PLANO, Texas & PURCHASE, N.Y. -- After only a month in national distribution, PepsiCo CEO Indra Nooyi said Pepsi Next "is off to a good start," though she stopped short of calling it a gigantic success. At the same time, Dr Pepper Snapple Group CEO Larry Young said the company will likely hold off on rolling out its TEN line extensions for several months.
These are the latest moves in the lower-calorie soft-drink battle that aims to bring consumers back to carbonated soft drinks (CSDs).
"Initial feedback is that [Pepsi NEXT] is sourcing volume from other categories, consistent with our objective of bringing back lapsed cola users," Nooyi said on a company earnings call Thursday. "And while it's very early, the results are ahead of our launch expectations, and we've already achieved nearly one value share point."
Pepsi Next, which has 60% less sugar and fewer calories than regular Pepsi-Cola, launched nationwide on March 26, targeting people who do not want all the sugar of full-calorie sodas but are "resistant" to diet sodas.
"Interestingly, NEXT is sourcing from outside the cola category," Nooyi said. "In fact, it's even sourcing from outside the CSD category, which means that lapsed cola users are coming back into the cola category.
"Now I want to make sure that you hear the appropriate caveat. It's too early to call this brand … a gigantic success, but what's surprising to us is a few weeks after the launch, it's now almost one share point, which has not happened in a long time in any new product launch. So we are watching every metric very, very carefully."
Meanwhile, Plano, Texas-based Dr Pepper Snapple Group's (DPSG) entry into the same category, Dr Pepper TEN, continues to perform well.
For the first quarter of the year DPSG's "CSDs grew 2%, led by our flagship Dr Pepper, which also grew 2%, driven primarily by Dr Pepper TEN," Young said on DPSG's earnings call on Wednesday.
DPSG launched the 10-calorie Dr Pepper TEN at the end of 2011 with a tongue-in-cheek ad campaign based on the premise that men don't like diet soda. On the heels of its success, DPSG has begun testing five other TEN products in various markets. 7 Up Ten, Sunkist Ten, A&W Ten and Canada Dry Ten are testing in Columbus, Ohio; Des Moines, Iowa; and central Pennsylvania. RC Ten, a cola, is in test in Chicago; Evansville, Ind.; and Des Moines.
"The test we're running on the Core 5 TEN is exceeding our expectations," Young said. "So we're very happy with that." Still, it will be some time before those extensions are rolled out nationwide.
"We haven't come up with a time yet," Young said. "We're still running the test in four or five markets. Right now, unless we have results like we saw on Dr Pepper TEN, we can always pull it forward. But right now, we're looking at it being more of a 2013 [product release]."
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