U.S. Cola War Continues with Pepsi True Launch

Pepsi True

It seems the Cola Wars continue to expand across the calorie spectrum.  Where Coke and Pepsi used to spar over full calorie soda (Coke vs Pepsi) and zero-calorie soda (Diet Coke vs Diet Pepsi, Coke Zero vs Pepsi Max), the two beverage giants now go to war over the middle.  The contestants are Coca-Cola Life and Pepsi True, two sodas sweetened with sugar and stevia, with less calories, and green packaging.  That may be where the similarities end in this round though, because this iteration is very different from prior rounds.  Their product launch tactics differ greatly, and this particular fight appears to be highly contained with the United States.

What some people may forget is that Pepsi already has a stevia-sweetened mid-calorie soda on the market – just not in the U.S.  Remember Pepsi Next?  The American Pepsi Next contains artificial sweeteners whereas other countries with Pepsi Next have a stevia-sweetened version.  Unless Pepsi decides to discontinue the existing stevia-based Pepsi Next everywhere, this Cola War will only exist in the U.S.  And it is likely that the Pepsi True launch is primarily relevant to Americans given Pepsi Next’s presence elsewhere.  So in effect, this should be termed more of a Cola “battle” rather than a Cola “War”.  Pepsi Next against Coca-Cola Life in markets outside the U.S., while the U.S. battle will be between Pepsi True and Coca-Cola Life.

Related Post: Pepsi Next May Find More Success in Canada

Both companies are also more cautious in their launch approach.  Coca-Cola Life has experimented in multiple countries outside the U.S. first to measures its market viability, and only recently started rolling out in U.S. regions this past August.  The American rollout isn’t national and they have yet to provide marketing support welcoming Coca-Cola Life to America.  Pepsi True is taking a similarly conservative approach by not even stocking this product in traditional channels.  Pepsi’s mid-calorie soda variant is set to launch exclusively through Amazon, where shelf space is limitless, operating costs are lower, and product delivery does not come from their distributor network.  After all, Pepsi distributors work with limited storage space and a delivery system optimized for sales and profitability; carrying Pepsi Next could mean sacrificing sales of other better-selling products.  To satisfy American distributors, Pepsi indicated that they will reimburse distributors for Pepsi True sales in their regions.

Related Post: Coca-Cola Life Commercial Review: Open Your Good Nature

It makes sense for both beverage manufacturers to take baby steps first.  Launching anything in the mid-calorie segment has been challenging for over a decade.  The 2004 introductions of C2 and Pepsi Edge marketing sucralose as a sugar alternative proved unsuccessful.  The 2012 Dr Pepper Snapple Group TEN-calorie soft drink line-up hasn’t received marketing support to keep up its launch momentum.  Earlier this year, Coca-Cola’s vitaminwater reverted back to its original formula after consumer complaints about its stevia formula.  The beverage industry’s history is littered with more failures than successes when companies attempt to bring mid-calorie refreshments to the consumer.  And as much as Pepsi Next could be deemed a global success, the results undoubtedly vary between markets.

Going forward, the road will only become more difficult.  Consumer perspective toward mid-calorie soda in general has not been overwhelmingly positive.  Taste is always the first consideration and most stevia-sweetened beverages contain a bitter aftertaste.  Consumers have also persisted in choosing drinks that offer health benefits and less calories over mid-calorie soda.  Regardless of consumption trends, soft drinks are still a significant part of the beverage landscape.  Even though the Cola War has evolved, both Coca-Cola and Pepsi will find new frontiers to wage their battles.

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Revisiting the Mid-Calorie Soda Segment

Courtesy of adage.com

Does anyone still remember Pepsi Next or Dr Pepper 10?  Anyone know how well these drinks are performing?  It seems that since their launch last year, not much has been said about these hybrid-sweetener sodas.  Pepsi has been focusing on their core offerings of Pepsi, Diet Pepsi, and Pepsi Max, while Dr Pepper has been left with the task of bringing news and excitement to the entire mid-calorie segment.  So far, it seems that mid-calorie sodas have taken a backseat to regular and diet cola products.  In the past two weeks, there has been some major stories from Advertising Age (link here), brandchannel (link here), and even myself at Canadian Grocer (link here) on how mid-calorie soda is doing.  While manufacturers recognizes the importance of this segment, it’s just not gaining momentum within the consumer market.  So what is wrong with mid-calorie sodas?  What will it take to make these drinks a success?

The jury is still out on whether mid-calorie soda is a success or a failure, but it’s certain that the beverage companies have not been supporting it at the levels necessary for long term success.  It seems that marketing efforts were most prolific during the launch period to gain awareness, but has not kept pace over time when it was most critical to win consumers over: the repeat purchase.  At release, news reports indicated that these drinks endured high rates of consumer sampling.  Pepsi and Dr Pepper gave away these carbonated drinks for free to stimulate trial.  However, the repeat rate has not been mentioned as much.  That is, how many consumers given a free can of mid-calorie soda ended up purchasing these particular drinks later?  Not much apparently.  Reports have indicated that the mid-calorie drinks’ sweetener leaves a bitter aftertaste and has led drinkers to stay away from it.  Therefore, people that were given that free can may have liked it because it was free, but would choose to drink another soda (or an alternate beverage) when they have to pay for it.

Courtesy of Forbes.com

Both sodas companies should have maintained marketing support to focus on championing the benefits of these new products.  Despite the bitter aftertaste, the fact remains that fewer calories are consumed per serving.  Pepsi Next and Dr Pepper 10 should have talked up these benefits relative to other sodas in order to win over consumer perception of a bitter aftertaste.  Instead, they continued on leveraging against the humor (Pepsi Next with their Baby commercials) and gender exclusivity (Dr Pepper 10 with their Manliest Man commercials).  It would have been better to educate the consumer as an alternative to other beverage segments with an identical amount of calories, or other sodas that were sweeter but contained the most calories.

So how can they make these beverages and the overall mid-calorie segment a success?  Or are these drinks primed to quietly disappear like so many other beverages before their time?  Does anyone still remember Coca-Cola Blak?  Or Pepsi XL? Or Orbitz?

Advertising and promotions.  Both Pepsi and Dr Pepper should keep up their mid-calorie advertising efforts to maintain brand awareness.  It seems like an obvious solution to ensure mid-calorie sodas stay alive long enough to see their potential through.  However, in organizations where performance is judged by quarterly performance and not much else, there is no room for tweaking unless it’s on-the-fly.  The interim period from when a new mid-calorie sweetener will be introduced is very crucial for manufacturers to preserve their shelf space.  These beverages must be afforded marketing support and in-store promotions to drive repeat purchases.  Without consumer incentives to stimulate purchases, retailers will have no choice but to remove slow sellers from the aisle.

The fact remains that health groups have picked out carbonated soft drinks as a strong contributor to obesity.  Consumers are also more focused on the sugars and calories they put in their bodies.  Mid-calorie sodas taps into these trends very well.  These soda innovations contribute less to obesity (relative to their full calorie counterparts).  It will also meet the needs of calorie-conscious individuals that want less sugars.  Whatever the case, mid-calorie sodas are here to stay and are crucial for the survival of the soda segment.  If not Pepsi Next and Dr Pepper 10 this time, it will be something else in the near future.

Mid-Calorie Sodas – Successful or Not?

Pepsi Next line-up - courtesy Robin Lee

It’s been over a year that Pepsi Next has first launched in test markets, and almost six months since it’s been available nationally in the United States.  Dr Pepper 10 will also soon be lapping it’s one year national launch in the market place.  These national launches proves that Pepsi and Dr Pepper both believe in the viability of the mid-calorie cola segment.  However, what are the results of this launch, and can it be considered a success so far?

For Pepsi Next, results so far can be considered average at best.   Wall Street Journal reported the Next to have gained 1% market share on US dollars (link here), although product reviews indicate that the aftertaste (end part of the Pepsi Next’s taste curve) is unpleasant and definitely feels like the artificial sweeteners (link here).  In spite of all this, Pepsi has launched two (limited for the summer) line extensions of the mid-calorie soft drink: Paradise Mango and Cherry Vanilla (pictured above).  That said, the launch can be considered a success so far, but the real test is converting these initial trail users into returning customers.

The line extensions and the continued advertising support for Pepsi Next would be much needed in order to help the brand sustain its momentum.  After all, it takes some time for a product to be accepted in the market – remember that it took Coke Zero & Pepsi Max a few years and some trying rebranding and repackaging before it caught on with consumers?  Beyond that, let’s hope for more products to enter the mid-calorie segment, and bring more attention to the category.

DPSG 10sFor Dr Pepper 10, test results have been similar to Pepsi Next.  On the Dr Pepper 10 alone, sales nationally have been strong enough to offset the declines across Sun Drop and 7UP.  And as the one year anniversary  for Dr Pepper 10 approaches, they have already worked on releasing five additional 10 calories colas.  The 7UP 10, A&W 10, Canada Dry 10, SunKist 10, and RC 10 are currently in test markets and some of these flavors should make it national (my bet is on the 7UP, A&W, and Canada Dry).

Overall, it would appear that there are two main players in the mid-calorie segment right now between Pepsi Next and Dr Pepper 10.  Coca-Cola has been reported to be trying a mid-calorie version of Sprite and Fanta in key test markets as well.  This segment will only continue to grow as consumers become more and more health conscious.  However, in order to make it a success, the main issue of taste must be addressed, since consumers likely wouldn’t sacrifice taste for calories.

And beyond that, let’s hope it makes it way up north to Canada so we don’t have to drive across the border to find some mid calorie beverages.

Enjoy Everything with Coke Zero

Coke Zero’s latest TV commercial continues touting the taste aspect of a full-calorie Coca-Cola with zero calories.  Released during the 2012 BET Awards, it may have went over the top in proving its point.  Normally that would be true, but given the audience and the spokesperson featured Ken Jeong (from Hangover, TV’s Community, and other movies) it appears to be just right.

Tagging Ken Jeong to champion Coke Zero seems like a perfect match.  Jeong is easily recognized among the BET Awards viewers (demographic target are teens & young adults) and is over the top himself when it comes to proving a point.  So the first step of a successful ad campaign is there – the audience is paying attention and not tuning out (provided that they haven’t left their couches or changed the channel already).

The main message of reinforcing true Coca-Cola taste and zero calories resonates well among the viewers that want to have it all, but fails to inspire any call to action.  Beyond comedic entertainment and grabbing attention, the messaging may fall on deaf ears.  It’s important to remember that the targeted demographic are teens – an age segment where calories are not a main concern.  If you were a teen, calorie content may be one of the last things on your mind.  Teens want to have it all and given that taste and brand matters, but why go for a lesser-known brand like Coke Zero when you can have Coca-Cola instead?  Brand trumps taste in this scenario.  Even if the target consumer viewing the commercial understands the messaging, they may not be inspired to go out and purchase Coke Zero. The message communication simply does not apply to them.

Would Coke Zero be better off engaging in the zero-calorie Cola Wars with Pepsi Max?  Certainly not, because they are still the leading brand in this beverage segment and should not play down to their competition.

Does the commercial need to be to tuned?   Coke Zero could adjust their focus on the next older age demographic: young adults (20-30 year olds).  Consumers in this age range are at the time where they are faced with sacrificing taste for lower calories due to slower metabolism and stronger health focus.  However, doing so would alienate a profitable demographic and tying the beverage in with the beginning of their purchase life cycle.  The most probable case would be adjusting the positioning toward teens and young adults, where brand appeal is touted in addition to the zero calorie component.

Does this commercial make you want to buy a Coke Zero, and why?

Pepsi Canada Brings Back the Taste Test

Pepsi UTC - courtesy of facebook.com

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?

Coke Follows Pepsi, Entering Mid-Calorie Soda Segment

Sprite Logo

With the recent success of Dr Pepper Ten and Pepsi Next, there’s been some renewed buzz in the carbonated soft drinks category recently.  Now Coca-Cola wants to get into the mid-calorie segment.  BevReview.com has a few links to other articles where sources have confirmed that Coca-Cola will be launching Sprite Select and Fanta Select in five U.S. test markets (link here).

As the linked article notes, both Coca-Cola and Pepsi have tried mid-calorie products before.  Both companies’ products failed to gain traction in the marketplace and were discreetly phased out from store shelves.  Given the technological advances and the successful-so-far products of Dr Pepper and Pepsi, is it time for Coca-Cola to come in with another mid-calorie product?  Will they succeed this time around?  And why try this with Sprite and Fanta, not with the trademark Coca-Cola product itself?

One issue would be to first determine what is “mid-calorie” and how this type of product is unique from the consumer’s perspective.  Arbitrarily, I’m defining this soda segment as with a limit of 70 calories per 12oz (355ml) serving, given Pepsi Next has 60 calories, and Sprite Select and Fanta Select will have 70 calories.  Dr Pepper Ten only has 10 calories per 12oz serving, so they fit the mold (Note: Dr Pepper Ten has 10 calories in both a 12oz serving, as well as 10 calories per 8oz serving, click through link to understand how).  Mid-calorie products are also categorized as those using natural sweeteners to bring the calorie count down below 70, featuring a combination of sugars, high fructose corn syrup, or some other form of sweetener in tandem with the natural sweeteners.  The purpose is to balance out the taste curve: from the moment the liquid hits the palette, all the way to the after taste.

Coca-Cola C2 and Pepsi Edge

Given that mid-calorie soft drinks like Coc-Cola C2 and Pepsi Edge of the early 2000s did not have the technology or cost-efficiencies before to insert natural sweeteners, they failed to catch on in the marketplace.  One decade later, the technology is in place , which makes it possible to give consumers a better-tasting (and better named) product.  The generally positive feedback toward Dr Pepper Ten and Pepsi Next would seem like an opportune time for Coca-Cola to enter the mid-calorie soft drink segment.  Similar to how Coca-Cola’s Dasani Drops may be entering the liquid flavor enhancers after Kraft’s MiO has tested the waters, Coca-Cola may have monitored the consumer reaction to mid-calorie products  (BevWire’s article on the Dasani Drops piece can be found here).  This lets Coca-Cola sit on the sideline to see what would happen without bearing the developmental costs until it’s been a proven success.

While it appears that these products have received positive reviews, it appears that Coca-Cola is still hesitant with this segment.  These reservations makes the pilot testing with Sprite and Fanta that much more important.  Coca-Cola would not want to put the trademark name on something that they don’t fully believe in, only to see it fail like last time.  A second failure with this segment would have implications such as losing brand equity or showing that the soft drink manufacturer does not understand its consumers.

A factor that would aid in their success, as well as supporting the successes of Dr Pepper Ten and Pepsi Next are consumer trends.  Consumer trends have shifted toward a stronger focus on health consciousness.  No longer are consumers willing to sacrifice calories for taste.  However, not all consumers are  prepared to sacrifice taste for zero calories either, which provides the opportunity for the Pepsi Next, Dr Pepper Ten, and the impending launches of Sprite Select and Fanta Select.

In this regard, there would appear to be a market for mid-calorie soft drinks, albeit a small market for now.  The consumer trends and the technological advances will help to make this a success this time around.   If history does end up repeating itself, it would certainly guarantee that Coca-Cola will not be testing any more mid-calorie soft drinks.

Second Dr Pepper Ten Commercial: Just As Manly

Dr Pepper has put out their second commercial and it’s just as male-focused as the first one.  Using other stereotypical testosterone-based examples, such as drill bits, desert target practices, and big TV screens, the commercial further enforces the point that it is a man’s drink.  The tagline remains the same, ending with “It’s Not For Women”.

As Dr Pepper spokepeople and industry insiders indicate that the low-calorie soft drink is a success at gaining new trial users at minimal cannibalization, Dr Pepper needs to remind consumers that it’s a better option than some of the more calorie-heavy drinks – it needs to increase its repeat consumption among men.  It’s main competition right now appears to be defending against the Pepsi Next launch, which was launched nationally in U.S. late last month.  At a point when awareness is high and feedback for Next isn’t completely positive, Dr Pepper inserts their low-calorie offering into Next trial users’ consideration set to let them know there is an alternative out there.  One that may taste similar on the taste curve (full flavor sweetness on the initial palette, followed up sour aftertaste from the aspartame sweetener).

On a pure business and marketing standpoint, it seems as if the launch of the second Dr Pepper 10 commercial came at the best time possible.  Not only because it seems to be a blocker/flanker-type to remind people that Dr Pepper’s low calorie offering is better than Pepsi Next, but also from an expansion and continuity perspective. While they may not reach the same levels of awareness and trials as their first commercial, the product is now available nationally and can translate sales in more U.S. markets (larger market size may equal lower awareness levels, but generate more sales dollars because of the sheer size).  For continuity, it also halos off their first commercial with the same shocking tagline of “It’s Not For Women”, so there will be some viewers that are reminded it is a male-specific soft drink like the first one.

One of the key sales barriers may be that the  grocery shopper of the household is still the mom or wife, not the men that the product is targeting.  It may ultimately serve a purpose similar to the H&M David Beckham 2012 SuperBowl commercial, which targets women to buy the undergarments for their men.  For the most part, the men might now take part in putting the product on the weekly grocery list, or are moved to purchase the product themselves when they make the rare supermarket trip (although not that rare anymore according to Ad Age – article link here).

So why hasn’t Canada received the Dr Pepper 10 yet?  The Canadian market still only has Pepsi Max and Coke Zero competing in the zero-low calorie soda space.  One would suggest that given the healthier trends penetrating the Canadian market and our affinity toward lower calorie alternatives, that Dr Pepper should launch Dr Pepper 10 in Canada.  Alas, the situation is not that simple because Dr Pepper does not have it’s own distribution network here in Canada.  As per their distribution agreement with Coca-Cola and Pepsi, Dr Pepper Snapple Group’s various liquid refreshments come off of both manufacturer’s delivery trucks in Canada.  That said, Dr Pepper 10 may have a good chance to make it on the delivery trucks once the distribution contracts are up for renegotiation, or they find a tertiary distribution network if the contracts permit that.

Until then, Canadians looking to try Dr Pepper 10 will likely have to look toward grocery stores that bring their product in from south of the border, or make the trip down south themselves to find the product.

Snow-Colored Coca-Cola Cans for Christmas

White Coca-Cola Cans - courtesy of trendhunter.com

Coca-Cola normally brings out Christmas packaging by November and this year is no exception.  This year, Coca-Cola has decided to offer their regular Coca-Cola soda in an arctic-white colored aluminum can instead of the traditional red.  BevNet has some more information here.  The packaging significance is that the commonly recognized red cans have always stayed that color until now, for a good cause.  Will there be other colors that the company tries in the future – like pink for breast cancer awareness, or green for Earth Day, or maybe even a black can with black script for Earth Hour?

Coca-Cola has long supported the World Wildlife Foundation so this packaging alteration makes sense.  However, they may not have strong no ties to any of those other organizations, so changing the cans to pink, green, black or any other color does not make sense.

Will Pepsi adjust any of their packaging this Christmas?  Pepsi has traditionally gone along with all the seasonal festivities – last year they did “Ho Ho Ho” and replaced the “O” with their Pepsi circular logo.  In terms of advertising, they haven’t really aired any of their Summer Santa or Uncle Teddy Pepsi commercials.  Was the attempt to make use of the traditional Coca-Cola icons only temporary?  Will they start airing them again, in conjunction with their X Factor Pepsi and NFL Pepsi Max commercials?  After all, what better time to carve into Coca-Cola’s iconic polar bears and Santas than Christmas?

Coke Zero New Tagline – Enjoy Everything

Coke Zero has launched a new ad showcasing the tagline – Enjoy Everything.  The advertising spot is 60 seconds long online, depicting a young adult that constantly asks “And?” and is never satisfied with what he is given.  At the very end, it’s a can of Coke Zero that satisfies him – providing him with full taste and zero calories.  Tim Nudd from AdWeek has more here.

Is there any real effect by changing the soda’s tagline – from “It’s Possible” to “Enjoy Everything”?  And while this ad was released in the United States first, it’s likely that this tagline will be consistent with Canada and any other place.  Coke Zero is simply modifying their communication to remain relevant and adjust their positioning.  Does this have anything to do with Pepsi Max’s recent success?  Or is it the fact that Coke Zero is now a recognizable product on shelves everywhere, that the “full taste but zero calorie” message is not as unique?   I believe both issues played a role.

Since 2005, Coke Zero has been communicating the message of full cola taste with no calories. At the same time, the “It’s Possible’ tagline may only be for the new drinkers, aisle shoppers that are in disbelief that there really could be a zero calorie beverage that products the same taste as a full calorie soda.  The tagline of “It’s Possible” would appear to be outdated since zero calorie colas have been “Possible” for the last six years, and Coke Zero is not the only zero calorie offering anymore.    By communicating a new message of “Enjoy Everything”, Coke Zero is alerting consumers that there is no need to sacrifice taste for calories, that they can really have it all.  Coke Zero’s latest twitter updates indicate as much:

With real Coke taste AND zero calories, Coke Zero is liquid proof you can live without compromise.   #EnjoyEverything  – Sept/10

peanut butter #AND jelly #AND yogurt #AND granola #AND milk #AND cookies #AND cream #AND Real Coke taste #AND zero calories #EnjoyEverything – Sept/7

Enjoying real Coke taste AND zero calories is kinda like getting the cool job AND a corner office. #cokezero. – Aug/30

We love the word “AND.” It always leads to having more. Like real Coke taste AND zero calories. – Aug/27

Relating to their competition, Pepsi Max has seen success by advertising the cola wars again, bringing  consumer’s attention to the zero calorie soda space by using comparison ads.  Their slogan “Zero Calories.   Maximum Pepsi Taste.” also sounds similar to Coke Zero’s slogan of “Real Coca-Cola Taste and Zero Calories”.  It appears that Pepsi Max is mimicking Coke Zero’s positioning, making it harder for people to tell the difference between Coke Zero and Pepsi Max.  After all, it was Coke Zero that started with white packaging and then Pepsi Max came out in white packaging.  And when Coke Zero changed to black packaging, Pepsi Max’s packaging soon changed to black.   In that sense, Pepsi Max changing their slogan last year necessitated Coke Zero’s need to differentiate themselves from Pepsi Max to some degree.

The question now becomes, what will Pepsi Max do?  Having enjoyed success by comparing themselves to Coke Zero and bringing attention to this soda space, will they add anything to their “Zero Calories.   Maximum Pepsi Taste.” slogan?  Coke Zero’s new tagline may or may not put their product in more thirsty people’s hands, but at the very least they’ve earned themselves some separate space from their competitor, and allow the consumer to more easily separate the two zero calorie giants.

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.