Pepsi Canada Brings Back the Taste Test

Pepsi Canada has brought back the taste test, launching a Canadian-specific summertime promotion titled the “Pepsi Ultimate Taste Challenge” and supported through facebook both online and offline (link here).  Facebook offline support includes a map showing locations where Pepsi will be conducting the taste test and at which times. The online component runs a digital challenge testing you on various cultural components linked with Pepsi (slogans, word scrambles, celebrity endorsements, and more).

For those unfamiliar with the previous taste test formats, interested consumers would line-up and drink to cola samples (one Coca-Cola and one Pepsi) and guess which one was Pepsi.  The purpose of this test was to prove to consumers that in the absence of branding (red Coca-Cola packaging, blue Pepsi packaging), consumers actually preferred Pepsi more.  The test was a big success for the organization when they first ran it in the 1970s and 1980s, leading Coca-Cola to change its formula and launch New Coke (which has since become a worldwide case study on the company’s blunder).  Pepsi gained market share through its taste test and Coca-Cola’s reaction was to alter its formula, which led to pandemonium as consumers rushed to buy as much Coca-Cola as they could before it was phased out of the market.  Coca-Cola eventually caved to consumers and re-launched the original Coca-Cola (called Coca-Cola Classic).  So why would Pepsi Canada want to re-launch this taste test, have they not learned their lessons from the past?  Will this iteration of the taste test change anything?

The current taste test shouldn’t have the same adverse effects for Pepsi that they encountered in the 1970s and 1980s.  Times have changed and so have consumer soft drink preferences.  Both companies have learned their lessons and moved on from that point.  While the Pepsi Ultimate Taste Challenge is on display on a national scale, it is not in the United States.  This point alone isolates the effect that the taste test can have.  American consumption versus Canadian consumption has roughly a 10:1 ratio, therefore it would be equivalent to a 10% impact in the United States (similar to a large scale pilot test market in the United States).  Similarly, Coca-Cola has learned what would happen if they reacted to taste testing and changed their formula.  In this aspect, the Pepsi taste test should only affect Pepsi and the summer sales for both brands.

In addition, the current version’s taste test should deliver stronger results to the overall Pepsi franchise, rather than only to the Pepsi brand.  The 2012 version incorporates both Diet Pepsi and Pepsi Max, pitting the entire Pepsi franchise against Coca-Cola, Diet Coke, and Coke Zero (neither Pepsi nor Coca-Cola has a mid-calorie offering in Canada…yet).  This caters to the current beverage trends, giving calorie-conscious and sugar-conscious consumers a chance to take part in the taste test as well.

The underlying effects of this taste test should go a long way toward helping both brand’s summer soft drink sales.  The comparisons would not only increase exposure and sales for the Pepsi franchise, but also for Coca-Cola’s franchise.  Summer is definitely the season for sampling, and bringing awareness back to soft drinks at this time benefits everyone.  After all, if not promoting soft drinks during the summer, when else can it be promoted?

Pepsi Next to Launch in Test Markets

A couple of months back I covered a piece on Pepsi’s intention to launch a mid-calorie cola this summer (previous post link here).  I also mentioned that it was a bad idea since their portfolio already included a full-calorie cola soda, a zero-calorie option, and a diet option as well.  As more information came out on the product, Pepsi plans to position the product on taste, which would ultimately be more advantageous to Pepsi Next and their portfolio.

Pepsi’s theory is that consumers want to limit their calorie consumption and look for substitutes for the full calorie option.  However, some consumers are disappointed with the diet or zero-calorie alternatives since it tastes different, and end up leaving the cola franchise altogether for water, juices, or teas.  By launching Pepsi Next, they can cover the cola consumer’s choice spectrum and extend their product life cycle.  Cola products typically enter a consumer’s consideration set when they’re young and carefree on calories.  As the consumer ages they want to cut back on calories so they transition to diets or zero-calorie options.  Unlike Coca-Cola (which has Diet Caffeine Free Coca-Cola to appeal to older consumers), that is the extent of Pepsi’ cola product life cycle.  Enter Pepsi Next.  Pepsi is attempting to insert Next as a bridge product between their full calorie and zero calorie options, hopefully transitioning consumers along a calorie path from full –> mid –> zero.

On the issue of taste, Bill Pecoriello, CEO of Consumer Edge Research provides us with some insight.  Pecoriello says,

“The consumer wants calorie reduction. If you can give half calorie with no taste sacrifice, there’s a product there for the consumer.  C2 and Pepsi Edge failed and taste was a major issue. [Consumers] are not willing to sacrifice taste for half the calories when you have Diet Coke and Diet Pepsi out there. Something like a Pepsi Next, if it could achieve the taste profile, could be incremental for the category.” 

Some questions come to mind from the above comments.  Will the taste of Pepsi Next differ from Pepsi and Diet Pepsi?  At a time when health and wellness have become a top-level issue, consumers may replace regular Pepsi with Pepsi Next if the taste is believed to be identical. And again, the question of cannibalization comes into play since the number of cola drinks are finite, and inserting another product to their consideration alternatives may turn into a substitution in their choices.

I believe that the tastes of Pepsi, Pepsi Next, and Pepsi Max will all be different.  Pepsi will likely engineer Next to taste more like Pepsi since it can be produced with ingredients that contain calories.

In any case, we will find out come July whether Next will be successful it its test markets.  Pepsi plans to introduce their mid-calorie cola in two cities, one each in Iowa and Wisconsin.  If any readers and Pepsi fans happen to be living in the initial launch cities, feel free to post some comments or send me an e-mail on this product should you run a taste test.

Pepsi Throwback in Canada

Regular readers of my blog may remember that I reported on Pepsi Throwback and Mountain Dew Throwback last year, but mainly as a American limited-time only beverage.  Well I was thirsty and went into a Shoppers Drug Mart a few weeks back and was surprised to notice that there was Pepsi Throwback here in Canada.  In addition to being a soft drink that was only released in the United States, I remember that the beverage being a few years old.

After some googling, it turns out that the Pepsi Throwback was made part of Pepsi’s permanent line-up because of their strong sales and recipe.  It was also launched in Canada early 2011.  Throwback tastes different from the current Pepsi cola in that it has no citric acid and uses real sugar, compared to High Fructose Corn Syrup in the “new” Pepsi.

Initial feedback has been great for Pepsi Throwback, but as my critiquing tendencies go, do they really need another permanent Pepsi?  It almost appears that they are trying to blanket-cover the calorie and sweetness spectra with their offerings.  Pepsi, Diet Pepsi, Pepsi Max, soon to be launched Pepsi Next, and now Pepsi Throwback.  How much cannibalization will occur?  The expanded line-up means some drinks within the portfolio gets less sales.  Pepsi should beware of what vitaminwater is doing in terms of having so many available options for a consumer to choose from.  vitaminwater’s consumers to this day still gravitate toward 5 flavors out of a possible 11 flavors, making more than half of them slow movers and hard for retailers to justify the shelf space.  This isn’t to say that having Pepsi available in 5 different options is a bad idea, but each of the 5 option must be unique to avoid duplicity.  Pepsi’s differentiation between Pepsi Cola, Diet Pepsi, Pepsi Max and even Throwback would be significant, but Pepsi Next…not so much in my opinion.

While I didn’t buy a Pepsi Throwback that day (settled for vitaminwater instead) I am still interested in finding out what it tastes like and how it compares to the new Pepsi.  Has anyone ran a taste test to try both, and care to give me your two cents?

Pepsi Next – the new 60-Calorie Soda

An article from BevNet.com mentions that Pepsi will be launching another soda in the coming year (link here).  The industry critic from the linked article believes that the launch won’t meet expectations since other similar products have failed in the past (Pepsi Edge, Pepsi XL, and Coke C2 are the failed experiments).  Pepsi Next – a 60-calorie carbonated soft drink (CSD) partially sweetened with high fructose corn syrup and natural sweeteners – launches Summer 2011.  Pepsi is reported to be promoting their new product through Simon Cowell’s new tv program “X Factor” in addition to other strong advertising and marketing support.

Is there such thing as middle ground for consumers though?  Those that want full flavor will opt for the regular Pepsi, those that want diet will grab a Diet Pepsi, and those that want the full flavor with zero calories will choose Pepsi Max.  Will anyone choose mixed sweeteners and 60 calories instead of any of the already available options?  Consumers that are willing to sacrifice taste and ingest less calories will likely choose the Pepsi Max, and whereas consumers that want full taste and do not care about the calories would choose Pepsi, so where does that leave Pepsi Next?  Even Pepsi expects there to be some form of cannibalization, where one Pepsi beverage will be substituted by another Pepsi beverage.

It is clear that the soft drink market is declining and Pepsi is trying to establish a stronghold in other categories like enhanced water and energy beverages, but why would they introduce one more product into this category?  On the heels of Pepsi slipping from No.2 to No.3 in the United States, their solution appears to be introducing a new product that will cannibalize their own shares in a declining CSD market and confuse their customers with which Pepsi product to choose.  Why not focus your portfolio on the emerging products and gain a stronghold in those categories?

The old adage is that you never want to fix anything that isn’t broken, and Pepsi clearly is broken in that sense.  But with what the beverage organization has done: introducing new Pepsi beverage alternatives, a modified logo and constantly changing packaging, are any of these “fixes” actually helping the company?  I believe this is a move in the wrong direction, but only time will tell.

 

Pepsi Slips To Number 3

A few weeks ago, Beverage Digest posted the latest market share statistics for the US carbonated soft drinks (CSD) category and we found out that Pepsi had slipped to number 3 (see stats here). Industry analysts had predicted that this market share change was coming as Pepsi had lost share in the last few years, as Coca-Cola has stayed the course with their beverage unit and maintained marketing Diet Coke in traditional media (TV/print/radio) while Pepsi started promoting other beverages in traditional media, and invested in other forms of marketing

It seems that as Pepsi sought to maintain a balance beverage portfolio by promoting other beverages (such as Pepsi Max, Sierra Mist, Aquafina Plus10, Mtn Dew, Gatorade, etc) that they forgot to keep promoting Pepsi itself.  Their NFL sponsorship was recently changed from Pepsi to Pepsi Max, Superbowl advertisements followed the same course, and even the main TV commercials started promoting a Coke Zero vs. Pepsi Max cola war instead of focusing on Coca-Cola vs. Pepsi.

Was this the right decision for Pepsi – to focus on other beverages instead of their core product?  Despite Pepsi’s balanced portfolio making them more formidable to withstand declines in any one category if they promote other products, the CSD category is still the largest beverage category.  Even within the CSD category, promoting Pepsi Max, Mtn Dew, and Sierra Mist helps these brands gain traction and spread their risk if any one product sees slow sales.  However, CSDs as a category is in decline, and Pepsi has been declining more than the category.  And according to the Beverage Digest rankings, it’s not just Pepsi that lost market share, it’s also Diet Pepsi.  Your two core products are in decline, while your competitor’s two core product maintain market share in a declining market, meaning they now own a bigger share in the CSD category.  Even Sprite, another core product for Coca-Cola passed Diet Pepsi in the market share rankings.

Although this decline cannot be fully traced back to any one particular issue, I would answer that Pepsi’s decision to experiment  with their marketing and promote other brands was a bad decision.  The core of your business where you make the most money is still Pepsi and therefore you should be promoting Pepsi.  In the largest marketing venues, Pepsi should be promoted and not Pepsi Max.  Though whether they should allocate more spend at the expense of other brands is still questionable, promoting their core product more and through effective traditional media is a must.