In an Aug. 21 memo sent to non-Pepsi distributors and obtained by Advertising Age, SoBe President-CEO John Bello warned Pepsi will put a "huge effort behind Amp when it is launched. ... Make no mistake, your energy drinks will be a target and that includes [SoBe's] Adrenaline Rush," he wrote. Adrenaline Rush is the country's No. 2 energy drink behind Red Bull.
In an interview last week, Mr. Bello downplayed the memo, saying he welcomes a Mountain Dew entry because it will focus attention on the segment. The memo, he said, was intended to fire up distributors. "I think they can do a little better, and that's me telling them they can do better," he said. He then added: "If it doesn't say SoBe, it's a competitor."
He said in areas where Adrenaline Rush and Mountain Dew are distributed by the same wholesalers, they will be pushed with equal vigor. His concern, however, is in non-Pepsi areas. About 60% of SoBe volume runs through Pepsi distributors.
PepsiCo's Pepsi would not reveal timing or introduction plans for Amp, which was sampled during August's X Games in Philadelphia. A similar sampling strategy was used at the 2001 ESPN Winter X Games in Mount Snow, Vt., with Code Red, the Mountain Dew line extension which is on its way to being a huge success (AA, Aug. 27). Three months after the Februrary games, Code Red was on shelves.
It's believed that advertising for the energy drink will be handled by Mountain Dew agency and Omnicom Group shop BBDO Worldwide, New York.
Infused with herbs and pledges of vigor, energy drinks are one of the country's hottest beverage segments. Though small-less than 1% of the soft drink category-its growth and profit are enough to make the rest of the stagnant segment envious. "The energy drink category is small, dynamic and growing, and Mountain Dew is a powerful brand that appeals to young people. It's already been successfully line extended once with Code Red, and Mountain Dew as a platform for energy drinks makes perfect sense," said Beverage Digest Editor John Sicher.
Mountain Dew Marketing Director Cie Nicholson declined to comment on Amp but said the company always considers additions. "It certainly is a brand that is extendable if done correctly, if it reinforces the overall brand equity," she said.
Should Pepsi proceed with Amp, it will have plenty of company among heavy hitters trying to tap the niche.
Earlier this year, Cadbury Schweppes's Snapple Beverage Group rolled out Venom, and Coca-Cola Co. launched KMX. Brewer Anheuser-Busch Cos. last year unveiled 180.
The leading energy drinks accounted for about $40.5 million in sales for the 52 weeks ended July 15, 2001, according to Information Resources Inc. There are no comparable year-ago figures because of the top five-Red Bull, Adrenaline Rush, Hansen's, KMX and 180-only Red Bull North America's Red Bull and Hansen's were marketed last summer.
To help distinguish itself, Pepsi's SoBe is expanding from the category's slender cylindrical can to include an amber-colored glass bottle that looks like it would hold beer.