Pepsi Tests 'Naturally Sourced' Beverage

Raw Aims to Respond to U.K. Demand for Less-Processed Products

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LONDON ( -- Apple extract, sparkling water, grapes, coffee leaf, raw cane sugar. The list of ingredients sounds like it belongs to a health drink, but those are the components of Pepsi's newest variant.

Pepsi Raw, being launched in U.K. test markets, is meant to be a more healthful alternative to the traditional cola. A type of Pepsi made from only "naturally sourced" ingredients, it taps into demand for premium, less-processed products.
Raw deal: Available in U.K. bars and clubs.
Raw deal: Available in U.K. bars and clubs.

It contains no artificial preservatives, colors, flavorings or sweeteners. Raw cane sugar replaces Pepsi's now-traditional high-fructose corn syrup, the cheap sweetener that has been linked to obesity. The result is a drink that is slightly paler and less fizzy than ordinary Pepsi.

Limited distribution
Pepsi Raw is being tested in the U.K. because of the country's "growing demand for premium and more natural products," according to a spokeswoman. Pepsi confirmed that the drink's distribution will be "reconsidered at a later date," with an international rollout expected if Pepsi Raw is a hit with consumers.

Bruno Gruwez, Pepsi's U.K. marketing director, said in a statement, "We are really proud that the U.K. is leading the way with the launch of Pepsi Raw, which is the most significant innovation from Pepsi U.K. in the last 15 years."

The drink, sold only in glass 300-millileter bottles, is available in selected bars and clubs in seven U.K. cities (London, Manchester, Glasgow, Brighton, Birmingham, Leeds and Liverpool). Prices for Pepsi Raw vary according to venue, but it is more expensive than normal Pepsi.

Lynn Dornblaser, a new-product analyst at Mintel, said, "This will appeal to younger consumers who are particularly interested in knowing exactly what they are consuming and want to avoid 'nasty stuff.'"

But, she added, it's likely to be a niche product. "The target market is small, and Pepsi would have to have relatively modest goals for it, but it could potentially garner a pretty loyal following and help Pepsi gain market share by recruiting drinkers from smaller specialist colas or from people who've given up cola. In a very mature category like carbonated soft drinks, it is difficult to maintain or increase share, so even a drink with a small appeal can make a significant difference."

Pepsi is supporting the launch with a press and outdoor campaign by Abbot Mead Vickers BBDO starting on March 3. The ads show naked people overlooking a city, their backs inscribed with slogans such as "Go Raw as nature intended" and "Do what comes naturally." There is also a website,

"It makes sense to launch first in the U.K. because health concerns are a bigger issue there," Ms. Dornblaser said, adding, "It might not fly as well in the U.S. because of the price."

Paul Linthwaite, a director at Pepsi's U.K. distributor and bottler, Britvic, said: "The cola category needs rejuvenation to drive further growth. As with many other drinks categories, the growth of soft drinks is being driven by premium offerings, with our research indicating that 53% of people will pay more for a quality drink".

Pepsi Raw's positioning makes sense in a market that is steadily declining in volume. According to TNS Worldpanel, cola volumes in the U.K. fell 2.3% in 2007. Coca Cola is the market leader in the U.K., but PepsiCo has had the edge when it comes to innovation. Sugar-free Pepsi Max is Pepsi's most successful drink in the U.K.

Coca Cola's new products, however, have had less of an impact. Coke Zero, launched in July 2006 to rival Pepsi Max, has just 5.3% of the market compared with 7.9% for Pepsi Max, according to Nielsen.
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