Two wrestlers are about to shake hands at the beginning of a match, when one (dressed in red leather and rubber) headbutts the other instead of shaking hands.
The victim falls backward, and instead of seeing the usual stars he sees an attractive fairy who lures him (inexplicably) into a soft drink taste test. Attracted to the beautiful fairy, he obliges her test and chooses Pepsi (or course).
She then flies in close and the wrestler thinks he's going to get to kiss her. Puckered up, the fairy turns into his opponent, who is also puckered up. Their lips almost touch but, as he comes out of his dream, he sees the masked man, who he then violently head-butts in revenge.
There are several reads on this ad, the most compelling would be the subverted desires the interaction seems to imply. Because of the blurry line between reality and dream, it is not clear if the masked wrestler is actually interested in a kiss or if the other has simply imagined it, along with the fairy.
Viewed more simply, a near male-male kiss was reversed with a violent action. It was not well-recieved by some in the gay community.
Complaints from Victoria's gay community resulted in an investigation by the country’s Advertising Standards Bureau. The ASB asked for a copy of the ad and Pepsi's comments, but no action was taken. Michael Barnett, who registered the complaint, told the Melbourne Star
the commercial "conveys a somewhat unsubtle message that it's okay to be violent if a guy tries to kiss you if you're male. The message it is giving is none too subtle and reinforces homophobic attitudes."
Darren Borg, marketing director of Pepsi Australia, defends the ad as “less gender-specific and not about that at all – it’s a competition between two wrestlers.” Borg notes that independent local bottlers in Australia have been supportive of the gay community as sponsors of gay events -- but not corporate Pepsi, and the commercial in question continued to run.
On the other side of the planet, Pepsi Canada ran an ad in late 2001 where a stereotypically gay looking man proclaimed that he was "bisexual" -- he likes both Pepsi and Diet Pepsi. Months later in 2002, Pepsi became the first soft drink anywhere to target the gay market, by sponsoring a program on Canada's PrideVision, the first 24-hour gay network in the world.