Refreshment, Change, Whatever, Just Think PepsiCo

(Links to videos at bottom of article)

“Change” is now the key theme to more than the Obama campaign.

PepsiCo, the maker of iconic soft drink brands Pepsi Cola and Gatorade, ran through major alterations in its top brands this week, showcasing – and explaining – new packages and logos for four of its key product lines.

The changes are part of a stem-to-stern effort to realign the company’s brands as a part of what executives claimed was a zeitgeist of youthful revolution and optimism via the tagline “Every generation refreshes the world.” It comes at a time when – company leadership acknowledged – its sales have been hurt by an industry-wide malaise brought on by economic uncertainty and a perception that many soft drinks are unhealthy.

“I’ve seen the best and the worst of the consumer packaged goods industry,” said Massimo D’Amore, the CEO of PepsiCo Americas Beverages. “I’m optimistic because we know how to win in this environment and we have the ammunition. We have been in the trenches before and we know how to fight.”

In addition to putting a new logo on Pepsi-Cola and re-labeling Gatorade to focus on an oversized “G” as part of a themed marketing campaign, the company revealed a new package for Tropicana orange juice and a three-dimensional Super Bowl commercial for its re-energized SoBe LifeWater brand.

And while much of the excitement from this week’s press conference stemmed from announcements about which brands would be highlighted in Super Bowl spots – as well as a spirited debate on whether or not PepsiCo had co-opted a free ride on the Obama campaign’s “Change” message and campaign insignia — there were other changes on display that will affect the entire Pepsi beverage portfolio.

Under the Tropicana brand, the company launched an orange juice line that will contain 50 percent of the sugar and calories as regular orange juice; SoBe LifeWater’s new zero-calorie options received similar treatment. The two products’ common ingredient? Stevia, a new, natural, zero-calorie sweetener that the company is backing to the hilt.

“We’re looking at Stevia across the entire portfolio,” d’Amore told BevNET. “Right now in the U.S., stevia is the best option we have for a zero calorie natural sweetener.. Over time there might be other technical solutions we might be able to tap, but for right now for the next year or so, stevia is at the forefront of our innovation.”

Stevia’s growing influence is only one of the changes taking place in the portfolio, however. Each brand will be tinkered with in turn, according to Dave Berwick, the company’s Chief Marketing Officer.

“We’re going to be revamping Naked, giving it a facelift,” Berwick said. Other changes will be coming to Izze and other carbonated brands, he added, including Mug root beer; Mountain Dew will also see a logo change.

Functional changes to several well-known brands are coming, as well. Berwick indicated that the popular Propel line of enhanced sport-themed waters would soon include fiber, while other skus of Gatorade are being reshuffled in an attempt to emphasize their own functional characteristics. Chief among them is an impending re-launch of Gatorade’s ballyhooed Tiger brand, which is being restaged with extra vitamins and the focus-oriented compound L-Theanine.

“Propel will be completely revamped at this point as well,” Berwick said, noting that the brand will be pulled away from the Gatorade umbrella.

Meanwhile, the company was not afraid to admit defeat in some cases. Berwick conceded that the launch of G2, a Gatorade sub-line featuring half the calories of its parent product, had not had the hoped-for consumer acceptance.

The launch “was not quite as successful as we think it could have been,” he said, while unveiling a new set of advertisements intended to re-center the brand around the notion of “less calories for more athletes.”

By placing G2 in an athletic framework, he said, SoBe would be free to operate as a kind of everyday hydration beverage.
But not all of the portfolio will be receiving a makeover, executives added. The company is notably leaving Aquafina, the best selling water brand in the U.S., out of the renovation mania. But not because of its success.

“There’s been so much change in the past year, and its grown as a category to the point where, really, we are starting to make very little money,” Berwick said. “We do expect it to turn and grow, but it’s not as important as it had been.”

Beating up the water category have been growing social movements against bottled water for its environmental footprint, as well as the use of tap water as a cheaper alternative. The desire for unflavored water has been replaced, in many cases, by functional products as well, Berwick said, noting “the category has morphed.”

NOTE: To see video of Massimo d’Amore, CEO of PepsiCo Americas Beverages, discussing the influence of Stevia and other product innovations on the company’s beverage portfolio, click HERE.

To see video of David Berwick, Chief Marketing Officer of PepsiCo North America Beverages, discussing the further revamp of the company’s beverages, including Izze and Naked, click HERE. To see Berwick discussing the way PepsiCo brought retailers into its new marketing efforts, click HERE. To see Berwick discuss the concept of brand change, click HERE.

To see scale models of some of the SoBE lizards, click HERE.