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Coke slashes adspend by 20 per cent

03-November-2004
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Coke slashes adspend by 20 per cent

Cola companies have always followed their own calling, almost never adhering to norms that other fast moving consumer goods (FMCG) companies follow. Whether it be advertising budgets, pricing or marketing initiatives, both Coca-Cola and Pepsi have generally followed a different path.

When the FMCG industry was still grappling with unrealistic price levels, the two unleashed their affordability strategy two years ago and just when the industry bigwigs were warming up to the pricing game, the two companies decided to increase prices in August this year.

In yet another surprise decision that bucks the trend of most FMCG companies increasing their advertising spends in 2004 to remain in the consumer's mind, Coca-Cola India has reduced its advertising spend between January and August this year by 20 per cent as compared with the same period last year, according to data by market research agency AdEx.

Pepsi's spends were also down by about 8 per cent till July but recovered there after and the company's total advertising budget has seen an increase of over 12 per cent between January and August 2004.

In fact, if one were to compare total adpsends of the two companies in 2004 with last year, Pepsi has beaten Coke to emerge the leader with Rs 58.88 crore total spend between January-August against Coke's Rs 50.87 crore, spanning television and print media advertisements.

When contacted, a Coke spokesperson said, "adspends have been optimised this year but the overall marketing spends remain at last year's levels". He said apart from advertising on television and in the print media, the company undertakes a whole host of marketing activities including below-the-line activities, consumer promotions, internet marketing, point of purchase material among others, and that the combined spends have been maintained at last year's levels.

PepsiCo India Chairman, Mr Rajeev Bakshi, said that while adspends were down in the first six months, the total spend in 2004 is expected to be up about 5 per cent over the last year. Significantly, adspends have been subdued despite several new initiatives by both companies this year. Besides, both the companies reduced spends for television as well as print ads between January and June this year - a peak season for soft drink consumption.

According to AdEx, Pepsi has hiked adspends on TV by about 22 per cent if one were to consider January-August 2004 to Rs 56 crore, while Coke's spends on TV during the same period witnessed a decline of about 17 per cent, from Rs 56.2 crore last year to Rs 46.8 crore during the corresponding period this year. Again, spending by the two companies in print media has declined all across eight months with Coke's spends down by more than 48 per cent to merely Rs 4 crore and Pepsi's down 55.44 per cent to Rs 2.78 crore.

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