PepsiCo to Roll-Out Low-Calorie Gatorade


PepsiCo said Friday it was launching new drinks, including the caffeinated Propel Invigorating Water and a lighter version of the Gatorade sports beverage.

The new Gatorade, called G2, has fewer calories than the original and is aimed at people when they are not working out.

Pepsi said its bottlers would begin delivering the new products to convenience stores, independent retailers and gas stations later this year.

The world's second-largest beverage company behind Coca-Cola first mentioned the new products in July, but did not say what they would be called.

Pepsi is aiming to boost sales growth of Gatorade, one of its biggest brands, since it has slowed recently, in part because of cooler weather and price increases.

The slowdown, coupled with the acquisition of Vitaminwater maker Glaceau earlier this year by Coca-Cola, has led analysts and investors to question Gatorade's future prospects.

However Sanford Bernstein analyst Robert van Brugge said in a recent research note that the threat to Gatorade from Vitaminwater was modest, since people tend to drink Gatorade when they are exercising and Vitaminwater at other times.

G2, however, may compete more directly with Vitaminwater because it also is not meant for athletic activities.

Van Brugge forecast that Gatorade growth would rebound next year in the absence of price increases by Pepsi and discounts by Coke on its Powerade sports drink.

Morgan Stanley beverage analyst William Pecoriello estimates that the new products will boost earnings per share for Pepsi Bottling Group Inc, the drink maker's largest bottler, by 2 cents in 2008 and 3 cents in 2009.

He did not change his earnings estimates for PepsiCo, but said G2 should help limit risks from the slowdown.

G2 will help the company "by holding onto consumers who were leaving the brand for lower-calorie options, attracting a slightly older/more female user than core Gatorade and holding onto or expanding Gatorade's share of non-sport occasions," Pecoriello said.

PepsiCo shares were down 37 cents at $68.19 in morning New York Stock Exchange trade, while Pepsi Bottling was up 19 cents  at $34.97.