Pepsi beats rival in battle to win hearts and minds

It's been a triumphant week for Pepsi in its never-ending war of attrition against its soft-drink rival Coca Cola, or so the company would like the world to think. On Monday Pepsi took over the in-flight contract with United Airlines, the largest domestic carrier in the United States. On Thursday, it wrested away the rights to all National Football League games for the next decade – ending Coca Cola's 22-year reign as the League's official sponsor.

As the world economy hits the doldrums, the two eternal rivals are fighting against the downturn in the only way they know how – by lurching for each other's throats. Curiously, this is not a battle fought over units sold or product lines bought and integrated into each of their fearsome line-ups of soft drinks, sodas and snack foods. In fact, sales at both companies are remarkably buoyant given the tough climate, and each expects a growth rate of about 5 per cent over the course of this year.

The real battle is one of hearts and minds. Branding is the name of the game, not shifting product as such, which perhaps explains why Coca Cola is prepared to lavish tens of millions of dollars associating itself with the Harry Potter movies, even though they represent zero return on their investment, or why Pepsi is equally adamant about associating itself with Britney Spears and her sparkling white teeth.

When it comes to David Beckham, the England football team's captain, the companies are fighting like lions ripping flesh from a dead antelope. Beckham has a personal deal with Pepsi and is expected to spearhead an advertising campaign to tie in with the World Cup, but the England team is affiliated with Coca Cola, so he will be in their publicity materials too.To put it mildly, Posh Spice has some competition for his attention.

The NFL deal is a good illustration of how insane the money, and the hunt for image, has become. Pepsi will pay an estimated $160m (£112m) over the next five years for the right to sell its products – not just soda, but Frito Lay crisps and Tropicana orange juice as well – at big league games. Coca Cola had the opportunity to match that bid, but decided that the large spike in price – nobody is quite sure exactly how much more – wasn't worth it. After all, Coke still has the contract with about 20 of the league's 32 teams, so it will hardly become invisible at the weekly bone-crunching sessions otherwise known as American football.

Yesterday, both companies were furiously spinning the deal their way. Pepsi triumphantly announced that it would, ineffect, be throwing a huge corporate party at every football game. Coca Cola, meanwhile, wheeled out analysts' reports saying it had made the smarter financial move. "Coke probably got the better deal here," Bill Chipps, a prominent sponsorship analyst, told Coke's hometown newspaper, The Atlanta Journal-Constitution. "For the most part, consumers don't have any affiliation with the NFL, per se. You're a fan of your local team."

Behind the hype is an interesting change of direction for both companies. Sales of their prime product, fizzy sugar-water, are looking sluggish, in part because of greater health consciousness and bad publicity over links between sodas and America's obesity epidemic. In response, both Coca Cola and Pepsi have gone on a buying spree in recent years to acquire lines of juices, healthy snacks and – the latest fad – bottled water.

The commercial wars remain as intense now as they were 20 years ago, and have sucked in a new player, the British conglomerate Cadbury Schweppes, the third-biggest player in the US market. Recently, Cadbury Schweppes filed suit against Pepsi alleging uncompetitive practices in negotiating a contract with the Pizza Hut chain. Pepsi sought to persuade Pizza Hut to drop Seven Up, owned by the British company, in favour of its own lemon-lime drink, Sierra Mist.