Tag Archives: PepsiCo

Diet Pepsi drops aspartame: Gilding the Lily?

PepsiCo just announced that it will be taking the artificial sweetener aspartame out of Diet Pepsi and replacing with another artificial sweetener, sucralose (known more commonly as Splenda®), combined with another sweetener named acesulfame-K (‘Ace-K’), which is a lower cost ’sweetener helper’.

apm-free D Pepsi

The stated reason is to respond to consumer objection to aspartame, as stated by a Pepsi Sr. VP: “Aspartame is the number one reason consumers are dropping diet soda.”

The more likely reason is that Diet Pepsi volume is down over 5% in the last year, part of a long-term slide, and nothing so far has worked to reverse the trend.

But this change is unlikely to make a material difference, for a few key reasons.

First, let me risk public embarrassment to try to establish my bona fides.  I marketed aspartame (Equal® Sweetener) for 6 years, and sucralose (Splenda) for another 5.  Did a lot of consumer research during those years.

DavesSweetenerBonaFides

Left: failing the dorky marketer test. Right: at a trade show, excitedly pitching sweeteners

Here’s why I don’t think this will make a difference:

1) Consumers generally don’t know what’s in their diet soda to begin with.  When asked open-endedly about ingredients in diet sodas, they have a vague notion that they contain artificial sweeteners, but the sweetener is not often mentioned by name.  When prompted, they will recognize aspartame.  But while consumers may theatrically claim that they avoid aspartame when they’re in a focus group, in reality very few actually check labels.

2) Consumers are generally full of it when it comes to stated preferences.  They will tell you all day long that they want less fat, less sugar, less salt, etc – – but in reality they will rarely change ingrained habits if there’s even the slightest risk of compromise (such as taste or cost).

3) Non-users or lapsed users have a handy reason for why they don’t use the product.  Aspartame has enough negative PR that it is an easy, politically correct and inarguable reason as to why surveyed consumers aren’t using the product.  But the true answer is a more complicated mix of dynamics including macro consumption trends, emergence of new alternatives, and changing demographics (‘modern’ diet sodas were first introduced, and gained loyal followings, in the early 1980s).

4) Changing out one artificial sweetener for another just reminds consumers that diet sodas generally contain artificial sweeteners.  Not a great plan to bring in new users. 

5) Changing ingredients to meet claimed consumer preferences is no guarantee of success.  3 years ago ConAgra changed its Hunt’s ketchup back to High Fructose Corn Sugar after a 2-year switch to sugar, ostensibly to answer consumer objections to HFCS.  Sales volumes showed that consumers didn’t really care.

Hunts No HFCS

6) Most importantly, consumers like their products the way they are.  ANY CHANGE in a loyal user’s product formulation will arouse suspicion.  A product as iconic as Diet Pepsi owes its unique taste to the specific combination of sweeteners in its formula.  It is impossible to improve the taste of Diet Pepsi, because its ideal is defined by its current taste.  So any change will alienate current users, who are currently drinking it even knowing in the back of their minds that it contains an artificial sweetener.

Ironically, this is the same category where New Coke infamously demonstrated what happens when you change the formulation of a well-loved product.  It will be interesting to see whether this ‘New Diet Pepsi’ fares any better.

Below is an introductory spot for New Coke in 1985.  In retrospect, a product and spokesperson that ultimately followed similar paths, albeit on different timing.

Outrage at New Corporate Average Calorie Count Mandate: What took so long?

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After over a year, the food industry has finally begun to voice frustration with the upcoming Corporate Average Calorie Count (CACC) requirements that were a little-noticed insertion in the recently implemented Affordable Care Act.

Like it or not, this law has been on the books for over a year – – why the sudden passive-aggressive reaction?

Like Big Auto’s Corporate Average Fuel Economy (CAFE) standards, CACC requires all US-based food and beverage manufacturers making over 20 products to average at or below 100 calories-per-serving for all processed products by 2019.   While CAFE uses a sales-weighted mean, CACC counts all products equally.  “We decided to use a simpler approach that everyone – consumers, manufacturers, retailers – – and Congress – – could understand”, said HHS Secretary Kathleen Sebelius (who knows a thing or two about the importance of simplicity). Sebelius-calories

Companies need to submit CACC plans by the end of 2014, with final compliance targeted by 2019.  Excluded are imported products, unprocessed foods, dairy, ‘ingredient’ foods like peanut butter or oil, alcoholic beverages and products sold through foodservice, vending and convenience channels (although vending machines are impacted by the same provision in ACA and have to post calorie counts by the end of 2014) .  Companies not meeting standards will face penalties of $1,000 per calorie above the target level, multiplied by each $1 million of revenue of that company. ACA-Vending

Food manufacturers are just now starting to realize the size of the challenge.  “CACC creates significant costs for manufacturers, a huge compliance burden, and most importantly, is likely to remove choice and impact taste for consumers,” said Lloyd Braun, CEO of Peterman Bakeries of Omaha, NE.  “If it’s difficult for a smaller producer like us, it could be almost impossible for the Krafts and Pepsis of the world”.

Indeed, meeting the standard will be tough.  We took a look at PepsiCo to see what they are facing.

According to its websites, PepsiCo sells 1327 products across its Pepsi, Frito-Lay and Quaker businesses (not counting Tropicana).  Its Corporate Average Calorie Count now stands at 118.2, with beverages actually close to the standard at 102.6, brought up by Frito-Lay at 137.9 and Quaker at 150.7 (click on chart).

PepsiCo-Calories

To meet the 100 calorie corporate goal, PepsiCo will likely need a combination of reformulation, elimination of higher-calorie offerings, and addition of lower-calorie offerings.  This could mean fewer products like Grandma’s Cookies (210 calories), Quaker Breakfast Cookies (175) and Starbucks Frappuccino (290) and more like Rice Cakes (35), Matador Jerky (75) and lots more AMP Sugar-free Energy Drinks (15).  Happily, Quaker’s Quisp cereal checks in at an even 100 calories and thus seems safe.

As difficult as this current Pepsi Challenge is, they at least have the benefit of a large number of products (and frankly, a couple of large subsidiaries) to work with.  The CACC mandate could be terminal for those companies specializing in more indulgent fare, such as frozen pizza (285), fettucine alfredo (415) and Garrett’s Gingerbread CaramelCrisp Popcorn (300).

Still, the angst is real: A source inside PepsiCo explained: “We thought we had done our part by helping reduce Americans’ calorie intake by 6.4 trillion calories as part of the 2010 Healthy Weight Commitment Foundation initiative – – we are now quite frustrated that the current Administration is piling on with these new requirements. So frankly, not much work has been done yet”.

Well, it’s time to stop whining and get to work.   ACA is not going away, and your country is depending on you.