PepsiCo, a prominent beverage company, will introduce their newest product, Pepsi Next, in the summer of 2011. This innovative soft drink aims to cater to the declining popularity of colas by offering a unique blend of high-fructose corn syrup and artificial sweeteners. According to Beverage Digest, PepsiCo plans to release Pepsi Next with only 60 calories per can. The anticipated launch date is scheduled for either July or August.
The role of Pepsi Next within Pepsi’s soda lineup needs to be established, given their three previous attempts at success. Although PepsiCo has not made any comments, John Sicher, editor and publisher of Beverage Digest, emphasized the importance for both Pepsi and Coke in retaining consumer loyalty towards their cola beverages.
According to Beverage Digest, colas accounted for around 65% of the U.S. carbonated soft drink industry in 1995 but have now dropped to approximately 55%. To maintain customers who switch from regular colas to diet options but dislike the taste and choose alternatives like water or other beverages, Pepsi is launching a new choice.
The theory proposes that Pepsi Next, a soda with moderate calories, may bring more satisfaction to specific customers in comparison to diet sodas. Furthermore, it has the potential to appeal to consumers looking for different options outside of the usual soda brands. The triumph of Pepsi Next will rely on its communication strategy, particularly considering the various choices already offered by Pepsi like Pepsi, Diet Pepsi, and Pepsi Max. Although the terms “regular” and “diet” are widely recognized, the notion of mid-calorie products is not as straightforward.
Consumers who are acquainted with Pepsi Max and Coke Zero may find the concept of a mid-calorie cola perplexing. These colas possess approximately half the calories of regular soda and are crafted using a blend of high-fructose corn syrup and artificial sweeteners. Nevertheless, mid-calorie colas have encountered challenges in previous instances. In the mid-1990s, PepsiCo introduced Pepsi XL, which boasted 70 calories, displayed its delightful flavor with an “X,” and highlighted its 50% reduced sugar content with an “L.”
In 2004, PepsiCo introduced a 70-calorie soda called Pepsi Edge, while Coca-Cola released C2. However, both brands disappeared from shelves in 2005 and 2007 respectively. Currently, Dr Pepper Snapple Group is testing a 10-calorie soda called Dr Pepper Ten. This new product is positioned to compete with Pepsi Max and Coke Zero in targeting male consumers. The reason behind these attempts is the pent-up demand for better tasting lower-calorie products as stated by Bill Pecoriello, the CEO of Consumer Edge Research. According to their research, introducing a mid-calorie cola could potentially increase the sales of carbonated soft drinks.
According to Mr. Pecoriello, mid-calorie colas are generally expected to attract an older demographic than full-calorie soda consumers, but younger than those who prefer diet options. It is theorized that they will have equal appeal among men and women, with the highest potential among individuals aged 25 to 34. Pepsi Next is expected to undergo a significant advertising and marketing campaign, with speculation suggesting its involvement in Pepsi’s “X Factor” promotion. Pepsi has announced plans to allocate over $60 million towards sponsorship and integration with Simon Cowell’s upcoming singing competition on Fox in the autumn season.
Pepsi Next is looking for a strategy to connect with a specific group of people who have been broadly identified in previous launches of mid-calorie beverages. For instance, Pepsi XL was focused on men between the ages of 20 and 29. C2, on the other hand, targeted individuals aged 20 to 40. According to PepsiCo, Pepsi Edge had a potential market of up to 60 million people who consume both regular and diet soft drinks. Both Pepsi Edge and C2 received substantial advertising support, with C2 being considered one of the most extravagant launches since Diet Coke in 1982.
The cost of the C2 launch campaign was estimated to be between $30 million and $50 million. Pepsi Edge aimed to target men through advertisements featuring popular sportscasters and the slogan, “This moment deserves a Pepsi Edge.” According to executives, the brand was slightly more popular among men, with a male to female ratio of 55 to 45. The belief was that men were more disinterested in advertisements targeted towards women compared to the opposite scenario.
Mr. Pecoriello stated that C2’s advertising approach was more inclusive of both genders by featuring songs such as the Rolling Stones’ “You Can’t Always Get What You Want” and Queen’s “I Want to Break Free”. He expressed doubt about Pepsi’s ability to effectively convey the desired message for this brand, which he considered a reasonable viewpoint. In his research note, he also acknowledged that both Coke and Pepsi have faced challenges in connecting with consumers when it comes to lower-calorie, better-tasting products. According to a survey conducted by Consumer Edge Research, one-third of consumers aged 13 and above showed strong interest in trying a Coke or Pepsi with half the calories if it tasted “almost identical” to the original.
Coca-Cola has chosen not to provide any comments regarding Pepsi Next or their possible plans for a mid-calorie cola. However, Mr. Pecoriello stated that Coca-Cola does not expect to promptly release mid-calorie colas as a reaction. Nonetheless, he mentioned that the company will probably be ready with both a product and marketing strategy in order to swiftly enter the market if Pepsi Next is proven successful.
It is anticipated that a mid-calorie Coke may be introduced in the fall if the upcoming launch is successful. However, Coca-Cola may choose not to release a mid-calorie option in order to maintain focus on its core three-cola strategy. Despite this, industry experts question why PepsiCo has not adopted a similar approach. In 2010, Diet Coke surpassed Pepsi as the second most popular soda brand, with only Pepsi and Diet Pepsi experiencing a decline in market share among the top ten carbonated soft drink brands.
According to sources in the bottling industry reported by Beverage Digest, PepsiCo anticipates that Pepsi Next will rival and potentially supplant other Pepsi products. Mr. Sicher from Beverage Digest believes that as long as PepsiCo can maintain its consumer base for Pepsi colas and possibly entice previous consumers, this should not be a concern.
