Will PepsiCo squeeze Tropicana to death?
The story of the Tropicana Pure Premium brand is a classic tale of innovation addressing latent consumer needs. In 1954 an enterprising citr...20 Feb 2012 4590 Views
The story of the Tropicana Pure Premium brand is a classic tale of innovation addressing latent consumer needs. In 1954 an enterprising citrus grower named Anthony Rossi invented flash pasteurization to preserve the taste of his fresh-squeezed Florida orange juice. He believed this would please consumers. It did. In 1978 Rossi sold Tropicana to Beatrice Foods for $500 million. Fast forward to February 2012. Today the brand is owned by PepsiCo under the auspices of Massimo D’Amore, PepsiCo’s Global Beverages Chief.
If you haven’t read Bloomberg’s interview with Mr. D’Amore, I recommend it. “PepsiCo Adds Water to Tropicana Products to Juice Margin” is one of the most elegant lessons in unbranding you’ll read this year. Mr. D’Amore was defending his stance that some consumers prefer diluted orange juice and are willing to pay the same or more for it.
In fairness to PepsiCo and Tropicana, it should be noted that the Bloomberg headline is misleading. Mike Torres from PepsiCo assured me that Tropicana Pure Premium never has and never will add water. “Our flagship brand Tropicana Pure Premium has always been and will continue to be 100% OJ with no added water or sugar. Unfortunately, recent media reports are inaccurate and creating confusion.” Evidently quotes in the article refereing to dilution were in reference to other products not Tropican Pure Premium (read PepsiCo’s reaction to the article here). That’s good news.
But my point is not so much about Tropicana the juice as it about Tropicana the brand. While I am pleased to know that there are no plans to change the juice, the Bloomberg article reminds me of how quickly a few errant words in the press can start to unravel years of brand loyalty. As a Tropicana consumer, here’s what I heard when I read Mr. D’Amore’s words:
1. “Our customers are chumps.”
In the article Mr. D’Amore discusses why PepsiCo is exploring alternatived to the 100% juice category. While I can respect the validity of Mr. D’Amore’s business insight, I find his wording unfortunate: “They themselves add water before drinking OJ,” D’Amore said. “So why not add the water ourselves and charge for it?” Convenience fee or not, I think most consumers cringe at the idea of paying PepsiCo more for a diluted product.
2. “We’re only in it for the money.”
Don’t let all those warm and fuzzy TV spots fool you. That just marketing make believe. Truth is, “We have lost perspective here on the primary reason we are in business, which is to make money,” says Mr. D’Amore defending his strategy not to compete with Coke in the 100% juice category but instead to focus on Tropicana products with less juice content and therefore higher margins.
3. “Tropicana is no different than any other juice.”
According to the Bloomberg article, Mr. D’Amore said he wouldn’t be duped into engaging Coca-Cola over a battle for “100% OJs that are all essentially the same. ‘This is not a product where there’s a lot of added value in the process’ “ I was amazed at how quickly a product with 58 years of skillful brand differentiation behind it could be commoditized in an instant.
The same article also mentioned that Mr. D’Amore will be retiring this year. And not a moment too soon for this juice-lover. If you recall it was also under Mr. D’Amore’s watch that Pepsi experienced its own New Coke moment in 2009 with the Tropicana rebrand fiasco. In that exercise every recognizable trace of humanity was stripped from the iconic premium brand to the point where it was indistinguishable from a generic store brand. Seven weeks later PepsiCo did an about face after losing market share to Coca-Cola’s Minute Maid and Simply Orange brands.
In 2010 Mr. D’Amore was up to more of his shenanigans when he reduced the size of its traditional 64oz carton to 59oz in the USA and maintain the same price level quietly imposing a 7.8% price increase on Tropicana fans.
I am a Tropicana fan. I think the brand needs to be treated by its handlers with the same care and respect its loyal customers have for it. We all love straight talk, but Mr. D’Amore’s crass comments shattered a brand illusion that I was quite happy with. Are companies out to make money? Sure. But I liked believing that Tropicana was out to make the best-tasting, freshest juice ever. I liked believing that they, like Anthony Rossi, had faith that if they succeeded in that endeavor the money would follow. It seems like Mr. D’Amore has been searching for shortcuts to this basic formula and in the process has diluted one of the most successful brands in history.
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NOTE: I received a phone call (and two tweets) from PepsiCo within hours of this post going live today. Kudos to the Tropicana team for their monitoring vigilance and to Mike Torres for the way he handled the call.
Mike Torres explained his view that the Bloomberg article was prone to misinterpretation on two counts. First many readers inferred from the article that Tropicana Pure Premium was going to change. He explained that is not the case. Pure Premium will always be 100% juice. Second he expressed his view that the story did not accurately reflect the character of Mr. D’Amore’s sentiments towards the brand.
In the sake of fair balance I added the third paragraph above to the original post. I also deleted one paragraph that addressed the Bloomberg inference to diluting Pure Premium since it was inaccurate. Having said that, this post is not so much about diluting juice as it about how a few statements in the press can quickly unravel years of exceptional brand building.
Thanks for the great article, Sean! As a long-time Tropicana consumer (and long-time ad pro) I’m appalled by D’Amore’s lack of tact and class. Of course businesses are in the business of making money, but the GREAT ones do so by doing right by their customers first, which is how they build loyalty and become great–and profitable in the first place!
(Can you imagine Steve Jobs, Walt Disney, Sam Walton, Bill Gates or even Ray Kroc making those comments?)