In tune with the popularity for low-calorie products, Pepsico Inc. (PEP) is set to launch mid-calorie drink ‘Pepsi Next’, which will hit shelves early next spring.
Pepsi Next has been designed to contain 60% less sugar, 60% fewer calories, and will be tested in two new markets next July.
Additionally, the retail giant had applied for trademarks for two more new-mid calorie drinks along with Pepsi Next, namely Mtn Dew Next and Sierra Mist Next.
Management has revealed that the mid-calorie drinks have been formulated to bind the consumers into the cola franchise. This is because people are abstaining from drinking cola as they are worried about high sugar and calorie content in the drinks. Reportedly, colas now account for about 55% of carbonated soft drink consumption, down from 65% in 1995.
Pepsi had tried its hands on mid-calorie drinks earlier. However, the earlier initiatives were not much of a success. Among them were Pepsi XL, containing 50% less sugar, launched in the 1990s, and Pepsi Edge, a 70-calorie soda, launched in 2004.
But management feels that nowadays the trends have changed and the drinks with lower calories enjoy higher demand than before. Moreover, management also cited that consumers had to previously choose between zero calories or full calorie. But there was nothing in between. Pepsi Next will be sweetened by four artificial sweeteners as it tries not to compromise on taste.
Pepsi’s rival Coca Cola Company (KO) had also tried to entice customers by its low calorie drinks, which were of no success. The low-calorie drinks Coke C2 and Coke Zero failed to create much hype in the market.
Both Coca Cola Company and Pepsi reported higher-than-expected sales in the recently ended quarter, as strong sales in emerging markets helped blunt the impact of ongoing weakness at home.
Currently, we prefer to be Neutral on Pepsi’s stock. Furthermore, Pepsi holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
