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Coca-Cola, DPSG Keep Eyes on Reformulated Diet Pepsi

PURCHASE, N.Y. — As PepsiCo prepares for the rollout of a reformulated Diet Pepsi sweetened with a blend of sucralose and acesulfame potassium, the other major carbonated-soft-drink makers are watching closely as they collectively battle trying times for diet sodas.

“Our largest competitor is changing their formula,” Alexander Douglas Jr., executive vice president & president of Coca-Cola North America, said on a company earnings call last week. “That’ll create a lot of buzz in the category, some of it good, as the good science of the safety of non-nutritive sweeteners gets out in the marketplace and is reinforced.”

The reformulated Diet Pepsi will launch in late August in an effort to battle five years of backlash over use of aspartame as a sweetener. PepsiCo president and CEO Indra Nooyi said she’s anxious to see how the new product performs on store shelves.

“We just want to make sure we have an offering for all of the consumers who want to switch out of aspartame,” she said during a June earnings call. “We have formulated a very, very good product. … So for all of those consumers who are looking for an alternative to an aspartame-sweetened diet product, we will have a product. And for those consumers, who still love Diet Pepsi with aspartame, we will figure out how to make it available online.”

While Coca-Cola might experiment with a reformulated Diet Coke, a brand that also has struggled in recent years, don’t expect a wholesale change similar to Pepsi’s anytime soon.

“We have an incredible number of very loyal drinkers in Diet Coke that love Diet Coke,” Douglas said. “We believe strongly in the Diet Coke franchise. The brand is the No. 1 diet beverage in the United States, and it will be for a long time to come. …

“We also are looking at changes in the category. We are looking at multiple programs to not only strengthen Diet Coke, but to offer consumers adjacent innovation in the Diet Coke franchise. … It’s a work in progress and a lot more work to do.”

Meanwhile, Dr Pepper Snapple Group continues to develop its diet CSD portfolio, which is among the most diverse in the category.

“It’s going to be a combination of diets, mid-calories, natural [sweeteners], the TEN [10-calorie platform],” president and CEO Larry Young said last week. “We’re very excited about seeing our diets kind of bucking the trend out there right now.”

And is a reformulated Diet Dr Pepper in the works?

“No. … We’re very satisfied with our diet Dr. Pepper with aspartame, the taste, I mean. That’s the profile. Our customer, our consumers love it,” Young said. “We have a lot of products out there; our Diet Rite is sweetened with Splenda. We have different sweeteners across the portfolio. But as far as our Core 4 and our Dr. Pepper, our base business, we’ll be watching everything.”

Carbonated-soft-drink sales in the United States have been on the decline for a decade, primarily on the argument that full-sugar formulations are empty calories and diet sodas still pack on pounds and potential cause cancer. The decline recently included a 1% dip in sales in 2014 and a 3.2% drop in 2013, according to Beverage Marketing Corp.

In convenience stores, the decline hasn’t been as dramatic. Chicago-based IRI reports CSD unit sales in c-stores were generally flat (down 0.1%) in 2014 following a 1.4% decline in 2013 and a 5.8% drop the previous year.

Steve Holtz


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