Reversing Course, Diet Pepsi Goes All-In on Aspartame

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Credit: Pepsico

PepsiCo—which faced a consumer backlash after it pulled aspartame from Diet Pepsi in 2015—is making a full reversal and will once again use the controversial sweetner in the soda's mainstream variety.

The brand yanked aspartame in mid-2015, replacing it with with sucralose and acesulfame potassium, known as Ace-K. But the move backfired as loyalists clamored for the original formula. So in 2016, the brand brought back the aspartame version—but only in limited quantities marketed as "classic sweetener blend." It kept the aspartame-free version as its mainstream variety. But now Diet Pepsi is making the aspartame version its main variety again as part of a marketing revamp.

Beverage Digest first reported the news on Friday. A PepsiCo spokeswoman confirmed the switch to Ad Age but did not comment further. The move sets up a new chapter in the cola wars with Diet Pepsi's overhaul going head-to-head with Diet Coke, which has also undergone big changes.

Diet Coke this year introduced new flavors, packaging and an aggressive ad campaign that included a Super Bowl ad. Diet Coke has stuck with aspartame all along. And despite criticism of the sweetener by some health activists, the move has paid off. Last year, sales of Diet Pepsi's aspartame-free version dropped by 8.0% in volume, while Diet Coke fell 2.5%, Beverage Digest reported.

Diet Coke's revamp includes new flavors such as "feisty cherry," "zesty blood orange" and "ginger lime," as it seeks to gain interest from younger drinkers. Diet Pepsi will add vanilla and lime flavors in addition to its existing wild cherry variety, Beverage Digest reported. The new lineup will be marketed as "Classic Diet Pepsi Taste," and be backed with a TV ad that is part of the larger "Pepsi Generations" campaign that debuted at the Super Bowl, according to Beverage Digest. Diet Pepsi will keep the aspartame-free version but only sell it via e-commerce, according to Beverage Digest.

The move comes amid continued struggles for PepsiCo's North American Beverage unit, whse revenues fell 3 percent in the fourth quarter. On Tuesday, the same day it reported fourth quarter earnings, the company executed a round of companywide layoffs. PepsiCo stated that the layoffs cover "less than 1% of our U.S. workforce focused on corporate positions" as part of an ongoing "$5 billion productivity program." A spokeswoman declined comment when asked for the percentage of global layoffs. As of Dec. 30, PepsiCo employed 263,000 people worldwide, including 113,000 people in the U.S., according to financial filings.

PepsiCo must balance growing smaller, often healthier, startup brands with managing its big sodas like Mtn Dew and Pepsi. While in decline, sodas remain a major revenue source.

PepsiCo's playbook for 2018 includes pouring more marketing behind its established soda brands. It is also pushing a new sparkling water brand called Bubly that will be backed with advertising during the Oscars. Meanwhile, PepsiCo on Friday announced comedian Kevin Hart as the new spokesman for Mtn Dew's Kickstart variety as part of yearlong campaign that kicks off this weekend at the NBA All-Star game.

On the earnings call, PepsiCo CEO Indra Nooyi made her case to investors: "Let's not forget, 2015 and 2016 were very good years for North American Beverages. 2017 was a year that we would have liked to have had better performance. And now we're going into 2018 with a strong marketing calendar. So, let's wait for the year to play out."

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