Bloomberg News

PepsiCo Aims to Bring Urban Cool to Mountain Dew Image: Retail

April 17, 2012

Mountain Dew has been a bright spot for the $76 billion U.S. soft drink industry, which is locked in a seven-year decline. Photographer: Jin Lee/Bloomberg

Mountain Dew has been a bright spot for the $76 billion U.S. soft drink industry, which is locked in a seven-year decline. Photographer: Jin Lee/Bloomberg

Urban cool and Mountain Dew are two phrases that don’t usually go together. PepsiCo Inc. (PEP:US) is trying to change that.

The snack and beverage giant built the country’s best- selling non-cola soft drink on the strength of its popularity in the largely white suburbs of the Plains states and the Southeast. Now it’s working to broaden the sugary, caffeine- laced drink’s appeal to a wider, more diverse, array of young soda consumers. In a marketing push featuring hip-hop singer Lil Wayne and street skateboarder Paul Rodriguez, PepsiCo is hoping Mountain Dew will catch on in urban centers such as New York, Miami, Los Angeles and New Orleans, matching the dominance the brand enjoys in markets like Nebraska and Kentucky.

“Our biggest opportunities are in those areas with the highest concentration of consumers who probably haven’t heard the dew message as focused as we could have,” said Brett O’Brien, vice president of marketing for Mountain Dew.

Mountain Dew has been a bright spot for the $76 billion U.S. soft drink industry, which is locked in a seven-year decline. There is cause for worry, however, after the brand -- one of PepsiCo’s most important -- lost share last year to Coca- Cola Co.’s (KO:US) Sprite and Fanta. At the same time, the company’s target consumers -- young people aged 18 to 24 -- are increasingly more diverse. The trick for the world’s second- largest soda maker will be reaching these new audiences while holding on to core Mountain Dew drinkers.

‘How We Dew’

PepsiCo has its work cut out. The percentage of white, non- Hispanics younger than 24 fell to 18.6 percent of the population from 21.5 percent between 2000 and 2010, according to Census data compiled by Bloomberg. And though Caucasians represent 70 percent of soda drinkers, they represent 80 percent of Dew consumers, according to iTrack Data figures provided by PepsiCo.

The new campaign, which debuted this week, centers on the tag line, “This is How We Dew,” and features Lil Wayne narrating. “If you got anything from me, it’s to find your thing and do you,” he says over clips of concert footage and skateboarders. “We all know it’s not what you do, it’s how you do.” The anthem ad mixes in snowboarders and a country singer to keep the brand’s mainstream hooked in.

Take a look at a map of the U.S. showing Mountain Dew’s top-selling states and you’ll find a swath reaching from North Dakota east to the Virginias and south to Arkansas. In the Southeast, Dew even outsells Coca-Cola in convenience stores in Georgia, Coke’s home state. Mountain Dew accounts for 20 percent of PepsiCo’s total U.S. beverage sales.

Tennessee Moonshine

Dew’s weakest territory stretches from California along the southern border of the U.S. to Louisiana. Under-served urban centers often carry only regular Mountain Dew, O’Brien said. PepsiCo will boost spending on the brand this year as it tries to close the geography gap.

Mountain Dew was named for the moonshine liquor produced in the Appalachian stills of Tennessee. In the 1940s, brothers Ally and Barney Hartman concocted a lemony soda as a spirits mixer, trademarking the name in 1948. Early bottles featured a gun- toting hillbilly chasing a federal agent from an outhouse.

PepsiCo bought the brand in 1964. Its first TV ad used the slogan, “Ya-Hoo Mountain Dew. It’ll tickle your innards.” A barefoot, one-toothed mountain man raved, “Shore as shootin’, there’s a bang in every bottle,” as a curvy woman wearing a hair bow and Wilma Flintstone-looking dress took a sip.

‘Matter of Messaging’

The new campaign -- targeted at consumers in their teens to 20s -- brings together a diverse lineup of seven celebrities, O’Brien said. Individual TV and radio ads by each superstar will be tailored to regional markets. The point: Link Dew to stuff young people find cool.

Country singer Jason Aldean’s spot might be in heavy rotation in Nashville, for example, while Lil Wayne flashes on screens in Los Angeles and rapper Mac Miller dominates airwaves in his home state of Pennsylvania. Mexican-American pro skateboarder Paul Rodriguez -- a.k.a. P-Rod -- appeals to a street-skate set that is racially diverse, O’Brien said.

“It’s been a matter of messaging,” O’Brien said. “We haven’t really talked to this differentiated, emerging teen base as much as we have that heartland consumer.”

Lil Wayne’s collaboration with Mountain Dew marks his first ever endorsement deal with a major consumer-products company. Next month, a promotion called DEWeezy -- a cross-pollination with his nickname Weezy -- will invite consumers to help produce a 30-second TV spot.

Old School

While the campaign marks Dew’s most pointed effort yet to broaden its appeal to blacks and Hispanics, it isn’t the first attempt. Early this decade, Mountain Dew teamed up with rapper Busta Rhymes. Like Lil Wayne, Busta Rhymes had massive cross- over appeal.

PepsiCo lost share in the U.S. carbonated beverage market to Atlanta-based Coca-Cola from 2008 through 2010, according to Beverage Digest, an industry newsletter. Pepsi shares fell 1.7 percent in the 12 months before today, compared with a 6.5 percent rise for Coca-Cola. PepsiCo gained 0.6 percent to $66.40 at the close in New York, while Coca-Cola climbed 2.1 percent to $73.95.

Dew’s latest marketing will be coupled with a distribution push in urban centers like New York City. Flavors including cherry Code Red and orange Live Wire, as well as diet varieties, may be added to the lineup at gas stations and convenience stores, where 45 percent of all Mountain Dew is sold.

Mountain Dew won’t forget its roots. Just this week, PepsiCo began offering soft drinks at Matthews, North Carolina- based Family Dollar Stores Inc. (FDO:US), which previously offered only Coca-Cola. The chief selling point: Mountain Dew.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net


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Companies Mentioned

  • PEP
    (PepsiCo Inc)
    • $97.05 USD
    • -0.04
    • -0.04%
  • KO
    (Coca-Cola Co/The)
    • $42.96 USD
    • 0.02
    • 0.05%
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