Over the weekend, the first three Pepsi Zone lounges opened around the country. At three shopping centers owned by General Growth Properties (NYSE:GGP) in California, Illinois, and Florida, the in-mall venues will seek to impress young soda sippers into becoming lifelong clients of PepsiCo's (NYSE:PEP) sweetened beverages.
Featuring Microsoft (NASDAQ:MSFT) Xbox consoles, videos, and cozy seating areas, Pepsi Zone's plan is ambitious, but it certainly isn't original. Two years ago, rival Coca-Cola (NYSE:KO) hoped to win over the mall rats by opening a pair of Red Lounge hubs not too far from where two of the three Pepsi Zones have decided to set up camp.
Coke has been slow to expand the concept, though it did open up a lounge in Singapore earlier this year.
The hangouts are free to the public. Guests can purchase beverages from state-of-the-art vending machines, but that's not the real driver here. Pepsi and Coke are simply trying to reach out to folks who are too busy playing video games or zipping past soft-drink ads on their TiVo (NASDAQ:TIVO) boxes to notice the soft drink industry's more conventional marketing approach.
But does any of it matter? Because venues such as restaurants, movie theaters, and amusement parks tend to have ties to just one of the two beverage giants, most soda drinkers have grown up as brand-agnostic. Even in the democratic platform at the corner grocery store, where consumers have a choice, it often boils down to which brand is discounting the deepest.
Still, selling syrup concentrate to bottlers is a high-margin business, and Coke and Pepsi can afford to pump money into brand ambassadorship if it means that the company's name will be seen in a favorable light.
So is product placement giving way to kiosk placement? No way. The companies will still find clever ways to wedge their presence into televised content. However, they at least know that they own their captive audience in these lounges. The kids belong to them -- at least until they find out about the sale at Aeropostale (NYSE:ARO) three shops over.
Coca-Cola has beaten the market since being recommended in the January issue of Philip Durell's Inside Value newsletter service.
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Longtime Fool contributor Rick Munarriz grew up a Pepsi kid, but his Coca-Cola wife changed his soda-swigging ways -- until his sons took a liking to Pepsi. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
