Pepsi Gets Jump on Rival, Unveils New Coke Abroad

Having battled to a virtual dead heat for control of the U.S. cola market, Pepsico and Coca-Cola took their war overseas Tuesday as Pepsi--whose foreign sales lag Coke’s--moved to deflate the hoopla over new Coke.

The controversial new-formula Coke that Coca-Cola began marketing domestically in May has not been formally introduced abroad by Coke, though it’s available in some countries, including Puerto Rico and Canada.

But Pepsi-Cola International, a division of Purchase, N.Y.-based Pepsico, held news conferences in 16 European, Asian, African and South American cities Tuesday to display cans of new Coke and steal the thunder from its competitor.

In Paris, Eric Sarre, the director of Pepsi-Cola France, held a news conference welcoming “New Coke” to France. The new formula Coca-Cola is marketed as New Coke in France, and cans are being sold in shops alongside cans and bottles of the old formula Coca-Cola.

A Pepsi official in Purchase said the press conferences abroad were held “in the healthy spirit of competition . . . to show our good will” toward Coke, which outsells Pepsi overseas by a ratio of more than 3 to 1. But, spokesman Dick Detwiler said, “we’re not hoping Coke’s sales will go up.”

Meanwhile, back in the United States, Coca-Cola claimed that Pepsi has been selling “New Pepsi,” a less-sweet version of regular Pepsi, in some overseas markets. Coke officials released a photograph showing a Pepsi can with “New” atop the familiar round Pepsi logo. A band across the lower portion of the can says “Join the Pepsi Challenge!”

‘Not Available Now’

However, Detwiler said that what Coke claims is “New Pepsi” is actually a “long dead” product that had “a very limited test marketing in one city in Japan . . . a couple of years ago.”

“It’s certainly not available now, I know that,” he said.

Coke, with its red-and-white trademark on millions of signs in 155 countries from Cuba to Hong Kong, is arguably the best-known brand name in the world. It has used its prominence to keep Pepsi from gaining a toehold overseas.

While neither Coke nor Pepsi discloses overseas sales or market share data, Emanuel Goldman, an analyst for Montgomery Securities in San Francisco, said Pepsi holds about a 10% share of the soft-drink market, while Coke has around 30% in most countries.

“Pepsi’s not going to untrack Coca-Cola” soon, Goldman said.

Last year in France, Coca-Cola sold 55 million gallons while Pepsi sold 8 million, Pepsi officials say, although neither drink fares well against wine, the preferred beverage in France. In Latin America, the disparity is even more pronounced, with Coke’s market share near 50% in Mexico and Brazil and Pepsi’s less than 10%, experts say.

Here in the United States, Pepsi was the only major soft-drink brand to increase its market share in 1984--moving up 0.6 percentage point to 18.8%, while Coke’s market share dropped to 21.7% from 24.5% in 1983, according to Beverage World, a trade publication.

Emboldened by the gain, Pepsi belittled Coca-Cola on April 23 for changing the formula of Coke, proclaiming in a newspaper ad: “After 87 years of going at it eyeball to eyeball, the other guy just blinked.”

The biting ads set the tone for Pepsi’s reaction to Coke during Coca-Cola’s four-month-long roller-coaster marketing effort for new Coke.

In early July, under pressure from die-hard Coke fans and only weeks after it had shipped new Coke to U.S. stores, Coca-Cola brought back its original formula as “Coca-Cola Classic,” to be sold alongside the new Coke. Once again, Pepsi officials publicly ribbed Coke, at one point saying: “What does surprise us is that they are bothering to keep this new Coke on the shelves at all.”

The press conferences held Tuesday took on a more muted tone, apparently out of concern about possible legal repercussions that might arise by poking fun at Coke in some foreign countries.

In France, where the law prohibits a company from deprecating a competitor’s product in advertising, Pepsi-Cola simply sent boxes of candies hailing the reformulated new Coke to journalists and served cans of the new soft drink at the news conference.

Sarre said Pepsi’s lawyers don’t anticipate any problems because the campaign in France was a humorous one and was part of an international advertising and publicity campaign.

Initially, Pepsi sources indicated that there were to be 30 press conferences held in different countries. Even as late as Tuesday morning, Pepsi officials in France were saying there would be 19 other press conferences besides the one in Paris. But Pepsi spokesman Detwiler said late Tuesday evening that only 16 were held.

Meanwhile, Pepsi officials ducked questions about the intent of the press conferences. Sarre said in Paris that “we expect to have an explosion of sales in Pepsi”; Detwiler in New York said: “It was purely a benevolent gesture.”

But Coke, in contrast to its reaction to the much tougher ribbing it has received from Pepsi in the United States, was not amused.

In a letter to its division, regional and country managers, Coca-Cola called Pepsi’s ploy “highly unprofessional and a blatant attempt to manipulate the press.”

Coca-Cola spokesman Carlton Curtis huffed: “If they (Pepsi) really believe the new taste of Coke is disliked (overseas), they wouldn’t have to hold a press conference; the problem would take care of itself.”

Stanley Meisler reported from Paris and Jube Shiver Jr. from Los Angeles.