In spring 2011, Pepsi conducted a blind taste-test with a group of bottlers. Lurking in the selection of colas was a new product that , following years of development, Pepsi hoped was ready for prime time. Now, the company has decided that it is .
There was good reason for caution. When it comes to midcalorie sodas, after all, history is littered with failed attempts. "There are a lot of skeptics," said Angelique Krembs, VP-marketing for the Pepsi trademark. She noted that the company had long talked about creating a tasty, midcalorie cola, and gathered tens of thousands of data points in the process.
"What first gave me confidence was the blind taste-test with our bottlers," Ms. Krembs said. "When they realized one of the products was Pepsi Next, they were blown away. That was the start of the journey. We started replicating variations of the blind taste-test with retailers and consumers in test markets. When people try the product, they're just really impressed."
The tagline, "Drink it to believe it," starts rolling out nationally March 26. PepsiCo hopes Pepsi Next, a 60-calorie cola with 60% less sugar than regular Pepsi , will attract at least a portion of the consumers who have been defecting to teas, enhanced waters and sports drinks in recent years. PepsiCo estimates 90 million cases a year are leaving the cola category, contributing to the overall decline of the carbonated soft-drink category.
"If we can capture even a portion of those people looking to reduce sugar, some fraction of that 90-million-case opportunity, we will have a viable business on our hands," Ms. Krembs said.
That's easier said than done, though Ms. Krembs said Pepsi Next is the "right product at the right time," unlike its failed predecessors. In the mid-1990s, PepsiCo launched the short-lived, 70-calorie Pepsi XL: "X" for excellent taste, "L" for 50% less sugar. In 2004, PepsiCo unveiled 70-calorie Pepsi Edge, while Coca-Cola pushed C2; the brands subsequently disappeared from shelves in 2005 and 2007, respectively. Dr Pepper Snapple Group is also testing a slew of 10-calorie sodas, after launching Dr Pepper Ten nationally last fall.
Demographically, Pepsi Next attracted a diverse group in test markets in Iowa and Wisconsin, skewing only slightly male and covering a broad age range. Often they're regular Pepsi drinkers who want to cut back on sugar and are resistant to diet sodas, even in the form of Pepsi Max. For that reason, Pepsi Next marketing and packaging emphasizes "less sugar" rather than "fewer calories."
"They're feeling pressure from family or society to reduce sugar," Ms. Krembs said. "[Talking about] calories puts you into a diet space, no matter how many calories you talk about."
In test markets, Pepsi Next fared well, exceeding benchmarks for trial, repeat business and incremental business. Rather than cannibalize other Pepsi trademarks, Pepsi Next attracted new users and generated news that benefited the entire lineup. And, in a vote of confidence, 100% of bottlers are aligned behind the launch, and 100% of Pepsi 's retailers have authorized it, Ms. Krembs said.
"Our expectation to source volume outside of cola was proven out," Ms. Krembs said. "News puts the focus on the trademark and the entire trademark benefited from that , with incremental displays, activity and attention."
Pepsi Next, which comes in a blue variegated can, will be promoted with a TV spot, digital marketing, direct mail, robust sampling and in-store efforts. A spot from TBWA/Chiat/Day, which was used in test markets, shows a couple fawning over Pepsi Next, unaware their infant is doing the worm and dancing a jig in the background. Getting the message right for a midcalorie soda is a tricky proposition, given the variety of products already on the market. Ms. Krembs said the spot tested well and proved effective at communicating the Pepsi Next proposition.
A Facebook campaign will promote a virtual taste-test , and Pepsi will tap into retailers' loyalty-card programs to target consumers who have abandoned or cut back on cola. Sampling will take place at a variety of retailers, though Walmart Stores will be an anchor of sorts, sampling Pepsi Next in 800 stores. The Barbarian Group is handling digital, while Weber Shandwick handles PR.
Ms. Krembs declined to comment on the launch budget for Pepsi Next, though the brand, along with the rest of the Pepsi trademark, will benefit from PepsiCo's plans to invest upward of $600 million in marketing this year. Past mid-calorie colas, including Pepsi Edge and Coca-Cola's C2, have received major marketing support. In 2004, the C2 campaign ranked as the most lavish launch since Diet Coke in 1982. Estimates pegged the cost of the C2 launch campaign at $30 million to $50 million.
"This is the broadest view of a launch that we've had. It's not one month and we're out," Ms. Krembs said. "I believe a new product is a new product for two years. We'll be watching closely, and we'll correct what needs to be corrected. We're taking a long-term view of support for this brand."
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