July. Whirlpool rival Electrolux also missed earnings forecasts, sending shares in the Swedish company sliding on fears that recent growth trends have topped out.

Also in the basket:

Olive Garden owner goes Green

Darden Restaurants, owner of restaurant brands like the Olive Garden, Red Lobster and LongHorn Steakhouse, has joined the Sustainability Consortium — a group of scientists, academics and industry leaders working to “green” consumer products. 

Darden, an 1,800-unit restaurant chain considered one of the industry’s best performers, has set a per-restaurant goal of reducing energy and water use by 15 percent by the year 2015. Long term, it aims to send zero waste to landfills.

Darden said it already has cut water use by about 700,000 gallons per year in each of its restaurants, installed energy-efficient lighting and has begun using “power up” schedules that help cut energy consumption.

“Our business relies on a number of natural resources, and these goals are designed to help us be the best stewards of those resources that we can be,” said Ian Olson, director of sustainability for Darden, which operates 1,800 eateries. 

Other Sustainability Consortium members include Wal-Mart Stores, Safeway, Best Buy, PepsiCo, Tyson, Hewlett-Packard, Dell, Intel and Waste Management.

The technology companies in the consortium said they were committed to creating what they say is a better way to identify the most environmentally friendly consumer electronics.

For its part, Wal-Mart is working on its own index that could be used as an industry standard. The retailer provided seed funding for the Sustainability Consortium.

Check Out Line: More quarterly earnings to parse

Check out the latest quarterly earnings to size up.

Williams-Sonoma reported a better-than-expected profit on lower costs and strong holiday sales, and the home goods chain said it sees sales and earnings rising for the year.

The operator of the Pottery Barn, West Elm and Williams-Sonoma chains, which won many shoppers in the  holiday season by offering more lower-priced home decor items, also boosted its quarterly dividend by 8.3 percent.

PepsiCo and Kimberly-Clark, meanwhile, both backed their 2010 earnings outlooks.

Tiffany’s message was more mixed as the upscale jeweler’s profit was lower-than-expected, but its full-year forecast was above the Street’s expectations.

Also in the basket:

Pepsi to cut salt, sugar and saturated fats

Check Out Line: Coke’s actions speak louder than its words

Check out Coke’s about face on its relationships with one of its bottlers.

Coke plans to buy the North American operations of its largest bottler, Coca Cola Enterprises, in a substantially cashless deal that would let it cut costs and be more flexible in its distribution.

The announcement of the deal comes just as Coke rival PepsiCo is about to close its own $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group and PepsiAmericas. It also reverses Coke’s previous stance, spelled out in repeated comments over the past several months, that its current relationship with its bottlers was just fine and it didn’t need to copy Pepsi.

Coke CEO Muhtar Kent said last April when the Pepsi deal was first announced that its franchise model was the best way to go and repeated that stance again in July, September and December.

Also in the basket:

Dr Pepper Snapple tops view despite sales slump

Kohl’s profits up but outlook below expectations

Check Out Line: Refreshing quarterly earnings

Check out the strong earnings results from several companies in the consumer sector.

PepsiCo reported a rise in fourth-quarter earnings in line with expectations, stronger-than-expected sales and maintained its full-year outlook. The maker of Pepsi drinks and Frito-Lay snacks said the volume of snacks sold rose 1 percent, while beverage volume fell by the same amount.

The company, which also owns Tropicana, Quaker and Gatorade, also said it still hopes to complete its $7.8 billion acquisition of its two largest bottlers by the end of the month.

Meanwhile, interactive toy maker LeapFrog posted a fourth-quarter profit that handily beat analysts’ estimates and it forecast strong revenue growth for the year. Apparel manufacturer VF Corp, whose brands include Wrangler, Lee and Vans, rang up a better-than-expected profit on strong demand for outdoor wear, and AutoNation, the largest U.S. auto dealership group, also beat expectations.

In another good sign for the U.S. economy, jobless claims fell sharply last week, reversing a recent spike that had raised concerns about renewed labor market weakness.

Not everyone is saying things are great, however, as French food group Danone said the crisis caused by weak consumption was far from over.

Also in the basket:

Gatorade demand dented by U.S. housing slump

The U.S. housing slump’s impact is well chronicled, but PepsiCo CEO Indra Nooyi said it also has hurt sales of the company’s Gatorade sports drink.

Nooyi — on a conference call with analysts after the maker of Pepsi-Cola and other sodas and Tropicana juices reported a better-than-expected quarterly profit – said she has met with convenience store CEOs who told her the weak U.S. housing market has resulted in fewer construction workers stopping by for sports drinks and other snacks on their way to the job.

“One of the things that used to happen is the construction worker used to pull up with the pickup truck at 6 or 6:30 in the morning, buy six or seven bottles of 32-ounce Gatorade, a few bags of Doritos, throw it in the truck and pull off to the construction site. With housing starts being down as much as they are, that construction worker is not coming through the (convenience store) to pick up that Gatorade and so there’s no question that we have lost that active-thirst occasion related to that construction worker who was toiling in the hot sun.”

Nooyi said the Gatorade franchise will shrink in the short term, but the company is running the business with the long term in mind.

She said PepsiCo will not go to lower “private-label pricing” and is “jealously guarding” the brand’s equity. She said the core athletic user is extremely loyal and that the company is offering other products to retain casual users who might be lured by lower-cost tap water, bottled water and in some cases soft drinks. 

Nooyi said Gatorade previously experienced strong growth due partly to the rising number of casual drinkers and warmer-than-normal weather. Now, those casual drinkers have more options, the weather has cooled and the recession has some buyers trading down.

from DealZone:

PepsiCo’s offers drag on and on

PepsiCo Inc's offers to buy its two bottling affiliates has dragged on and on and could be a distraction for the companies as they begin planning for 2010.      Bill Pecoriello, CEO of ConsumerEdge Research, said he believes PepsiCo would only be willing to raise its offer 10 percent and that would be insufficient to entice Pepsi Bottling Group to the negotiating table.      Pecoriello said the soda saga has dragged on longer than he expected and there's no catalyst in sight to trigger talks.       "The biggest worry is that it becomes a distraction. You get to the point when you have to start planning for 2010 and everyone is in limbo," Pecoriello said.      PepsiCo's strategy could be to let time pass and hope PepsiBottling's shares drift lower -- making the $29.50 per share offer look more enticing. Still, PepsiCo has room to raise its offer and it would be attractive for the soda giant even if it paid in the upper $30-per-share range, Pecoriello said. PepsiCo could afford to pay in the high $20-per-share range for PepsiAmericas.      If PepsiCo walked away from the deal, it would have to invest $400 million to improve the performance of its North American beverage business, he said. Rival Coca-Cola is gaining momentum and could pressure PepsiCo.      PepsiCo has said its offers were "full and fair."

Cola truce? Coke and Pepsi trade niceties on Twitter

Cola rivals Coke and Pepsi gave their long-standing feud a rest last week after a user-provoked experiment on Twitter prompted the two pop makers to trade friendly greetings on the popular social networking service.

Coca-Cola responded first to a clever user’s message suggesting that the two make nice on Twitter, offering “A gracious (yet competitive) hello” to Pepsi. In return, Pepsi extended a Twitter-style olive branch of sorts to its competitor: “Can rivals and tweeps coexist? We’re willing to find out. ” Tweeps, for those unversed in the lingo, is a cutesy term for Twitter users.

The whole episode began with the single Twitter message sent by a digital media consultant from a web marketing firm called Amnesia Razorfish based in Sydney, Australia, but quickly grew as other users got in on the fun and repeated (or “retweeted”) the message to their own friends and followers across the social network.

Within three hours of the original message being sent, Coke had fired off its friendly response and even decided to add Pepsi to its Twitter network. Pepsi took a bit longer to respond but wasn’t far behind in returning the virtual handshake.

Considering both companies’ long-standing commitment to the whole cola-war marketing scheme, such a quick decision to take part in the digital truce may come as a bit of a surprise. But what’s probably more illuminating about the viral affair is that it shows two companies with deeply established brands adapting their marketing strategies to the world of social networking.

Whether the whole incident actually compelled anyone on Twitter to go out and buy a bottle of Coke or Pepsi is less important than the essential message it sends to consumers – namely, that their brands are still fun and youthful.

Moreover, as people increasingly turn to the Internet for information and entertainment, companies are being forced to accept that they have less control over what information gets to consumers. In such an organic environment, top-down brand management no longer seems to be a sustainable strategy.