Obama: the Pepsi candidate.

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Aug. 21 2008 6:56 AM

Obama: the Pepsi Candidate

The Democratic presidential nominee and the soft drink have strong affinities.

Pepsi Logo (R), Obama Campaign Logo (L)

It is oddly fitting that the convention that will give Barack Obama the Democratic nomination for president will take place in Denver's Pepsi Center. During the primaries, some bloggers argued that Obama's insurgent campaign made him Pepsi to Hillary's establishment Coke. An eagle-eyed observer (who happens to work for Pepsi's P.R. firm) noticed that during the primary debates, Obama could be seen refreshing himself with Aquafina water—a Pepsi brand—while Hillary Clinton drank Coke's Dasani. In addition, Wonkette and others have noted that the round "Obama '08" logo is similar to the red and blue yin-yang-like symbol that Pepsi-Cola has used since 1991.

Of course, the connection between Obama and Pepsi is largely accidental. In early 2006, when Denver began lobbying the Democratic National Committee to host the convention, very few would have predicted that Obama would be the nominee. And PepsiCo Inc., the $40-billion-a-year food conglomerate headquartered in Purchase, N.Y., does not manage Denver's Pepsi Center; it bought the arena's naming rights for 20 years in 1999.

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But while the connection may be arbitrary, the Obama-Pepsi affinity is strong. Last month, when Obama assembled a team of financial heavyweights for a summit to discuss economic issues, one of the most prominent corporate leaders in attendance was Indra Nooyi, the Pepsi CEO whose Indian heritage makes her, like Obama, one of the few nonwhites to reach the highest levels of power in her profession. Although Nooyi hasn't endorsed Obama—few CEOs make explicit endorsements—it's hard to imagine that she doesn't support him; she and her husband gave $27,000 to John Kerry's campaign in 2004. (A spokeswoman says that no comparable appearance with John McCain has been scheduled, though she's not aware of any Nooyi donation to Obama.) According to the database operated by the Center for Responsive Politics, Pepsi employees have given $39,700 to Obama's campaign, compared with a meager $6,000 from Coca-Cola employees.

Perhaps more significant, the prevailing theme of Obama's campaign meshes well with Pepsi's corporate messaging. Pepsi's marketing has for decades tried to exude youthful energy, from the early '60s attempts to adopt baby boomers as the "Pepsi generation" to the '90s fantasy commercials depicting Pepsi as a veritable soda fountain of youth, transforming nursing-home residents into skateboarders. Pepsi's advertising slogan not too long ago was "The Choice of a New Generation," which could almost be Obama's. Certainly his strategy in the general election, as it did in the primaries, will rely on youth support that is almost as fanatical and fantastic as the fictional version in Pepsi's ads.

Actually, Pepsi's appeal to the young has a corporate rationale and goes back to the beginning of its modern history. (After a bankruptcy, the company was reborn in the 1930s.) In order to build market share against the incumbent Coca-Cola and smaller rivals, Pepsi offered 12 ounces of cola for a nickel—6-ounce bottles were the standard at the time—and held fast to the 5-cent price for several years even as rising sugar prices during and after World War II compelled others to go to 6 cents and more. (This was the origin of Pepsi's renowned jingle: "Pepsi-Cola hits the spot/ Twelve full ounces, that's a lot.") As a result, Pepsi's customer base skewed very young.

It also skewed black, which is the source of Pepsi's unusually close relationship with the African-American community. Beginning in 1940, Pepsi was almost alone in the corporate world in hiring African-American salesmen and in specifically targeting the African-American consumer, about whom there was very little reliable data. This was a risky strategy, as any company seen as overtly trying to appeal to blacks could well have found itself boycotted by Southern whites.

And indeed, Pepsi's strategy created friction internally. According to Stephanie Capparell's 2007 book, The Real Pepsi Challenge, even Pepsi President Walter Mack—who was responsible for hiring the African-American sales team—seemed conflicted about it. At a 1949 company event at New York's Waldorf-Astoria Hotel, he told the crowd: "[W]e're going to have to develop a way whereby [Pepsi] will no longer be known as a nigger drink," causing at least one African-American salesman to walk out of the meeting. Nevertheless, the company continued to foster a strong relationship with African-Americans in its marketing and in its employment practices.

Pepsi's political and marketing agenda these days is much more complex. In recent years, Pepsico and others in the food and beverage industry have tried to persuade Congress to pass a "uniformity for food" law, whose main effect would be to nullify tough California labeling regulations, which forced Pepsi to stop printing soda labels in Mexico that contain lead. Pepsi also pays close attention to anti-obesity regulations—in addition to "sugar water," as Steve Jobs memorably described it to John Sculley, then president of Pepsi, it also sells potato chips and Cheetos—and keeps tabs on local prohibitions against bottled water. And one of the company's most high-profile executives is General Counsel Larry D. Thompson, who was deputy attorney general in the Bush administration and is co-chair of the lawyers' steering group for McCain.

As for Obama, for all of Pepsi's positive associations with youth and African-Americans, there are nonetheless disadvantages to being a Pepsi candidate. The soda is a perpetual runner-up, like Avis or Burger King. Moreover, Pepsi does not lose out to Coke because its product is inferior. For decades, participants in blind taste tests—the "Pepsi Challenge"—have preferred Pepsi's sweeter, citrusy, slightly less-carbonated flavor. Yet consumers consistently choose Coke in larger numbers, an anomaly usually attributed to Coke's marketing and packaging. But another theory, argued by Malcolm Gladwell in Blink, is that Pepsi's sweetness appeals more in a sip than over the course of a whole can.

For a candidate who earlier this year lost several primaries in states where opinion polls showed him ahead, that is a worrisome analogy. And perhaps that's why, on the day Obama is scheduled to make his acceptance speech, he's moved the proceedings out of the Pepsi Center and into Invesco's Mile High Stadium. Accepting the nomination in a football stadium named after a wealth management firm ... now that's the choice of a new generation.