PepsiCo Inc for the first time is introducing a product exclusively through Amazon.com Inc as the snack and soft drink maker aims to expand its footprint in e-commerce.
The product, a naturally sweetened soda called Pepsi True, will be available on Amazon in mid-October in 24-packs of 7.5-ounce cans, the company said. It will not be in brick-and-mortar outlets, though Pepsi said it plans to eventually sell True in grocery stores.
By introducing True through Amazon, Pepsi says it can better assess demand and gain insight into where people are buying it ahead of a wider launch.
Industry insiders said the move illustrates how the food and beverage industry is expanding into non-traditional distribution channels like e-commerce as it searches for growth.
Kraft Foods Group Inc recently started selling Jell-O molds of university mascots and logos through Amazon and grocery stores. And other companies are using Amazon to test the waters when reintroducing a product. Coca-Cola Co said recently it would bring back Surge, a soda it discontinued 12 years ago, through Amazon.
"While it seems there is still demand for the product, we aren't sure how much or how quickly it will sell," a Coca-Cola spokesman said in an email. "Working with Amazon allows us to determine what the market for Surge really is."
Amazon says the consumer goods space is one of its fastest-growing categories. Last spring it introduced Prime Pantry, where its Prime members can shop for hundreds of household items including soft drinks, laundry detergent and cereal.
At Pepsi, "online selling is a relatively new endeavor," said Simon Lowden, chief marketingofficer at Pepsi Beverages North America. "You should expect online commerce to be a much bigger part of our proposition going forward."
The e-commerce space comes with risks as well as opportunities. Amazon could put downward pressure on prices in the consumer packaged goods category, as it did with e-books, analysts at Sanford Bernstein said in a research note in April. And Amazon's vast array of products could make it harder for brands to stand out.
A Pepsi spokeswoman said prices for its other products sold on Amazon have been stable. The company says it decided to introduce True through Amazon after noting the success of other products such as its Starbucks Double Shot Light, Pepsi's top-selling item year-to-date in e-commerce. Pepsi sells the product through a joint venture with Starbucks Corp.
Still, e-commerce is especially tricky for soda companies because of their agreements with bottling partners, which have exclusive distribution rights in certain regions. Lowden said that although Pepsi True will not be distributed through Pepsi's bottler system, bottlers will be compensated for revenue they would have received when purchases are made through Amazon in their territories.
SOFTER SALES
Pepsi's move comes against the backdrop of nearly a decade of declining sales of carbonated soft drinks in the United States, according to the trade publication Beverage Digest, as consumers have become more health-conscious. More recently, consumers have also shifted away from diet soda because of health concerns about artificial sweeteners.
Pepsi True is a "mid-calorie" offering sweetened by sugar and stevia, a plant-based sweetener. It is aimed at people who want a naturally sweetened cola with fewer calories. A 7.5-ounce can of True contains 60 calories. That compares with 100 calories for the same-size can of regular Pepsi.
Stevia doesn't appeal to all palates, and soft drink makers have been trying to eliminate its bitter aftertaste. Pepsi said it spent three years developing True, drawing from its knowledge of stevia-sweetened colas in overseas markets and tweaking the formula for the U.S. consumer.
It is not the first company to launch soft drinks containing the sweetener in a measured way. Coke recently launched Coca-Cola Life, a sugar- and stevia-sweetened soda, in Fresh Market, a premium grocery chain, in four states. It said it plans to make the drink available in other locations across the United States by next month.
Pepsi plans to market True mainly through digital content such as videos on Amazon. It will also offer opportunities where consumers can sample the soda in certain markets.
"We recognize at the moment that Pepsi True is a niche product in our portfolio," Pepsi's Lowden said. "We want to be at the right size and the right scale to accommodate the 'mid- calorie' segment, which is still small today."
(Editing by Eric Effron and Douglas Royalty)