Just yesterday, Pepsico, Inc. (PEP) announced its latest soft drink: Pepsi True. There are a few things that make this new beverage so unique. For starters, it won’t exactly be coming to a store near you.
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You see, given its plummeting soda sales, Pepsi made a strategic decision to launch its new stevia-sweetened product exclusively on Amazon (AMZN).
The decision to launch a new product was driven in part by the fact that carbonated soft drinks sales have been declining for the past 10 years. Even diet sodas have been underperforming says John Sicher, Editor and Publisher of Beverage Digest. Therefore, both Pepsi and Coca-Cola (COKE) are being forced to innovate.
Weight loss is all the rage in America, so not only do consumers want lower calorie beverages, but they also want natural sweeteners. And Coca-Cola actually beat Pepsi to the punch here by launching Coke Life a few weeks ago.
What’s more, Coke is also experimenting with e-commerce via Amazon, as it’s considering bringing back Surge, a soda it discontinued 12 years ago.
So with all of Coke’s strides, is it too late for Pepsi to cash in?
Too Little, Too Late?
According to Sicher, Pepsi is a “master of marketing,” which should be advantageous as the company promotes Pepsi True on Amazon using digital videos.
Though some consumers may be hesitant to purchase an unfamiliar product online, it’s hard to ignore the fact that Amazon and e-commerce are driving tons of retail growth in the United States.
Plus, beverage companies are underrepresented on Amazon, which means e-commerce is a largely untapped market for soda makers.
So in light of this industry trend, let’s see how we can benefit. Right now, Pepsi and Coke are running neck and neck, yielding dividends of 2.82% and 2.86%, respectively.
After Pepsi True is launched in mid-October, we’ll be able to tell over time how both companies’ strategies will help sales. And if the companies gain confidence in future performance, there could be a bump in dividends, too.
Income Research Team