Blowing Up Pepsi

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Old (left) and new: Nooyi wanted a sleek and minimalist look, "like the iPod"

Arnell was a controversial choice as one of d'Amore's key brand advisers Alan Zale/The New York Times/Redux

Cooper (left) heads all carbonated beverages; Burwick is chief marketing officer for North America David Yellen/Redux

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The demographic of people who march to the beat of their own drum, who say no even when it's unpopular, who say yes even when it's an uncomfortable change, who change a hundred-year-old brand icon because the new one is simply more beautiful and fitting for our times."

Pepsi had its manifesto. Now it needed commercials for the Super Bowl. D'Amore was unsatisfied with the ads proposed by BBDO Worldwide, PepsiCo's agency of 48 years. And he wanted a bigger agency than Arnell's to handle the work. So he showed the manifesto to Lee Clow, creative director at TBWA\Chiat\Day, which already had the Gatorade account. A few weeks later, Clow presented his team's concept. D'Amore liked it enough to propose a showdown between Chiat and BBDO. The winner would become Pepsi's main agency.

The face-off took place in November at Calloway House, an old Colonial on the PepsiCo campus. In his presentation, Clow tapped into the Obama campaign. Proposed billboards featured words like "Optimismmm." Another showed people passing a bottle of Pepsi from one generation to the next. The tagline: "Every Generation Refreshes the World." Pepsi would sell youth, as it always had, but it would implicitly assure boomers they were still cool. A few days later, BBDO had its shot. D'Amore took a few minues to decide: Chiat had the gig. BBDO chief Andrew Robertson, who turned 48 that day, recalls: "I've had better birthdays."

By Jan. 15, Americans could see in stores the results of a hectic year's worth of work. Gatorade bottles featured a giant G, which PepsiCo hopes will become as iconic as Nike's (NKE) swoosh. SoBe Lifewater's lizard mascot was now larger. And big stacks of Pepsi cans and bottles featured Arnell's new logo. The response was mixed. Consumers hated Arnell's redesigned Tropicana carton, which included a cap that looked like an orange. After receiving mounds of irate letters, Nooyi decided to cancel the repackaging. Design critics said the Pepsi logo's "smile" would be lost on the average person. But the Pepsi Super Bowl commercial made USA Today's much-watched annual Top 10 list.

D'Amore and Nooyi say PepsiCo doesn't expect to see results until the second half of this year. So far the company says there have been glimmers of hope: Its surveys show consumers have become more positively disposed toward SoBe Lifewater, Pepsi, Sierra Mist, and Mountain Dew since the rebranding. Most promising, Pepsi has gained market share against Coca-Cola in the U.S., says Beverage Digest's Sicher. But cola sales still fell in the first quarter. And despite all the new advertising, Pepsi, like Coke, is losing market share to private-label brands. D'Amore is undaunted. "Breaking new ground is always controversial," he says. "Our opportunity [is] to change the rules."

Helm is marketing editor for BusinessWeek in New York .

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