CEO Pushes Pepsi to Within Striking Distance of Coke : Enrico Thriving on the Cola Wars

Ronald Reagan is called the Teflon President because of his ability to skirt political misfortune; in the business world, though, the title could go to Roger A. Enrico, president and chief executive of Pepsi-Cola USA.

Locked in a heated battle for soda supremacy with Atlanta-based Coca-Cola Co., the world’s largest soft-drink company, Enrico seemingly can do no wrong.

He has gingerly danced around Coca-Cola’s marketing land mines, cross-pollinated a new Pepsi Generation by deploying television commercials featuring Geraldine Ferraro, Dan Marino and Michael Jackson and pulled his company--a subsidiary of Purchase, N.Y.-based Pepsico--to within striking distance of the giant Atlanta beverage maker by diffusing controversy and capitalizing on instinct.

While Coca-Cola, Burger King and some other big corporations were being pressured by civil rights groups to sign agreements to support minority businesses in the early 1980s, for example, Enrico quietly increased Pepsi’s support of minority vendors without being drawn into the fray. Coke’s reformulation of its cola last spring drew protests from consumers; by contrast, Slice--Pepsi’s 10% fruit juice drink that was introduced 13 months after Enrico became president of Pepsi in April, 1983--has garnered a respectable market share and spawned a mass of imitators even though some analysts had predicted that the product would fail.

“We have made some inroads,” allowed Enrico, 41, who attended the International Soft Drink Industry Exposition and Conference in Anaheim that ended Wednesday.

Indeed, the latest A. C. Nielsen Co. figures show that Pepsi’s flagship cola--with a 19.1% market share--now leads the combined market shares of New Coke (9.7%) and Coca-Cola Classic (5.8%). In 1984, before New Coke was introduced, Pepsi-Cola held 18.8% of stores’ sales, compared to 21.7% for Coca-Cola.

That is no small accomplishment. Soft drinks are perhaps America’s pre-eminent market product, with per-capita consumption last year exceeding that of tap water, according to Beverage Industry, a Cleveland-based trade publication.

Because of the need to please large numbers of consumers, the business--as Coca-Cola executives found out last summer--is not without its pitfalls. Too much corn syrup here, the wrong ad there--and pretty soon a product can falter. Satisfying independent bottlers can add difficulty to the job.

With his boyish good looks and low-key demeanor, Enrico hardly seems to be up to the task. Nonetheless, he has made his mark. In the increasingly media-dominated arena in which soft-drink battles are being waged, Enrico has put Pepsi on the map in part by infusing his product with a style while Coke wrestled unsuccessfully with its substance.

“Coke has a corner on the Norman Rockwell image,” said Enrico, referring to the famous American illustrator. “They slapped their name on more and more kinds of products. Pepsi stands for something; its image is a leading edge kind of a thing, despite the fact that (the product is) 88 years old.”

Enrico says Pepsi will expand its line of nine soft-drink products. The company is introducing a mandarin orange Slice soft drink and is test marketing a Cherry Pepsi in Canada. But Enrico thinks Pepsi’s biggest growth will come in the vending market and overseas, where Enrico said Pepsi is closing the immense gap between its sales and Coke’s huge business.

“Coke has a very strong position in countries like Japan and Germany,” Enrico said. “But we have made inroads in the developing parts of the world . . . the Middle East . . . Southeast Asia. I think the market is up for grabs. My view is that you don’t own any business for too long. You’ve got to earn it every day.”

That may become more difficult as Pepsi runs out of high-powered celebrities to appear in its commercials. Although Enrico says that “I don’t think you’ll ever see me in any” Pepsi commercials, he clearly has his eyes peeled for new stars.

Shown ‘Massive Growth’

“There is still the Refrigerator out there,” said Enrico, referring to celebrated Chicago Bears defensive tackle William “Refrigerator” Perry. (In fact, Perry has just signed a contract to promote New Coke and Classic Coke.)

Nevertheless, Enrico’s aggressive marketing philosophy has brought him the admiration of soft-drink experts.

“Roger . . . has lit a large bonfire under the collective backsides of the Pepsi-Cola system,” said Jesse Meyers, a beverage industry analyst. Although Coke remains larger, “Pepsi has shown massive growth in the past year. It’s been amazing.”

George D. Wolff, president of the Pepsi-Cola Bottlers Assn. and a Pepsi bottler for nearly 25 years, added: “Roger has brought a whole new dimension to the Pepsi-Cola system. He is one of the most innovative presidents we’ve had. There are some philosophical differences between us . . . but our partnership is getting stronger all the time.”

Enrico still has obstacles to overcome, however. Pepsi still lags Coke overall because of the Atlanta beverage maker’s stronger fountain sales in fast-food outlets such as McDonald’s. Coke also leads overseas sales.

Analyst Meyers believes that Pepsi needs “to make massive investments in the vending market,” sign up more fast-food chains and mimic the megabrand strategy now being pursued by Coca-Cola with its proliferation of products.

Enrico disagrees. He says Pepsi is currently exploring the vending market by promoting small, $1,200 soft-drink dispensing machines that he hopes will replace the ubiquitous coffee machines in small and medium-size offices. Yet, while Enrico acknowledges that Pepsi needs to sign up more fast-food chains, he is not impressed at all with Coke’s megabrand strategy.

“Megabrand strategy is just a marketing buzzword,” Enrico said. “When people pick up Pepsi, they know what they are getting. I don’t think you can say that with the other product.”