Pepsi faced the boycott after it dumped the rapper Ludacris as a spokesman in summer, after conservative commentator Bill O'Reilly said that Pepsi was immoral for using Ludacris, a star whose lyrics are often profane and misogynistic.
The company was accused of hypocrisy when it featured Ozzy Osbourne in an advertisement that debuted during January's Super Bowl in the US. Osbourne is famous for his colourful language -- one of the criticisms that had been levelled at Ludacris before he was dumped.
The boycott threat was lead by Russell Simmons, the hip-hop mogul and founder of Def Jam, the label to which Ludacris is signed. He led the calls for a boycott through a charity he co-founded called the Hip-Hop Summit Action Network.
Pepsi has now agreed to distribute millions of dollars to grass-roots, non-profit organisations in the US, with the assistance of the Ludacris Foundation, another charity. However, Pepsi has refused to reinstate the Ludacris advertising campaign.
Pepsi spokesman Bart Casabona said in a statement: "We've come to an agreement where the common ground is young people. We're working together on a multiyear, multicity effort that will encourage kids to express their creativity in the visual and performing arts."
Assuming that the accusations of hypocrisy do not stick, Pepsi will have got off quite lightly with the multimillion-dollar payout. No doubt the company will be ever more wary of signing up celebrities, having had embarrassing press coverage over its associations with other celebrities.
These include Madonna, whose 'Like A Prayer' ad ran foul of conservative religious groups in the late 1980s, and Britney Spears, who was photographed drinking a rival cola beverage despite being paid millions to promote the "Joy of Pepsi".
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