Pepsi is Refreshing. Coke

Isn't this interesting: Coca-Cola reported strong sales growth in the fourth quarter, including market share gains in North America that appear to have been taken right out of Pepsi's hide.

Despite a long-term decline in soda consumption, Coke has seen growth for three straight quarters, a phenomenon CEO Muhtar Kent attributes to a growing number of younger consumers and "aggressive marketing." Kent said, "We've continued to invest in our brands in this economic environment, and our brands have gotten stronger." The company is even bullish enough to be planning price increases that will partially offset rising commodity costs.

And what of Coke's biggest rival, Pepsi? It's been occupied with the Pepsi Refresh Project, an ambitious effort to give away $20 million to deserving organizations that offer "refreshing ideas that change the world." While the company has been busy doing good, sales declined nearly ten percent in the first nine months of 2010.

What's going on here?

Pepsi says the Refresh Project is meant to reflect the "optimistic and fun" spirit of Pepsi-Cola and that "the whole notion of allowing consumers to have a voice is really the wave of the future." PepsiCo CEO Indra K. Nooyi said,"It's a matter of, 'What does this brand stand for in terms of doing something positive in the world.'"

Hmmm. Sounds to me like Pepsi has a guilty conscience and is offering an odd form of charitable penance as an apology for dealing sugar and caffeine.

To be fair, the Refresh Project has made an impact. PepsiCo's CMO Jill Beraudsaysit has generated some 76 million votes for more than 12,000 submissions, and that it is recognized by fully one third of consumers. Beyond that, Pepsi has generated millions of dollars of publicity value from the program and has made a real difference for a number of charitable organizations.

That's all good. But it begs the question of what business Pepsi is in, offering yet another example of the "loss of focus" principle at work. And it only deepens the mystery as to why the program hasn't refreshed Pepsi's sales and market share.

Branding is, as a rule, as much about tomorrow as it is today, and Beraud emphasized "We always expected that sales would come over the long term." But when a company makes this big of a splash, it ought to reap some financial rewards after a year of effort. Oddly enough, some reports suggest that many Refresh Project grants have gone to organizations and individuals who aren't soda drinkers (and may even be anti-soda). Sounds like a classic case of hitting the wrong target.

PepsiCo provides jobs for nearly 300,000 families and stewards the resources of more than 50 million shareholders. If I was one of them, I'd be all for the company leveraging its resources to do good in the world. But I think I would suggest that the way to accomplish that is by first doing well.
Steve McKee is president of McKee Wallwork Cleveland and author of When Growth Stalls: How It Happens, Why You're Stuck, and What to Do About It . Find him on Twitter and LinkedIn .