The rise of prebiotic soda in the US has caught the attention of the giants of the soft sector. And, weeks after PepsiCo made a near-$2bn bet on the sector, it has moved again – with its own product.
PepsiCo is launching a prebiotic cola in the US under its flagship brand Pepsi, a new product the company said “marks the first significant innovation in the traditional cola category in 20 years”.
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The launch of Pepsi Prebiotic Cola follows hot on the heels of the group’s $1.95bn acquisition of Poppi earlier this year.
The roll-out of the Pepsi-branded prebiotic soda begs a number of questions. How will PepsiCo tackle any possible cannibalisation of Poppi’s sales? How can PepsiCo win over consumers who might be sceptical about its health claims for the new product? And could the company look to take the product into markets outside the US where demand for so-called gut-friendly soda is starting to grow?
Meanwhile, PepsiCo’s arch rival isn’t sitting on the sidelines. In February, The Coca-Cola Company made its own move in prebiotic soda with the launch of its own line called Simply Pop.
A new segment
One resounding response to PepsiCo’s prebiotic cola launch, is that it shows the company sees strong long-term potential in the segment.
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By GlobalDataJust like the company grew a lower calorie and sugar segment for Pepsi with the Diet brand, it now sees potential to add on a new branch to its brand line with prebiotic.
As Jim Watson, senior analyst of beverages at Rabobank says: “It can be easy to still think of prebiotic as a pretty small segment, even despite the Poppi acquisition.
“But this is Pepsi saying it’s big enough to have multiple tiers of pricing. Multiple different brands going at the category different ways, and that potentially it’s just another category of soda, the way you’d have diet versus regular, and they’re saying you might be able to diet versus regular versus prebiotic.”
Richard Wyborn at Food Strategy Associates agrees that the decision shows the company is confident about the long-term opportunities in prebiotic soda, and that the group wants to make sure it’s one of the leading players in the space.
He also however sees the product launch as “an odd move”, given the drink will likely compete with its recently acquired Poppi.
Though he notes “equally, I can imagine that there’ll be a little bit of overlap, just based on pure mass, but there’s probably not masses of overlap between the two brands. And therefore, this move perhaps reflects a view that this is going to be a long-term shift on alcoholic beverages.”
Poppi does produce its own cola products: the Classic Cola and Cherry Cola. But its range also includes an additional 15 flavours.
Capturing a new audience
What stands out about PepsiCo’s prebiotic cola compared to Coca-Cola’s Simply Pop is that it is being launched, not under a new label but under its one of its core brands.
Some analysts see the positioning of the prebiotic cola under Pepsi as a tactical move, which could help it expand its consumer-base.
“You’re trying to capture some drink some consumers that might like Pepsi and their needs weren’t being met by the Pepsi brand, but they might otherwise be Pepsi drinkers,” explains Watson at Rabobank.
“You had a long-time Pepsi drinker who sees the entire category moving towards more functionality, more health claims, but maybe they don’t like the artificial sweeteners, and so the Diet Pepsis aren’t working for them. There isn’t something within the Pepsi portfolio that works, and so this will bring them around.”
Others though, are more hesitant about the brand being able to rein in consumer that know and love Pepsi brand already, given the drink being marketed is quite different to what they’ve come to know about the brand.
Wyborn at Food Strategy Associates says the move “risks confusing consumers”.
He adds: “Overall, it does feel strange. Just given the fact that it’s so much like the core Pepsi product, and, quite frankly, your average Pepsi consumer, I would imagine, couldn’t really care less about prebiotics, or doesn’t really have a clue [what that is].”
It’s an argument that’s echoed by Ivan Izus Torossian, consulting director at GlobalData: “I think 90% of people don’t really know what probiotics are [and] even more so prebiotics. We don’t know the difference; it’s just kind of trendy now.”
While health and wellness are a key growing area of interest for consumers across food and beverages, it’s hard to know whether the prebiotics element of the brand will actually attract or deter Pepsi’s loyal consumer-base.
The ‘health halo’
One hurdle producers in the prebiotic soda area of soft drinks have been facing is consumer scepticism around health claims.
Earlier this year, Poppi settled a lawsuit in the US filed by consumers who questioned the brand’s gut-health claims.
The suit claimed that the two grams of prebiotic fibre in Poppi’s drinks were an “amount too low to cause meaningful gut health benefits” for drinkers consuming a single can a day.
Though the lawsuit is settled, it showed a growing consumer scepticism which could pose a hurdle to the prebiotic sodas category.
“The challenge for that category is whether or not the health halo around it stands up to greater scrutiny over time,” says Watson at Rabobank. “And whether or not having a little bit of fibre in a drink really makes a difference to your health and whether or not consumers believe that.”
Despite the haziness surrounding health benefits of prebiotic products, Watson doesn’t necessarily see this as being a major barrier, given the product simply gives consumers more Pepsi to choose from.
He explains, “You’re selling health, but you’re selling an excuse to have the drink you wanted to have anyway. That is a much lower bar often than, you know, needing actual measurable health benefits.”
Compared to Poppi, Pepsi Prebiotic Cola contains just 1g more fibre. What is particularly striking about the drink though, is the 5g of sugar in a 12oz can compared to the 41g in a traditional can of Pepsi. The product also contains 30 calories and has no artificial sweeteners.
The drastic reduction in sugar is the most interesting aspect about the prebiotic drink for some.
According to GlobalData’s Torossian, the reduced sugar element is “the really big news”, given sugar reduction is something the company has tried already in the past, but it was only to around 15-30g.
He also notes that the group will be adding Stevia to the product. “So how they will nail that? Pepsi had a lot of backlash for using, aspartame,” he says.
Global opportunity
Pepsi Prebiotic Cola will launch online in the US later this year, followed by a retail roll-out in early 2026.
For Wyborn, the launch in the US seems a little strange, given how other soft drinks players, such as Coca-Cola Co. have approached launches of low-calorie products in the past.
“Coca-Cola Life, I remember they launched it in a handful of markets that weren’t in the US. I was in Argentina when they launched it. And a brand that you think has got global legs, you wouldn’t necessarily launch in your key market day one… I thought you’d almost test it elsewhere. Maybe I’m wrong on that.”
One potential market to grow the brand, Wyborn says, would be the UK. The market has seen a number of prebiotic growth in the prebiotic soda area. Living Things and XOXO Soda are two brands which received backing from local investors last year.
He notes, “there’s clearly momentum for it in developed markets, and as a consequence, there could be international potential for it in the future”, but that the Pepsi brand itself might not be the best avenue.
He adds: “For me Pepsi is an odd vehicle through which to access the opportunity given the limited relevance of prebiotics to Pepsi consumers generally but also the fact that the product visually looks so similar to the core Pepsi can.”
PepsiCo is clearly confident its Pepsi Prebiotic Cola can become a successful branch within its Pepsi soft drinks line, but we’ll have to wait and see whether consumers agree.
