NEW HEIGHTS IN THE COLA WARS

MICHAEL KEPP

RIO DE JANEIRO, Brazil (FNS) -- With the Brazilian economy in its most promising phase in years, consumers here are being treated to a world-class display of cola warfare, courtesy of Coke and Pepsi.

In a widely publicized case of "ambush marketing" here in early January, Pepsi-Cola flew a huge blimp decorated with its red, white and blue logo above the Coca-Cola-sponsored "Opera Mundi" multimedia event in Rio's Maracana soccer stadium.

Two weeks later the blimp appeared again, this time hovering over two Coke-sponsored Rolling Stones concerts in a Sao Paulo soccer stadium.

Nicolino Spina Neto, Pepsi's marketing director in Brazil, responded to the charge of ambush marketing, saying, "The sky is free and we can fly wherever the Brazilian Air Force said we could." That has included big cities like Rio de Janeiro and Sao Paulo in prosperous southern Brazil, which accounts for 70% of the country's consumer economy.

Since the July 1994 launch of Brazil's "plano real," the government currency stabilization plan boosted consumption on low-priced products like soft drinks, cola producers have engaged in a combative tug-of-war for these consumers.

Pepsi has only a 6.3% slice of the soft-drink market and a 10% slice of the cola market. In recent years it had invested a modest $30 million per year in marketing its product here.

But in 1995 alone, Pepsi is investing $500 million in new factories (to double output) and marketing (it brought rock singer Rod Stewart to do a free New Year's show in Rio de Janeiro) to try to triple its market share. And it's just introduced 7-Up to the market here, in competition with Brazilian lemon-flavored soft drink brands.

For its Brazilian campaign, Pepsi has teamed up with Argentine bottler Buenos Aires Embotelladora (Baesa, 26% owned by Pepsi). A similar Pepsi/Baesa joint venture in Argentina in 1990-1991 boosted Pepsi's market share in Argentina from 4% to a current 25%.

"We expect our Brazilian joint venture with Baesa to be as successful as it was in Argentina," said Spina Neto.

Archrival Coca-Cola, which has a 54% slice of the soft drink market and a 90% slice of the cola market, is not taking Pepsi's challenge sitting down. In 1994 Coke invested $140 million in new plants and marketing. It plans to match that investment in 1995.

Coke and Pepsi have traded barbs in this battle for the cola market. Spina Neto made the news when he called on Brazilians to "break up the soft drink monopoly." And a Coca-Cola external relations director in Brazil made front-page newspaper headlines after recently accusing Pepsi of trying to imitate Coke's flavor.

Recent Pepsi advertising has played off of the January inauguration of a new Brazilian president, with the slogan, "A country that is thirsty for change can't change without choice."

To that, Coca-Cola Marketing Director Mauro Multedo retorted, "Pepsi's charge that we have a soft drink monopoly was very arrogant. We have a 54% slice of the soft drink market, with 60 or 80 other much smaller producers making up the rest of the market. That's hardly a monopoly. Brazilians have had a soft drink choice and that choice is most often Coke."

Royal Crown, the third biggest U.S. cola producer, is also trying to break into the Brazilian market. With Momesso, a Sao Paulo bottler, it recently began consumer test-marketing and TV advertising in Sao Paulo.

Antarctica, Brazil's second-biggest brewery and third-largest soft drink producer (a 15.3% slice of the market), has also entered the soft drink slugfest. Though it normally invests around $100 million annually behind its soft drinks (principally Guarana Antarctica, a top-selling carbonated drink made from a caffeine-containing Amazon berry), it has allotted $170 million for 1995.

Antarctica is now consumer testing its first cola, called Pop Cola, which should be selling nationally by April. It intends to grab 10% of the cola market within six months, said Antarctica Marketing Director Paulo Pereira.

Brahma, Brazil's biggest brewery and fifth-largest soft-drink producer, is spending $30 million to consumer test a newer version of its "guarana" soft drink, to be launched in the first part of 1995, in the hopes of cutting into sales of Guarana Antarctica, the No. 1 selling guarana soft drink.