MANAGING

MARKETING
Root beer battle adds fizz to soft drinks
Coca-Cola's advertising blitz for Barq's revived consumer
interest in a relatively flat market segment

You bet Barq's has bite. It bit Richard Murray hard.

Mr. Murray is general manager of A&W Beverages of Canada Ltd. of Vancouver. For years, off and on, A&W was the top-selling root beer, he says, made famous by the A&W Root Bear who waddled to the tune of a tuba.

But last year, Barq's came along and sank its teeth into the Bear's behind with an aggressive advertising campaign that lodged the slogan "Barq's has bite" into the brains of thirsty teen-agers across Canada.

Barq's soon rocketed to No. 1 and A&W's sales went flat. Now, persuading some stores to even carry it is a struggle. "I'm still astounded that a brand as strong as A&W isn't in more demand from the retail trade," Mr. Murray says.

If getting bitten by Barq's wasn't bad enough, A&W recently got mugged by another new player in the root beer market called, appropriately enough, Mug. It is also backed by a well-orchestrated marketing campaign geared to teens. The drink's slogan: "The foam goes straight to your brain."

As A&W has discovered, getting caught in the crossfire of the two biggest soft drink makers isn't much fun. What many teens suddenly discovering root beer don't know is that Coca-Cola is the corporate goliath behind Barq's, and Pepsi-Cola is the purveyor of Mug.

Both are spending big dollars to promote their new brands, making root beer one of the most brutal side battles in the cola wars.

For A&W, the arrival of Barq's was a double-whammy. Coca-Cola Ltd. of Toronto used to distribute A&W, but it dropped the brand when it started pushing Barq's in 1997. "When they brought Barq's in, they just took A&W off the shelf and they put Barq's on the shelf," Mr. Murray says.

It happened so fast, even pop machines that had A&W on the button would dispense Barq's. A&W is now using a patchwork of distributors across the country.

Hires root beer, another brand that at times has laid claim to the No. 1 spot, is going through a similar experience. Mississauga-based Pepsi-Cola Canada Ltd. used to distribute Hires, but that ended this year when the soft drink giant introduced Mug. Now, at The Globe and Mail's pop machine, if you ask for a Hires, out pops a Mug.

Hires has since found a new distributor.

For a long time, root beer was a quiet segment of Canada's $1.8-billion soft drink industry, claiming only about 2-per-cent market share. If it weren't for Tahiti Treat, it would have gotten awfully lonely at the back of the shelf.

But with Coke and Pepsi both promoting their new brands heavily, sales of the sweet, spicy drinks are climbing fast and could easily double in the next year or two, some industry players predict. "As a segment, it's probably the fastest growing," says Tracy Atkinson, brand manager for Barq's, Sprite and Cherry Coke at Coca-Cola Ltd.

Barq's sales took off from the moment the first commercial appeared in Canada last fall, she says. The quirky ad, aimed at male teens, features a street vendor who wiggles his tongue and pours a Barq's for a short guy named Johnny who repeatedly asks: "What do you mean, Barq's has bite?"

Why was the commercial such a hit? For one thing, it created an enormous amount of curiosity among its target audience, who went out and bought the drink to answer Johnny's question for themselves. The alliterative slogan is also effective because it reinforces the brand name.

"Overnight, the awareness, the trial and the sales were there. It's one of those great stories that we're trying to replicate on all our brands, to really find advertising that breaks through the clutter," Ms. Atkinson says.

Some young consumers don't even realize how effective the ads are. "I didn't buy it because of the commercials," says Tyrone, 21, walking down Yonge Street in Toronto. So how does it taste, then? "It's okay, I guess."

Barq's is new to Canada, but the beverage has been available in the U.S. market since 1898, when Edward C. Barq sold his first bottle in Biloxi, Miss. Barq's Inc. later moved to New Orleans (where the Johnny spot was filmed, incidentally), and in 1995, it was acquired by Coca-Cola Co. of Atlanta.

With Mug, Purchase, N.Y.-based PepsiCo Inc. is trying hard to capitalize on Barq's success and capture some of root beer's new-found popularity. It has also been hitting the airwaves with a commercial aimed at young males, which shows a kid gulping a Mug while he turns off and on the power to an entire city.

Like Barq's, product sampling is a big part of the Mug marketing push. This summer, Pepsi has 18 teams known as "foamers" on the road across Canada in refurbished Volkswagen Beetles handing out free samples of the root beer.

At these events, kids with nothing better to do are encouraged to play Twister and other retro games in a pit of artificial foam. Mug also has extensive promotions on radio and Pepsi is giving away five Beetles as prizes.

"We don't launch soft drinks every year so it's pretty major for us," says Stacey Mowbray, vice-president of marketing with Pepsi-Cola Canada Beverages.

While she won't disclose how Mug's sales rank, she claims the product is building market share faster than Barq's. Ask the people at Coke, however, and they will tell you Barq's is the fastest-growing brand.

As Coke and Pepsi slug it out, Mr. Murray at A&W is busy just trying to get more retailers to carry his root beer. When the product started disappearing from shelves, he says many A&W lovers complained, but stores were too busy loading up on Barq's to listen to their pleas.

Is he sore? "I've had a year to get over it, I guess."

BARQ'S BITE

U.S. soft drinks by market share:
1. Coca-Cola Classic, 20.7 per cent
2. Pepsi-Cola, 14.9 per cent
3. Diet Coke, 8.5 per cent
4. Mountain Dew, 6.3 per cent
5. Sprite, 6.2 per cent
6. Dr. Pepper, 5.8 per cent
7. Diet Pepsi, 5.1 per cent
8. 7 Up, 2.2 per cent
9. Caffeine Free Diet Coke, 1.8 per cent
10. Barq's (including diet and cream soda), 1.1 per cent
(Source: Beverage World, March, 1998; Canadian figures unavailable)

ROOTS OF ROOT BEER

-Native Americans in Florida introduced an early version of the beverage, a root tea, to Spanish explorers.
-Commercial root beer was first produced in 1876, by Charles Hires, a Philadelphia pharmacist. It contained a small amount of alcohol.
-In 1960, the U.S. Food and Drug Administration, citing cancer risks, banned the use of a major ingredient, safrole, an oil found in sassafras root bark.
-Root beer flavourings today cover a wide spectrum and include wintergreen, vanilla, cinnamon, lemon oil and cloves.