PepsiCo jumps on functional bevie bandwagon

By Clarisse Douaud

- Last updated on GMT

Related tags The coca-cola company Coca-cola

PepsiCo is joining the trend for mainstream beverage companies
looking to invigorate their sales with increasingly functional
offerings, such as vitamin waters.

Following closely on the heels of Coca-Cola, the carbonated beverage giant is unveiling G2 low-calorie electrolyte beverage under its Gatorade sports drink brand, as well as Propel invigorating water. As the carbonated category lags and functional beverages are predicted to grow, the soft drink mega-players are getting in on the action - either by expanding their brands, buying out existing brands, or creating new functional ones. Looking at the figures for growth in the functional water market gives a glimpse into the potential for growth across other emerging functional beverage categories. According to Euromonitor, in the US alone, the market for functional/fortified bottled water ballooned from $206mn in 2002 to $1.4bn in 2006. As such, it is not surprising that the likes of PepsiCo and Coca-Cola are looking to harness this trend. Introduced in 1967, and with more than $5bn in US sales, Gatorade was well ahead of its time as a sports drink brand and subsequently developed research portfolio. Now, G2 will be the company's largest new product launch since enhanced Propel Fit Water, which was introduced in 2002. "Today's news marks the biggest development in PepsiCo's non-carb business since bringing Gatorade into the portfolio,"​ said John Compton, PepsiCo North America CEO. G2 is designed not just to hydrate athletes following physical activity, but also round-the-clock. Propel invigorating water, which is mildly caffeinated and flavored, is tailored to hydrate as well as to provide energy. PepsiCo's number one challenger, Coca-Cola, has aggressively tackled the functional beverage industry this year. While the onslaught of acquisition and brand expansion represents a threat to smaller functional players, it also brings the promise for them to piggy back off of the company's global marketing power. In 2007, Coca-Cola has invested $4.1bn into the acquisition of vitamin water company Energy Brands for the manufacture and marketing of new nutritionally enhanced vitamin water lines. The new nutritionally enhanced vitamin water lines driven by Coca-Cola look set to display all of these attributes. Coca-Cola also launched new flavored functional waters under its existing Dasani brand. Fortified with vitamins and minerals, the zero-calorie Dasani line comes in three varieties under three slogans: "refresh and revive", "cleanse and restore" and "defend and protect". Coca-Cola is also taking the nutraceutical trend into its soft drinks. It launched Diet Coke Plus in April. Each eight-ounce can of Diet Coke Plus provides 15 percent of the daily value of Niacin, B6 and B12, 10 percent of the daily value for zinc and magnesium.

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