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Cola Wars Are Back On!

Americans love competition and now they're getting a high stakes battle from two of the nation's most loved brands: Coke and Pepsi.

The two cola companies are trying to stem a slip in U.S. sales -- Coke sales fell 4.4percent in the first nine months of 2008, while Pepsi sales dropped 6.6 percent in that same time period. Older consumers are drinking more bottled water and younger ones are drawn to hipper non-carbonated beverages and energy drinks.

So despite the industry-wide pullback in advertising spending, Coke and Pepsi are bucking the trend and ramping up big campaigns.

Pepsi launched a campaign called "Refresh Everything" in December, tapping into excitement about the Presidential inauguration and optimism. This month Coke is launching an "Open Happiness" campaign, with new high-profile ads during American Idol on Fox , this weekend's Super Bowl, and the Academy Awards. Coke's campaign is also optimistic and upbeat, reminding consumers that a Coke is an affordable pleasure. The campaign coincides with the launch of a new 99 cent, 16 ounce bottle.

The two campaigns tap into similar emotions and a familiar approach of appealing to the brands' history. This is probably largely because both Coke and Pepsi do serious market research to figure out what will work, and they're both trying to expand their audience. But Coke's Chief Marketing Officer in the U.S., Katie Bayne put it a bit more bluntly: she noted that Coke has bigger marketshare, and Pepsi's tapping into the kind of authenticity and optimism that's traditionally Coke's. She says they're looking to these attributes because they've worked so well over the years.

In fact, it's this very kind of insinuation and competition that builds up a Cola War that might end up benefiting both companies. High-profile bickering between the two brands draws the kind of media attention (ahem) that reminds people about this beloved rivalry and the fact that they might be craving a soda.

So the Cola War is less likely to result in one brand stealing market share from the other, and more likely to yield a bigger pie of cola drinkers.

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