Food & Beverage

New turf for old-school soda wars: The soda fountain

Pepsi challenges Coke with 'Spire'
Pepsi challenges Coke with 'Spire'

The soda wars have raged for decades, but the new front in the age-old battle has shifted to a high-tech version of the old soda fountain.

Pepsico is betting Spire—a new touchscreen, make-it-yourself, high-tech beverage fountain—will be a game changer for its food-service business.

"Food service is a growth area for Pepsico," CEO Indra Nooyi said in an interview with CNBC at the National Restaurant Association trade show in Chicago.

The goal for Pepsi is to expand its business with restaurants, movie theaters and other food-service locations by grabbing market share. To do this, Pepsi will be going head-to-head with Coca-Cola's Freestyle machine, which has been out for four years, and according to the Atlanta beverage giant, has 20,000 machines in the market.

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Coke unveiled a countertop version of its Freestyle machine, which takes the shape of Coke's iconic curved glass and lets users choose from more than 100 flavors of drinks in Coke's portfolio.

"I'm not saying theirs is a bad machine or not," Nooyi said. "Two great companies producing two great machines. ... Our machine addresses a lot of the issues that restaurant owners said they had with other machines: wait times, the cost of the machine was too high. It required a new operating system; they had to train their workers how to use a new cartridge. So I think our machine is just different. It's the 21st-, 22nd-century machine."

Indra Nooyi, CEO of PepsiCo
Justin Solomon | CNBC

Of course, the overarching question is whether these machines will bring much-needed enthusiasm and sales to a declining North American carbonated drinks business.

But as Nooyi pointed out, the machine makes a lot more than just soda. "It becomes irrelevant whether it is carbonated or noncarbonated," she said.

Read MoreSoda drinks lose fizz in 2013

"What it really says is it doesn't matter what the base is, whether it's carbonated or noncarbonated. Pick a beverage, pick a base and bring excitement to it."

That's why it's called "Spire.'

"I think Spire is just the suffix. It could be 'aspire,' 'inspire.' I think the team was so inspired by it, they thought about it as an aspirational product. They said we don't want to stop at just aspire or inspire, let's call it 'spire' and put any suffix with it."

Spire's versatility also extends to diet beverages, despite the fact that diet sales and volumes have been declining at a sharper rate lately than regular soft drinks.

Read MoreDiet Coke may take the pop out of Coca-Cola shares

"It's a big mystery. Three or four years ago, we never thought the diet category was so out of favor as it is today. I think it's because people are wondering what the issues are with artificial sweeteners, which I don't believe there are any issues with it, but people are concerned with artificial sweeteners and going back to full sugar and high-fructose corn syrup, so I really don't think there is an issue."

Coca-Cola Freestyle machine.
Justin Solomon | CNBC

Despite challenges like declining sales of diet drinks and carbonated beverages in North America, Pepsi's message with Spire is that it's innovating to drive growth.

As Nooyi puts it, "Pepsico has gone from being an innovator to being a leading-edge innovator, and I think innovation as a percentage of sales has gone from 5 percent to 8-9 percent, and heading north from there, so stay tuned."

Design of Pepsi 'Spire' machine
Design of Pepsi 'Spire' machine

—By CNBC's Sara Eisen.