PepsiCo’s North America Beverages unit saw 2% organic net revenue growth in its latest quarter, with water volumes growing in the mid-single digits.
And with sparkling water continuing to gain traction with consumers, PepsiCo chairman and CEO Ramon Laguarta identifies bubly as a star performer: eying it up as ‘a brand of the future’ with plastic-free packaging, multiple can sizes and flavor innovations.
'Consumers are coming back to bubly'
PepsiCo launched calorie-free sparkling water bubly in February last year, aiming to shake up the sparkling water category with the brand’s fun, modern ‘undeniable pop of personality’. And PepsiCo has already ramped up distribution and put its marketing muscle behind the brand, notably with a Super Bowl ad this year featuring Michael Bublé.
Last month PepsiCo announced that the brand would go plastic-free (the brand is currently available in both cans and PET bottles); and will instead offer a variety of can sizes.
Bubly is available in eight flavors across the US: grapefruitbubly, limebubly, strawberrybubly, orangebubly, lemonbubly, applebubly, mangobubly and cherrybubly.
Ramon Laguarta, chairman and CEO of PepsiCo, says the brand is well-positioned to tap into the growing sparkling water market.
“We're super happy, really, with this opportunity. And sparkling water has always been underdeveloped in the US, if you compare with some of the European markets, and we saw there was a big opportunity there.
“I think the R&D team did an amazing job: we have a very good product and we see that by the levels of repeat and loyalty we're creating with some of those flavors. I think the personality of the brand is fun, it's modern, it's young. So the consumers are coming back to bubly.
“So we see this brand as a brand of the future. We're going to be innovating in this brand and on these flavors, that other occasions that I think we can attack.
“You're going to see mini cans, you're going to see larger cans. It is going to be a no-plastic brand. I think that is a very, very good positioning that we can have for this brand going forward for the modern consumer, the millennial, and the younger mother that I think is adopting this brand for her kids.
“So we're feeling very good about this brand. This could be one of our next billion dollar brands. That's our goal with the NAB team, and they're executing every step of the way with a lot of precision. So we're very, very happy with this new brand in our portfolio.”
SodaStream: optimizing capabilities
PepsiCo continues to be bullish on its SodaStream acquisition: saying the brand is doing ‘very well’.
“It's exceeding our expectations in terms of the growth potential and growth execution,” said Laguarta. “So we're feeling good, we're understanding more about this platform. We're starting to put more of the PepsiCo capabilities against the SodaStream business, especially around flavors and around some of the consumer experience with flavors, which I think were underoptimized direct-to-consumer capabilities.”
But Laguarta says its strategy with SodaStream is to let it act separately to the main PepsiCo body.
“We're trying to insert some capabilities into SodaStream, but we're running it as a separate business that should be agile and nimble and going after actually disrupting the bottle business. That's the strategy and that is how we want to run this business going forward.”
PepsiCo has highlighted SodaStream’s sustainability credentials as a key part of its motivation for acquiring the brand, and also points out the work it is doing with other brands.
LIFEWTR will be packaged in 100% rPET bottles, and Aquafina will be packaged in cans in US foodservice while being tested in retail on the West Coast. Along with making bubly a plastic-free brand, these changes are anticipated to eliminate more than 8,000 metric tons of virgin plastic and approximately 11,000 metric tons of greenhouse gas emissions.
PepsiCo's goal is to make 100% of its packaging recyclable, compostable, or biodegradable by 2025, and use 25% recycled plastic content in all its plastic packaging.
