In this discussion, Laura Cooper, a WSJ reporter specializing in the soda industry, reveals how Pepsi is struggling to reclaim its status from Dr Pepper. She highlights the brand's intriguing evolution, focusing on the new beverage chief, Ram Krishnan's efforts to pivot back to drinks after years of prioritizing snacks. The conversation touches on the historical rivalry with Coca-Cola, innovative marketing strategies aimed at younger consumers, and Pepsi's acquisition of Poppi to appeal to health-conscious drinkers. Will Pepsi's comeback strategy pay off?
PepsiCo's new beverage head Ram Krishnan aims to refocus on revitalizing soda sales while increasing product visibility and distribution.
The acquisition of prebiotic soda brand Poppi reflects PepsiCo's strategy to adapt to health trends and appeal to health-conscious consumers.
Deep dives
Pepsi's Rise and Decline
PepsiCo has a long history of competition with Coca-Cola, historically positioning itself as the cooler choice, especially during the 1980s and 1990s with campaigns like the Pepsi Challenge and collaborations with pop icons like Michael Jackson. The company experienced substantial growth during this time, capturing nearly equal market share with Coke. However, as consumer preferences shifted and health consciousness increased, PepsiCo expanded into snacks and other beverages, which inadvertently led to a decline in soda sales. This diversification may have caused Pepsi to lose focus on its core cola product, leading to a significant drop in market ranking, with reports indicating that it has fallen to third place behind Dr. Pepper as of last year.
Strategic Changes Under New Leadership
PepsiCo appointed Ram Krishnan as the new head of beverages in an effort to regain market share and reignite interest in Pepsi. His strategy involved improving product visibility in stores and restructuring distribution to leverage the strong operational infrastructure of PepsiCo Foods. To boost the appeal of Pepsi, Krishnan launched a marketing campaign focusing on the idea that Pepsi pairs best with food, reinforced through targeted ads that showcase consumers swapping Coke for Pepsi at fast-food restaurants. Additionally, the reboot of the Pepsi Challenge, this time comparing Pepsi Zero Sugar with Coca-Cola Zero Sugar, aims to attract a younger demographic and invigorate sales.
The Future of Soda and Health Trends
Despite PepsiCo's efforts to revitalize its signature beverage, the overall soda market is facing challenges due to changing consumer preferences influenced by health trends. Many consumers are now opting for low-sugar or healthier alternatives like seltzers and energy drinks, which have affected traditional soda consumption. PepsiCo's acquisition of Poppy, a healthier prebiotic soda brand, exemplifies its commitment to adapting to these trends and targeting health-conscious customers, especially Gen Z. While there is optimism regarding potential growth through these strategies, industry experts suggest that PepsiCo must navigate a difficult landscape where health concerns around sugary drinks are increasingly prevalent.
After decades of fighting Coca-Cola to be the nation’s favorite soda, Pepsi dropped to third place, after Dr Pepper. Now PepsiCo needs to win back soda drinkers . WSJ’s Laura Cooper reports that after years of focusing on potato chips and energy drinks, the company’s new beverage head Ram Krishnan is trying to refocus PepsiCo on drinks, in part with an agreement to purchase prebiotic soda brand Poppi. Allison Pohle hosts.
