Pepsi Next to Launch in Test Markets

Pepsi Next - courtesy of rft3.wordpress.comA 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.


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