February 22, 2012 / 11:38 PM / 6 years ago

UPDATE 1-Coke, Dr Pepper react to Pepsi ad increase

By Martinne Geller

Feb 22 (Reuters) - Top executives from PepsiCo Inc’s two biggest competitors were unfazed Wednesday by a significant increase of North American advertising by the number two soft-drink maker.

Coca-Cola Co Chief Financial Officer Gary Fayard said he did not expect his company to increase its advertising budget as a percentage of revenue, even though Pepsi announced an increase in advertising of $500 million to $600 million this year.

“As of today, I don’t see that we’ll be adding to what we’ve already planned. We’ve got a great plan in place in the U.S. and I feel confident in our plan,” Fayard said on Wednesday at the annual Consumer Analyst Group of New York conference in Boca Raton, Florida. “I think we’re OK.”

Coca-Cola and its bottlers spent about $17 billion in direct marketing, including advertising, in 2010 and 2011, Fayard said.

“Coca-Cola’s brands have already benefited from healthy, consistent investment in recent years,” said Wells Fargo analyst Bonnie Herzog.

Also on Wednesday, at the same conference, Dr Pepper Snapple Group Inc Chief Executive Larry Young said he was “very excited” about PepsiCo’s plan to boost advertising on 12 brands including Pepsi, Mountain Dew, Gatorade, Tropicana, Quaker and Doritos.

That is because PepsiCo distributes Dr Pepper sodas in some markets, as does Coca-Cola.

“Whenever they spend, our brands go up with them,” Young said. “The tide rises and all the boats go up with it.”

PepsiCo earlier this month laid out a plan to improve its North American beverage business that included stepped-up advertising and thousands of job cuts.

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