Wednesday, February 13, 2008

Marketing Memo: Drinks' Giant Pepsi is Getting 'Raw' and 'Natural' With its First New Cola Introduction in Over Ten Years

Food and beverage industry giant PepsiCo, maker and marketer of the Pepsi cola drink brand, is getting raw and natural with a new cola it will introduce soon in the United Kingdom called Pepsi Raw. The new cola was created by Pepsi's UK drinks division.

The beverage, the first new cola the marketer has launched in over a decade, will not only contain all natural ingredients, but the drink maker will depart from the age-old soda pop industry paractice of not listing all the ingredients of a cola on its container, and list all of Pepsi Raw's ingredients on the can or bottle.

The ingredients which make up Pepsi Raw are: pure cane sugar (instead of fructose or another corn sweetner), apple extract, natural carmel coloring (we aren't sure what that is), coffee leaf, tantric acid extracted from grapes, gum arabic from acacia trees and sparkling water. Petty clean--and "raw."
Pepsi says the new drink will not contain any artificial preservatives, colors, flavors or sweetners. Hence the raw name, we imagine. This is in contrast to the company's other Pepsi branded colas and soft drinks which contain fructose corn syrup, artificial coloring and preservatives.

Pepsi Raw is paler in color than the other Pepsi cola drinks and has less carbonation or fizz to it. The beverage marketer will initially introduce the new cola later this year in the UK, first in a select number of clubs and bars in London, Liverpool, Manchester, Brighton, Glasgow and Birmingham. It then plans to launch the natural cola in UK food and beverage retail stores and supermarkets, as well as in foodservice, before it markets Pepsi Raw in the U.S. or elsewhere in the world.

The UK has become a leader in natural and organic food and drink--both from a consumer demand standpoint and retailer push perspective--so the UK launch makes good sense to us. It offers a test in a hip food and drink market, where "natural," "organic," "ethical," and "green" are becoming a part of the everyday language of consumers.

By departing from the time-honored soft drink maker's code of keeping at least some of their cola ingredients secret (natural flavors is meaningless for example), Pepsi is blazing a new path with its "Raw" cola by listing everything the drink contains on the label. To this day, Coca Cola goes to great lengths--and expenses--to maintain the "secret ingredient" or two in its famous Coca Cola, even though it lists the primary ingredients on the can or bottle. Cola marketers also have believed leaving a little something out, the "secret ingredient," creates an illusiveness which creates new drinkers. We think that once might have been true, but it isn't likely the case today.

Of course, since Pepsi Raw is geared to a more health-oriented consumer, it makes perfect sense to "break the code" and list all the ingredients on the cola's container. In fact, not doing so would likely create a buying barrier among healthier-oriented shoppers who demand full-disclosure on food and beverage labels. The new cola has far-less calories, 90 calories per 300ml bottle for example, than Pepsi's other colas in the same size bottle, which have about 130 calories.

Pepsi's marketing director Bruno Gruwex is touting the new natural cola as the marketer's "most significant new product innovation in 15 years." In terms of breaking the cola mold for the bottler, we probably agree with him.

It's not like a wild band of hippies have just invaded PepsiCo though. The food and beverage company has been getting deeper into the natural and organic products categories over the last five years or so. Its Frito Lay snack food division has introduced organic potato and vegetable snack chips. It's created all natural snack products with far less salt, and with no preservatives or other artificial ingredients as well.

Late last year, PepsiCo even acquired a company called Sabre, which produces and markets a popular all natural, fresh prepared hummus under the Sabre brand. Since buying the company, the food and beverage marketer has launched it into thousands of new supermarkets nationally in the U.S., and put substantial marketing funds behind promoting the hummus brand.

In the beverage category, PepsiCo recently bought the Naked Juice brand of fresh, all natural and organic juices. Naked Juice is similar to Odwalla, which is owned by Coca Cola. It's an all natural, super-fresh juice which requires refrigeration in merchandising and has a relatively short shelf-life because of its pure nature. The New York-based company is expanding its direct sales force to sell the brand, launching it nationally, and spending a sizeable chunk of cash to buy floor space in supermarkets for the Naked Juice point-of-sale refrigerated merchandising units.

Looking at PepsiCo's corporate strategic marketing push into the natural food and beverage categories illuminates the marketer's motivation behind creating a product such as Pepsi Raw. It wants to capture more health conscious consumers, as well as younger, hipper folks who want alternatives to basic cola's and have switched to new age soft drinks and other beverages. The Naked Juice and (the marketer hopes) Pepsi Raw consumer are very similar in many demographic characteristics.

In fact, it's no accident Pepsi is introducing "Raw" first in clubs and bars in the UK cities we mentioned above. The marketer's hope we are certain is to create word of mouth buzz among the trendsters who frequent these establishments, thereby creating more widespread demand for the new cola. These clubers tend to be early adopters, and are always looking for the latest next new thing, be it in food, fashion or cola drinks.

We think Pepsi Raw is a pretty good name for the cola drink. It's short, describes the natural elements of the cola well, and lends itself to various positive brand connotations that consumers can make in their own minds. Of course, taste as always will be key. If people don't like the drink's taste, they might connote negative definitions of raw, which that won't be a good thing for the brand at all. But, good branding is generally always a potential double-edged sword.


AC said...

Remember fuelosophy? Pepsi launched this product exclusively at Whole Foods about 1-2 years ago. Just goes to show how progressive their thinking is.

Natural~Specialty Foods Memo said...

Yes, I do remember Fueosophy. However, if you didn't mention it in your comment, I wouldn't have even thought about it.

Goes to show the weakness of that particular brand I suppose.

Wasn't Fuelosphy more of an energy drink type of beverage though?

The new Pepsi Raw seems to be more of a cola drink hybrid.

Thanks for the input.