“Away-from-home is a big, big element of our future strategy. We're big in away from home. We're big in on-the-go. We're big on immediate consumption both in our snacks and beverage business. We want to provide more experienced solutions to the consumer away from home, so we can capture more calories or more of the hydration needs for consumers.”
Gatorade becomes ‘an ecosystem of solutions for both hydration and fuel’
During his presentation, Laguarta outlined two core areas that PepsiCo is focusing on to grow its brand: customer-centric innovation and building "an ecosystem of solutions” that taps into different occasions and day parts.
“How do we leverage our brands beyond what they are today into an ecosystem of solutions that drive consumer occasions in multiple parts of the day, and this ability to be always everywhere? Through our go-to-market systems [and] through our innovation, we can be in every day, in every single day part of the consumer journey, but also being everywhere in home and away from home to capture that consumer.”
Over the years, PepsiCo expanded its portfolio to better address consumer needs for energy and sports hydration through innovation in enhanced functionality like Rockstar’s functional mushroom-infused energy drink line Focus. The company's sports drink business, which includes Gatorade and Propel, was worth approximately $11bn in 2023, and its energy drink business came in at about $6bn, based on 2023 global estimate retail sales value data.
PepsiCo has also revamped the Gatorade brand to be “an ecosystem of solutions for both hydration and fuel,” Laguarta said. In 2022, PepsiCo released Fast Twitch, an energy drink and sports drink hybrid, and built out a line of powders and tablets, “giving consumers the opportunity to find Gatorade or to use Gatorade in a much different way,” he added.
Laguarta highlighted that new formats in liquid refreshment beverages (LRB), like tablets and powder, make the brand more desirable to younger consumers. In PepsiCo's Q3 2023 earning call, Laguarta admitted that Gatorade lost market share to Logan Paul's PRIME, a brand popular among young consumers.
"If we can help consumers move from tap water ... into other more functional experiences, this is a big opportunity for everybody participating in LRB, and that's what we're trying to do. It is not only going to be Gatorade, but it's going to be a combination between Gatorade, Propel and some other solutions that we have. It's not only going to be ready-to-drink bottles, but it's going to be powders and tablets, and we're making big investments in the supply chain of those powders and tablets. ... New generations, they think about beverages in a different way, and they prefer to have their own bottles, and they create their own drinks."
Last month, PepsiCo also expanded Gatorade’s direct-to-consumer (DTC) and digital offerings with Gatorade iD, a membership program through which consumers can purchase personalized Gatorade gear and limited-time flavors and access education on how to improve their hydration, Laguarta explained.
“When you think about e-commerce, [it’s] clearly a huge, huge growth opportunity, e-grocery being a big part of it,” he said. “We're creating direct-to-consumer solutions, be it with Gatorade, be it with SodaStream, or be with snacks.com, where we can personalize solutions for consumers, and those are starting to become scalable solutions already.”
Doubling down on positive choices with reduced sugar, sodium, fat
In addition, PepsiCo continues to provide more portion control options and products with reduced sugar and sodium. Pepsi Zero Sugar and low-sugar options were estimated to be worth approximately $9bn in 2023, and the SunChips and Baked line are worth a combined estimated $2bn, based on 2023 estimated retail sales value.
“There [are] a few spaces that we want to double down. One is ... positive choices. We will continue the journey of positive choices through superior R&D, be it reduction of sodium, reduction of salt, reduction of sugar, positive ingredients, whole grains, lentils, etc. So, we're working on a lot of innovation around foods and beverages around positive choice.”
In its PepsiCo positive (pep+) framework, the company laid out a series of sugar, sodium, and fat reduction goals that it hopes to reach by 2030, including 67% or more of its beverage having less than 100 calories from added sugar per 12 oz. serving, 75% or more of its convenient foods portfolio volume to not exceed 1.3mg of sodium per calorie, and 75% or more of its convenient foods volume can't exceed 1.1g of saturated fat per 100 calories.
PepsiCo achieved its fat reduction goal with 75% of its portfolio, while 56% of its beverages meet the sugar reduction goal, and 68% of its convenience foods meet its sodium reduction goal.
PepsiCo has also expanded its portion-control options through bite-sized versions of its Cheetos, Doritos, and SunChip and multi-pack offerings, which will be another focus of future innovation.
“We also invested in giving the consumer optionality for portion control, optionality for portability, and you'll see some of the innovation around packaging, be it canisters with multi-packs or variety packs, which [is] already a big part of our business $3 billion in the US.”
