Coke, Pepsi see juice, dairy opportunities

by Jeff Gelski
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LAS VEGAS — Juices could make a bigger splash in the probiotics category, which is known more for its dairy products, said David Del Pozo, senior manager of R.&D. for The Coca-Cola Co., Atlanta. Dairy products themselves may stretch their reach and boost the energy drink category, said Michael Hammer, director – venture capital strategy for PepsiCo, Inc., Purchase, N.Y.

Mr. Del Pozo and Mr. Hammer spoke Oct. 12 at SupplySide West in Las Vegas at an education session called “How and When Does R.&D., Product Development, Ingredient and Marketing Converge in Building a Beverage Brand?”

Mr. Del Pozo said juices already have an inherent connotation of health and wellness and thus would fit in the probiotics category. He added many consumers are unable to consume a lot of dairy products and might be looking for another way to add probiotics to their diet.

Mr. Hammer said dairy products might become more of an all-day beverage, such as Frappuccino beverages from Starbucks. Some have wondered if the energy drink market is on its last leg, he said, but dairy products may energize the market. People may start looking at dairy as fuel.

“As opposed to something you just put over cereal,” Mr. Hammer said.

He said PepsiCo might need to look outside the company for dairy product innovation since it has little expertise in the area. Whether or not PepsiCo looks outside for product innovation depends on the category, he said. For example, sports beverage experience already is in house because the company owns Gatorade.

Mr. Del Pozo said he has found that in product innovation, a new ingredient might confuse consumers. In those instances Coca-Cola might partner with another company, such as how it invested in Zico Coconut Water.

Both Mr. Del Pozo and Mr. Hammer were asked about the use of high-fructose corn syrup, which recently has been replaced by other sweeteners in many products. Mr. Hammer said PepsiCo will continue to search for more ways to use natural sweeteners.

“Whether it’s stevia or luo han guo or some other sweeteners that are out there,” he said.

He did not mention HFCS although the Food and Drug Administration has said HFCS may be listed as a natural ingredient if a common enzymatic process is used.

Mr. Del Pozo said, “At the end of the day, calories are calories.”

He said consumers should have a choice in what they consume, including sweeteners.

Mr. Del Pozo said he saw four trends in product development: weight management, sustained energy, baby boomer health and beauty. He said consumers need to feel and see the benefits of functional ingredients, such as in better digestion after consuming Activia yogurt regularly and in the rush of energy after consuming a 5-hour Energy shot.

Mr. Hammer said PepsiCo wants to evolve and become a lifestyle company and not just a food and beverage company. The company wants to encourage people to live more sustainable lives.

Mr. Hammer said companies should decide whether they want a product to enter the market fast or wait until the product is ready. If the company decides upon a fast introduction and the product does not start out well in the market, the company should quickly decide whether to give up on the product or modify it. Companies want new product development to be good, fast and cheap, he said.

“Pick two because you can’t have all three,” Mr. Hammer said.

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