PepsiCo, AB InBev Teaming Up In-Store

Published in CSP Daily News

Joint marketing program fueling acquisition speculation

PURCHASE, N.Y. -- PepsiCo and Anheuser-Busch InBev will team up on joint promotions and in-store marketing that will for the first time offer Bud Light and Pepsi together, reported Advertising Age. The promotions, which will get heavy play leading up to the Super Bowl, come after the two companies had previously touted snacks such as Doritos alongside beer brands.

"The promotions between PepsiCo and Anheuser-Busch offer convenience and value to consumers during a variety of occasions. Since we are both official National Football League sponsors, we are in a unique position to kick off the year by helping our consumers celebrate Super Bowl XLVII with brands like Pepsi, Doritos, Budweiser and Bud Light," said the companies in a joint statement obtained by Ad Age. "This is a continuation of the longstanding relationship our companies have had in several areas of our business."

"We've worked well together as official [NFL] sponsors," Paul Chibe, AB InBev's vice president for U.S. marketing, told the publication. This year's effort is "just building upon the success of our work together last year."

He said the partnership would not yet extend to other channels, such as digital or in-game promotions.

One image of an in-store sign shows two bags of Doritos, two bottles of Pepsi and two bottles of Bud Light, along with the Super Bowl logo. The caption reads: "Super Bowl. Super Team. Super Party."

The partnership takes PepsiCo's Power of One efforts a step further. In the last year, it has stepped up efforts in that area, with a summer campaign promoting Mountain Dew alongside Doritos and Lay's with Pepsi.

In an internal memo sent by AB InBev to distributors that was obtained by Ad Age, the brewer refers to the program as a "National Big Bet." The memo also shows a "save up to $8" coupon next to images of Bud Light, Doritos and Pepsi (with a mail-in rebate). "We have always worked with cross-merchandising partners in the past, but for 2013...all three [brands--Doritos, Pepsi and Bud Light] are trying to work together to have flawless execution at retail," an AB InBev distributor told the publication. He said the arrangement requires coordination between three sales and delivery teams.

"In-store marketing and merchandising is getting more and more important, and having these three brands on the same displays could potentially be very powerful," John Sicher of Beverage Digest, which first reported the news. "Based upon what I've heard from Pepsi bottlers, they believe this could have strong competitive potential."

Andrew Lazar, an analyst with Barclays, in a research note cited by the publication, said, "In our view, the packaging of soft drinks, snacks and beer around a large event makes a great deal of sense, particularly in these channels, and this may be an indication of more to come down the road. While execution of a cross-company marketing and promotional agreement certainly brings its own challenges, this plan basically brings together three formidable go-to-market systems with the potential to unleash substantial value for the organizations."

"The news will certainly fuel speculation that ultimately [AB InBev] might acquire PepsiCo's beverage business," wrote Bill Pecoriello, CEO of ConsumerEdge Research, in a report cited by Ad Age; however, Pecoriello says for now a deal seems unlikely, given AB InBev is about to close a deal to acquire Grupo Modelo and PepsiCo is still trying to turn around its beverage business.