What you need to know:

• Pepsi and Coke are reviewing local media operations.
• Pepsi will run a completely local pitch, handled internally under the direction of new ANZ marketing lead Vandita Pandey.
• The future of Coca-Cola's $20m South Pacific account is uncertain as the company prioritises "a scalable marketing infrastructure".
• Data, ecommerce and automation are priorities.

Refresh everything?

Coca-Cola and Pepsi are reviewing their local media relationships, kicking off a new wave of cola wars in Australia as agencies battle over two of the world's most recognisable brands.

A Pepsi spokesperson confirmed to Mi3 the account is in play: “We are currently in the process of reviewing our media agency. Once complete we will make an announcement.”

The review, initially understood to be handled by a third-party consultancy, has since gone in-house under the direction of new Pepsi ANZ marketing boss Vandita Pandey.

Pandey, a marketer from PepsiCo's Frito-Lay in the United States, joined the business in December last year. PHD Australia currently holds the Pepsi Co ANZ account.

Meanwhile, Coca-Cola is also reviewing agency relationships, with its global review across creative and media called last November now understood to have a direct impact locally.

Australia’s $20m media account, Coca-Cola South Pacific, operates outside of a global remit and is currently managed by UM.

Industry insiders told Mi3 that other agencies have been approached about the account, which could remain a standalone unit, but may yet be folded into a global agency model.

Coca-Cola denied that there was a specific local pitch in the works. UM was approached for comment.

"As announced last year, The Coca-Cola Company is undertaking a full review of our media and creative planning and buying practices, as well as our media and creative agency appointments around the world. We expect this process will be completed by the end of 2021. There is no separate pitch underway for the Australian media account," A spokesperson for Coca-Cola told Mi3.

One anonymous source told Mi3 there was a level of confusion around the future of the account, stating that agencies in discussions with Coke about the Australian market are likely doing so in relation to how it would fit into a “global network model”.

The comments are in-line with a leaked memo from Coke’s Global CMO Manuel Arroyo, who said a network model would pare back the number of standalone local market operations.

Arroyo said effectiveness, rather than cost-saving, was a primary objective of the ongoing review, expected to be completed by the end of the year.

Digital, automation

Both brands are also ramping up their respective data and tech capabilities.

Arroyo in his internal memo stated that "reliance on highly localised agency models" limited the scope of understanding the brand had over its data, measurement, strategies and technology.

"[It's] critical to creating and managing a scalable marketing infrastructure that serves all stakeholders, including our consumers," he wrote.

Pepsi Co finds itself in the same boat, with industry insiders telling Mi3 a major focus is to improve Pepsi's current data capabilities, both internally and with its agency partner.

In 2020, the global business began digitising its marketing and consumer insights strategies. Global CFO Hugh F. Johnston said enhancing internal data and insights capabilities would improve efficiency around promotions and marketing.

This included further investment into in-house automation, with the intention of "deploying higher ROI marketing programs".

After a difficult year for drinks brands, both are also aiming to drive ecommerce.

In Q4 2020, Coca-Cola reported a 6% decline in operating income for APAC, driven by pressure in away-from-home channels (bars, pubs, sporting grounds and other non-supermarket environments). Australia was one of the underperforming regions.

To increase ecommerce sales, Coca-Cola has prioritised packaging options for online sales while increasing investment in digital imagery and in-app visibility with online grocers and has piloted digitally-enabled fulfilment models.

Given the change in consumer habits globally, Coca-Coca Chief Customer and Commercial Officer Elaine Bowers-Coventry, said last August that ecommerce is "no longer an alt channel.”

"We want to provide a digital shopping experience that, at minimum, mirrors the physical shopping experience and converts browsers to buyers,” Bowers Coventry said.

“We’re applying the same commercial and shopper discipline to the digital path to purchase.”

However, Pepsi's results for the same period showed an increase of 7% in operating profit, primarily reflecting productivity savings - but the firm said cost cutting did not apply to marketing and advertising investment, which had increased.

As part of its digital strategy, Pepsi Co in the US launched two direct-to-consumer websites, PantryShop.com and Snacks.com. Both were developed from concept to execution in less than 30 days. 

Pepsi Co's ecommerce revenue last year exceeded $2bn. The firm's next financials, due next month, should indicate whether its strategy continues to pay off.