Home > Making a splash: Innovation in the soft drinks sector. Part Two

Making a splash: Innovation in the soft drinks sector. Part Two

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This is the conclusion of a two part series on innovation in the soft drink and beverage industry, to read the first half of the article click here.

The Next product 
One of the most talked about low calorie releases of recent times has been the Pepsi Next launch. 

This release was of particular importance not only because it represented a major leap into the mid-calorie market, but because its Australian release was significantly different to other global releases. 

Unlike its US counterpart, the Australian launch of Pepsi Next had a stronger focus on retaining the sugar content. 

"The brand was launched in Australia in 2012, but interestingly using a formulation with stevia for 30 percent sugar reduction, rather than the 60 percent reduction in the US version with a variety of sweeteners," Williams says. 

With consumers increasingly concerned about the impact artificial sweeteners may have on their health, brands have moved to quell concerns by bringing sugar back into the equation. 

This move forms the crux of the difference between the US and Australian versions of Pepsi Next, with the local version being sweetened with sugar and stevia only, while the US version takes on a blend of sugar and four different sweeteners. 

With its lower reliance on alternative sweeteners, the Australian product posts a significantly higher sugar content, and it's a far cry from the sugar-free Pepsi Max consumers are most used to. 

In Australia, stevia is considered a 'natural' ingredient and the fact that the sweetener is plant-based has helped allay health concerns and improve the product's image. 

The move has also been used by a number of non-alcoholic beverage makers, particularly juice makers, which enjoy the benefit of closely aligning their products with more 'natural' ingredients. 

But despite the new buzz around mid-calorie drinks, Williams says the new products aren't without their downfalls. 

These products are not well tested in the market, so brands are still unsure how they'll be received by consumers, and the new competition brought in by these products may introduce complications for existing products with a strong and loyal fan-base. 

"They may not have widespread consumer appeal, may confuse consumers with a raft of different calorie levels, sweeteners and positionings, may, in any case, cannibalise sales of existing full and low calorie lines," Williams warns. 

The trend intensifies 
Pepsi isn't the only large soft drink brand to enter the mid-calorie market, with main rival Coca-Cola also making similar moves overseas. 

Last month Coke released a new reduced calorie Sprite for the UK market, and in a sign of how confident the company is in the product, the new release will completely replace the existing Sprite range. 

Like the Australian incarnation of Pepsi Next, this new Sprite will be sweetened with stevia and sugar, but will contain 30 percent less sugar. 

The launch will bring Coca-Cola's UK assets up to speed with what is already becoming a well-established trend in other markets, and the company has already released Sprite with 30 percent less sugar in France. 

Back in the US, Coke has also developed and tested its own mid-calorie drinks for Fanta and Sprite. 

Both products feature 'natural' sweeteners, including sugar, stevia, and erythritol, producing a product with 50 percent less calories. 

With the US traditionally acting as a litmus test for the wider industry, Coke's foray is likely to attract plenty of competition in the soft drink market. 

And not to be outdone, number three player in the US, Dr Pepper Snapple, has also been driving its Dr Pepper Ten concept, a 10 calorie soft drink aimed at young males who are traditionally less interested in health and dieting. 

In January, Dr Pepper launched new lines of 7 Up Ten, A&W Ten, Sunkist Ten, Canada Dry Ten, and RC Ten, all of which relied on a revamped recipe. 

"With 10 calories, they are neither traditional diet soft drinks nor even really mid-calorie offerings, but fall somewhere in between," Innova said.
The wider view 
The issue of health, and particularly the worsening obesity epidemic, looms large over most new soft drink releases. 

It follows a highly publicised ban on large sugary drinks in New York restaurants, and closer to home Australian regulators have long considered tightening the rules on this controversial market. 

If anything, the new trends in soft drinks show manufacturers aren't willing to be caught behind the eight-ball, and these investments show they're willing to make big bets on the emerging trends. 

But only time will tell whether these releases hit the spot, with health improvements and profitability the true measures of success on this front.
In the meantime, brands and pundits alike will have to sit back, wait and watch, because at the end of the day it will be the consumers who ultimately decide whether these new product developments sink or swim.

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