Pepsi Accuses Coke of Deceptive Advertising

Pepsi Accuses Coke of Deceptive Advertising

by Beverly Rice, December 2009

Yankees versus Red Sox. North versus South. 50 Cent versus Ja Rule. But when big bucks and market share are at stake, few rivalries can compete with the fierce competition between soft drink titans Pepsi and Coke. This time the dust up is about the carbonated rivals' sports drinks - PepsiCo's Gatorade versus Coca-Cola's Powerade Option. PepsiCo has filed a lawsuit accusing Coca-Cola of false advertising in its sports drink ad campaign for Powerade Option.

The TV Commercial at Issue

Pepsi's suit centers on a Powerade commercial with two Amish farmers racing horse-drawn carts. The farmer with 10 bales of hay on his cart easily defeats his opponent who's hauling 50 bales. The ad's narrator announces, "Ten is less than fifty," in reference to Powerade Option's 10-calorie serving versus Gatorade's 50 calories.

However, Gatorade feels the ad implies Powerade Option not only has less calories but can also provide more energy, a claim Coke cannot substantiate. While Powerade Option does contain less calories, the drink cannot refuel athletes in the same manner as Gatorade.

Coke clearly felt the claim had some merit and pulled in their reins. In fact, the company agreed to modify its ad campaign. The revised ad will make it clear that Powerade Option has fewer calories and less carbohydrate energy than Gatorade.

Deceptive Advertising in the Marketplace

Deceptive ad lawsuits are hardly new in the advertising world. Companies usually take their disputes to the National Advertising Division (NAD) of the Better Business Bureau. Just last year Gatorade brought its complaints before NAD when Coke's ad campaign touted Powerade Option's 80 percent fewer calories without mentioning the major differences between the two drinks. The NAD, fueled by Gatorade's indignation, ruled Coke must inform consumers that Powerade Option does not provide the energy refueling benefits of Gatorade.

The lesson didn't seem to stick as Coke's marketing folks launched this year's campaign. However, high stakes in the beverage world make competitors desperate to distinguish themselves. Demand for soft drinks is sluggish, and there's only so much one can dress up bottled water. Gatorade rules the sport drink roost with an 80 percent market share, providing parent PepsiCo with a nice profit boost. That leaves Coca-Cola pulling out all the stops to gain an edge in the sports drinks arena.

In the End

Perhaps the brouhaha will work out for both parties. Gatorade gets the nod for those wanting an energy enhancer, while Powerade Option can tout its low-calorie benefit to the waistline watching crowd. No matter what, with high rewards for sports beverages, odds are we haven't seen the last cart race for profit dominance between Pepsi and Coke.