Diet Coke Wins Battle in Cola Wars

The Wall Street Journal

U.S. sales of Diet Coke overtook those of Pepsi-Cola for the first time in 2010, making the diet soda the No. 2 carbonated soft drink in the country behind Coca-Cola, industry data are expected to confirm Thursday.

Occupying the top two rankings would mark a historic win for Coca-Cola Co. (NYSE: KO - News) in its decades-old rivalry with PepsiCo Inc. (NYSE: PEP - News), which has seen its market share slip in recent years and is trying to retool its marketing.

The two companies have fought over the past decade to win market share from one another as cola sales overall have dropped.

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Pepsi-Cola commanded only a slight lead over Diet Coke in 2009, when each brand had slightly less than a 10% market share among carbonated soft drinks. That year, regular Coke won the cola wars with a 17% market share, according to Beverage Digest, a trade publication and data service.

But market-share data to be released Thursday by Beverage Digest is expected to confirm Diet Coke pulled ahead in 2010.

The signs are there: Last month, Beverage Digest reported Pepsi-Cola's market share fell 0.5 percentage point while Diet Coke slipped just 0.1 percentage point in U.S. supermarkets, convenience stores and other retail outlets. This week's comprehensive data will also include food-service data, including restaurant fountain sales, where Coca-Cola is larger.

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PepsiCo made a big bet in 2010, when it didn't market its flagship cola on the Super Bowl or in other TV spots. Instead, it launched the Refresh Project, an online charitable-giving program that disbursed $20 million in donations "for refreshing ideas that change the world.''

Some industry analysts have questioned whether that program would translate into cola sales. PepsiCo says that the initiative improved its corporate profile as more than 87 million votes were cast for charitable projects, and that it will help boost revenue in the long run.

Coca-Cola has ramped up its traditional TV marketing in recent years to focus on its core brands. After a nine-year hiatus, it has advertised its flagship Coke brand during the past five Super Bowls. It has also pitched Diet Coke during the past five Academy Awards.

PepsiCo says it will continue its Refresh Project but also plans more traditional ads to try and boost Pepsi-Cola and Diet Pepsi.It plans to promote Pepsi-Cola on "X Factor," a televised music competition created by Simon Cowell to compete against "American Idol," which Coca-Cola sponsors.

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PepsiCo also returned to the Super Bowl this year to promote Pepsi Max, a diet cola that targets males and competes against Coke Zero, another diet cola.

Increasing the stakes, Coca-Cola and PepsiCo also spent billions of dollars last year to acquire their largest independent U.S. bottlers in a bid to bring drinks to stores more quickly.

Write to Mike Esterl at mike.esterl@wsj.com

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