Pepsi and Coke Settle Over Powerade Affair

23/03/06 PepsiCo Inc. has reached an agreement on Wednesday with Coca-Cola Co. to settle a lawsuit that accused Coke of false advertising in a new campaign for its Powerade Option sports drink, the two companies said.

PepsiCo's Stokely-Van Camp Inc. subsidiary, which owns the rival Gatorade sports drink brand, had filed the lawsuit on Monday in U.S. District Court in Chicago.

Pepsi had charged a legal suit for false advertising and requested the court to ask Coke to stop airing two advertisements for a low-calorie sports drink, Powerade Option, which was introduced to the market last year. Coke consented to drop one of its television commercials and make some modifications to the other.

The ads, in the suit, emphasized that Gatorade, which dominates the category with nearly 80% market share in the U.S., has 50 calories per 8-ounce serving while Powerade Option has 10 calories in every 8 ounces. In the suit, Pepsi said that Coke makes the false claim that Powerade Option is superior to Gatorade, in that it provides a performance advantage while containing fewer calories.

Coke noted that its advertising would continue with its main theme that Powerade Option has fewer calories than Pepsi's Gatorade. However, the company agreed to modify the ad and be clearer that Powerade Option has both fewer calories and less carbohydrate energy than Gatorade.