Comment – Soft Drinks & Water - Where Next for Pepsi Next?

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Just over six months ago, PepsiCo garnered quite a few headlines when it launched Pepsi Next in Australia. What caught the industry's eye was that this marked the first time that the company had used stevia in the reduced-sugar brand. Ray Rowlands of Drinksinfo Ltd takes a closer look at the variant and asks: What's next?

I have been waiting for the stevia version of Pepsi Next to ‘go viral’, or at least break out of its Australian testing ground. As far as I am aware, this cola variant is still only available in the one market, although a version containing artificial sweeteners is on sale in the US.

The US formulation has 60% less sugar than a standard cola, the sugar being replaced with a blend of high intensity sweeteners - aspartame and acesulfame potassium. The Australian Pepsi Next, however, uses stevia to replace 30% of the sugar found in regular Pepsi.

The product was developed to win back lapsed Pepsi drinkers who want to cut down on the calories but do not like the taste of artificially-sweetened diet drinks. Indeed, research quoted by PepsiCo in Australia shows that consumer taste appeal in maximised by products that can lay claim to containing 30% less sugar. But, why was PepsiCo happy to employ artificial sweeteners in the American version of Pepsi Next rather than stevia, especially considering the negative press and health scares that such ingredients are receiving?

Stevia has been legal to use in the US since late 2008. The Food and Drug Administration has not permitted the use of whole-leaf or crude Stevia extracts, but it has not objected to highly refined preparations. 

The brand development in Australia is a bold move for PepsiCo. after all, it is the first time that the company has employed stevia in its cola brand. But, the choice of this market for the pilot is a bit of a mystery to me. Although the Australian food authority FSANZ approved stevia as an ingredient in foods and beverages back in 2008, this natural sweetener is still not widely used there. According to the Australian Beverages Council, stevia sweetened products still represent less than 1% of the country’s drinks market. 

Whilst PepsiCo appears to have been wary of trying out stevia sweetened Pepsi Next in its home market, why choose Australia as an alternative? Japan, for example, would appear to have offered a far more suitable launch pad. This country has been at the forefront of stevia development, having produced its first commercial stevia sweetener in the early 1970s. Since then, the Japanese have used it in a variety of soft drinks, including Pocari Sweat, Sunkist and even Diet Coke, for a while.

The choice of Australia over Japan can’t really have a bearing on the potentially negative impact on company image and sales, should the product fail. Pepsi volumes and market share in Australia and Japan are of a fairly similar size, so there is as much to lose in both.

Maybe it is because Schweppes, which bottles for PepsiCo in Australia, has stevia experience of its own: Schweppes flavoured mineral waters have contained the sweetener for a couple of years at least, as does the company’s cordial drink.

To be fair, it is not only PepsiCo and Schweppes who see the opportunities presented by stevia in Australia. Unilever has recently introduced a sugar/stevia Lipton iced tea blend there, whilst Nudie, a local juice company, has launched Wonder Winnie, a water-based drink sweetened with stevia. The Natural Cordial Company (NCC) also employs the sweetener. Stew Bailey, the owner of NCC, believes that the cordial category has stopped growing in Australia because consumers believe the products are all loaded with sugar. He sees his company's range as a healthier option.

Much as stevia is marketed as a natural alternative to sugar, it is not without its drawbacks. For one, the sweetener is more expensive than artificial sweeteners including aspartame, saccharin and sucralose. It is also up to 300 times sweeter than sugar and, even when diluted, it still tends to leave a slight liquorice aftertaste (although it is reported to work well in tandem with citrus-flavoured drinks). All this could help to explain why Pepsi Next is still only on test in Australia, but it does not really answer the conundrum of why it was launched first in that particular market.

Coca-Cola Co has dabbled with stevia, but not yet in Australia. According to a spokesperson from Coca-Cola France, the recipes of Sprite, and the Coca-Cola partner brand Nestea, have now been modified to include this sweetener, following the earlier French rollout of Fanta with stevia. Also, last month, it was announced that the UK Sprite brand is also to adopt the sweetener. In addition, and as mentioned above, Diet Coke in Japan had included it in its formulation. So, it may only be a matter of time before PepsiCo’s arch rival also branches out into the Antipodes with stevia, as Pepsi Next heads for Europe. But, I guess, the latter will depend on the results of the Australian trial.

It is too soon to say how well the brand is doing in Australia. so, whether it will see the light of day elsewhere is still uncertain. Having had the opportunity to actually sample Pepsi Next, however, I still prefer the taste of Pepsi Max.

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