Food & Beverage

Pepsi True, a stevia-sweetened cola, to launch on Amazon

Meet Pepsi True, the latest attempt by PepsiCo to sweeten soft drink sales with a midcalorie cola.

By using sugar and stevia, the new drink contains 30 percent less sugar than a regular Pepsi, but no artificial sweeteners or high-fructose corn syrup. It's also the first cola under the flagship Pepsi brand since Pepsi Next 2½ years ago, and it will be among the first colas in the U.S. to use stevia, a plant native to Paraguay, as its primary sweetener.

Rival Coca-Cola is also in the process of a gradual and targeted launch of its own reduced-calorie, stevia-sweetened Coca-Cola Life, a cola that has 35 percent fewer calories than its flagship Coke. Like True, Coca-Cola Life mixes the stevia with sugar to achieve its sweet taste, and it also sports green-hued packaging.

The stevia cola war comes as Pepsi and its peers fight a multiyear slump in U.S. soda sales and a seismic shift in consumer attitudes and tastes toward healthier and more natural beverages.

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Stevia was approved by the Food and Drug Administration nearly six years ago, and since it comes from the leaves of a plant and has no calories, it has led the charge in the search for more natural alternatives to sugar. It is now being used in everything from flavored water to energy bars, candy to cookies and yogurt.

But stevia can be tricky to work with as it often comes with a bitter aftertaste, and it has taken beverage makers some time to nail down the right recipe to maintain a familiar and sweet cola taste.

Simon Lowden, chief marketing officer at Pepsi Beverages North America, said the product captures the "true taste of the cola" and hearkens back to a time when colas used real sugar.

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But in a departure from the past, True will be launched in a novel way: It will be sold exclusively on in mid-October and Pepsi will compensate its bottlers for purchases made in their respective regions.

"It's a brand-new product proposition with a brand-new media platform, and we want to make sure the launch reflects a right-size approach," Lowden said.

Source: Coca-Cola Company

Coke also is releasing its stevia cola gradually. Coca-Cola Life began to roll out in the U.S. at Fresh Market stores in the South in late August, after launching in Argentina, Chile, the U.K. and Mexico.

The slow rollout signals a cautious approach by the two beverage giants, whose previous attempts to market "midcalorie" colas in the U.S. were unsuccessful.

"While we do not believe that either of these new sweeteners/flavoring agents will be the natural, great-tasting and calorie-free 'silver bullet' that the industry has been waiting for, we believe it is possible that they will be able to drive interest, engagement and potentially sales growth because of the massive consumer/societal need to reduce sugar and enhance healthiness," Ali Dibadj, an analyst at Sanford Bernstein, said in a note last December that previewed sweetener innovations expected this year from Coke and Pepsi.

The launch follows a nine-year decline in U.S. carbonated soft drink sales. Increased concerns about health and wellness, along with research linking sodas to obesity and health problems, have driven the drop.

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Making matters worse, diet sodas that use no-calorie and low-calorie artificial sweeteners like aspartame are losing fans fast. Industry newsletter Beverage Digest reported that U.S. volumes last year for Diet Coke and Diet Pepsi tumbled nearly 7 percent from the prior year, worse than the 4 percent slump in U.S. soda volumes overall.

But it remains to be seen if consumers seeking natural and healthy products will find Pepsi True and Coca-Cola Life appealing.

In a recent U.S. consumer survey, Jefferies analysts found that "health concerns, particularly around artificial sweeteners continue to plague the U.S. diet carbonated soft drinks industry."

However, 45 percent of those drinking less diet soft drinks suggested they would possibly consume more "if they were healthier" and 30 percent said they would do so "if they were made with a natural sweetener like stevia." However, 34 percent of those drinking less suggested nothing would get them to boost their consumption.

Consumers also will need to be convinced that the taste is worth the calories in these so-called midcalorie beverages.

Pepsi thinks it's achieved that.

"It's taken us three years to get to a place we feel good about," Lowden said about the development process. "No one is willing to give up on taste. Taste is king."

But calorie-conscious consumers have found the concept of midcalorie drinks tough to swallow in the past. In 2004, when sucralose, or Splenda, was the hot sugar alternative, Coke and Pepsi launched the short-lived brands, C2 and Pepsi Edge. Pepsi Next also is a midcalorie drink, but unlike True, it contains artificial sweeteners in the U.S. market.

"When it comes to soda, people want either the taste of a full-sugar product and are willing to accept 140 calories per can, or they want a zero-calorie solution and are open to a product that doesn't taste exactly like a full-sugar soda. There really isn't much in between," said Paddy Spence, CEO of Zevia, which makes naturally sweetened, zero- and low-calorie sodas using stevia.

Spence, formerly head of sales and marketing for Kashi, said his company adds monk fruit, another zero-calorie natural sweetener to its mix "to boost sweetness without adding aftertaste."

According to John Sicher, CEO of Beverage Digest, it's too early to tell whether stevia-based drinks will be the way forward.

"I think it will take three to five years to see how much better the [bigger] beverage companies will get working with stevia," Sicher said. "I think consumers will go for a sweetener that is natural, low and zero calories and tastes close to sugar, but the industry is not there yet."