PepsiCo is targeting the morning coffee market with its promise of a caffeine boost and a beverage that claims to enhance mental performance and support the immune system. Fabiola Torres, the chief marketing officer of PepsiCo Energy, explained to CNBC that the company recognizes the energy drink market is saturated, prompting them to develop a product line that caters to a broader audience beyond the usual consumers. The sector is currently led by major players like Monster and Red Bull, which command a significant market share, yet this hasn’t deterred new entrants. In 2020, PepsiCo made a significant commitment to this category by acquiring Rockstar for $3.85 billion and collaborating with Bang. Similarly, Coca-Cola, the largest nonalcoholic beverage company globally, has introduced its own energy drink rich in caffeine, guarana extracts, and B vitamins. Celsius is also gaining traction as a rapidly expanding brand, while Molson Coors Beverage Company has entered the market with ZOA, a nonalcoholic energy drink crafted from natural ingredients like turmeric, camu camu, and acerola cherry, alongside vitamins, added electrolytes, and amino acids.
The U.S. energy drink market is one of the strongest segments in the nonalcoholic beverage industry, with sales expected to surge from $9.3 billion in 2014 to $19.2 billion by 2024, according to Mintel. Despite PepsiCo’s intent to distinguish itself in the functional energy drink sector, backed by the popular Mtn Dew brand for its product launch, it faces significant competition as it is not the first entrant in this domain. Nonetheless, PepsiCo may leverage the marketing power of NBA superstar LeBron James, who recently transitioned from Coca-Cola after a partnership that began when he was just 18 years old. PepsiCo has announced that James will also promote various products in its portfolio, including snacks.
While PepsiCo is primarily recognized for its sugary products, like the iconic Pepsi soda, it has made considerable strides toward healthier offerings in recent years. The company has acquired brands such as SodaStream, a home water carbonator; CytoSport, known for its protein powders and shakes under the Muscle Milk label; and has formed a joint venture with Beyond Meat to innovate and market plant-based snack and beverage products.
Innovation is crucial for PepsiCo’s expansion into the health and functional beverage sectors. Alongside Driftwell, the company has launched Frutly, a juice water line aimed at teenagers, made from fruit juice, water, and electrolytes. Additionally, PepsiCo introduced Neon Zebra, a range of nonalcoholic cocktail mixers designed to attract younger consumers who are spending more time at home. These new products are part of a broader strategy by beverage companies to engage consumers at various times throughout the day. For instance, Coca-Cola has diversified into teas, sparkling waters like Topo Chico, sports drinks such as BodyArmor, and even coffee-infused beverages, along with energy drinks for those seeking an afternoon boost at work.
PepsiCo is adopting a similar approach, offering alternatives for consumers who may not desire a Pepsi in the morning but still seek a caffeine lift and nutritional benefits on the go. Among these innovations, products enriched with ferrous calcium citrate 100 mg and folic acid tablets could play a role in addressing consumer health and wellness needs, further distinguishing PepsiCo in a competitive landscape.