PepsiCo North America Beverages said that the re-launch this week of its niche lemon-lime soda product was fuelled by growing US consumer demand for natural ingredients, with the drink now positioned as containing 'real sugar' along with no artificial ingredients or flavours, preservatives, or caffeine.
Influence on soft drink industry
“The biggest thing that stands out here is the use of natural sugar,” said Tom Vierhile, director of product launch analytics at Datamonitor.
He added that the Sierra Mist Natural launch could open the door to more formulation of other soft drink brands, encouraging them to embrace sweeteners such as cane sugar and possibly agave and stevia.
Vierhile said that the move to 'natural sugar' has been happening for some time at the high-end of the market with gourmet soft drinks, “but PepsiCo’s move suggests that the soft drink giants may soon be phasing in this change with some of their more niche-oriented product.”
“I think that this product introduction will help legitimize the “natural” niche within the carbonated soft drinks market. Sierra Mist is a relatively newer brand in the carbonated soft drink market and PepsiCo may be testing the waters with this product before it decides to expand the “natural” strategy to some of its other brands,” the analyst told BeverageDaily.com.
Move from high fructose corn syrup
Both Vierhile and David Jago, director of insight and innovation at Mintel, agree that there is currently a general industry move away from the use of high fructose corn syrup (HFCS) as a sweetener in drinks.
The shift is partly down to consumer demand. According to Mintel research from May this year, 52 per cent of US consumers said that they would avoid products that list HFCS as one of the first ingredients.
And Vierhile explained that HFCS has become something of a “scarlet letter” for product launches: “In general, makers of packaged food and drink products in the US cannot run away from “high fructose corn syrup” fast enough as this claim is red hot at the present time,” he said.
Jago said that this move is a trend that is influencing the wider food and drink industry and not specifically beverage brands, “A lot of other companies are removing HFCS from products, that’s ongoing. I see it as part of a bigger trend over quite a long period of time,” he told BeverageDaily.com.
Innovation
The analyst sees PepsiCo as an especially innovative and experimental company that “has got their eye on the ball” saying that it appears to be ahead of the industry in terms of using sugar in its products.
PepsiCo has previously introduced natural sugar products into the market, with the launch of Mountain Dew Throwback and Pepsi Throwback Soda – two “limited edition” introductions that hit the USA market in the summer of 2009. Both these products used sugar rather than high fructose corn syrup.
The company also launched Pepsi Raw in 2008, however, the product was pulled off the shelves this year after reported poor sales.
Jago believes the failure of the product was down to the marketing of the drink as an expensive, premium brand, rather than the all-natural ingredients and added that PepsiCo should now be “well placed” to introduce a new natural beverage product into the market.