Pepsi goes local in China: Osmanthus-flavoured drink first to tap local culture and comfort

The firm first entered China in 1981 with the original Pepsi, and only recently the no-sugar version.

In an exclusive interview with FoodNavigator-Asia​, Lilly Yip, chief marketing officer of PepsiCo APAC, said the company previously tried to drive demand for new flavours from its global portfolio, such as vanilla, cherry and fruity.

“We found that these fruity flavours generated some interest, but the relevance for local (China) consumers was not very significant​.

“The GenZ consumers are very proud of their own culture and want a product that has local relevance with local comfort ingredients​.”

This inspired the firm to create an Osmanthus drink exclusively for the China market.

“It was the first local flavour developed in China, this was a major move for PepsiCo​,” Yip told us.

Osmanthus is obtained from a flowering plant native to China and widely consumed in the country as well as Asia. It is commonly used in teas and deserts.

Yip said the initial challenge was exploring the myriad of ingredients and local concepts within China, given its diverse market and differing consumer tastes between regions.  

The company explored popular cuisines, desserts and F&B trends to identify some key concepts.

“We did a national test, screened top ideas, developed prototypes and also did geographic screening to make sure the flavour was not geographically bias in terms of taste to any particular region in the country​,

“After a few rounds of testing and considering multiple factors, we identified Osmanthus was the most popular​ and performed well across all markets, so we decided to go with it as the first launch​.”

At present, Yip said there were currently no plans to distribute outside China, where the  drink is sold on major e-commerce sites, after an initial launch through convenience stores

“For the early-adaptors consumers, they want to try the product first to determine if they like it, before they go onto e-commerce platforms to purchase in bulk​,” said Yip.

The suggested retail price is between RMB 4 to 5 (USD0.5-0.7) and is available in 330mL (canned) and 500mL (PET bottled).

Yip said it was still too early to announce figures, but highlighted how the company was using social platforms to drive awareness.

She said consumer engagement levels were high on Weibo, with most of the content user-generated.