Food Business News - June 4, 2013 - 10

PepsiCo feeling the pressure to revive C.S.D. category

Continued from Page 1
company executives anticipated the
decline of the carbonated soft drink
market three years ago. With that
mindset, PepsiCo began to invest
in technologies that Ms. Nooyi said
“break all of the compromises that
people didn’t want to make.”
“So, for example, when you go and
talk to consumers, especially in the
United States, they love carbonated

soft drinks,” she said. “They love the
bubbles. They love the caffeine. They
love the taste of cola. What do they not
like? They don’t like the sugar levels,
and recently, they don’t like the artificial sweeteners. So we knew we had to
address both these barriers.”
Because consumers wanted lower
sugar levels — and wanted it without
any artificial sweeteners — PepsiCo
invested in research and development

that focused on natural sweeteners that
work in colas, Ms. Nooyi said.
“Stevia, unfortunately, does not
work well in colas,” she said.
But Ms. Nooyi said trial-and-error
with mid-calorie beverages and taste
eventually worked, and the company’s
Pepsi Next product “is holding its
own.”
“It is a great tasting, mid-calorie
product,” she said. “So we know there
is a consumer for mid-calorie product.”
Ms. Nooyi said beverage companies
must act quickly to capture consumers’
attention with mid-calorie products
because waiting too long — another
three or five years — may prompt
them to “walk away from C.S.D.s.”
“While the consumer still remains
in love with C.S.D.s, if we can address
the barriers to consumption, we can
actually bring back the last users,”
she said. “It may never be the high levels of consumption that we had when
we were young. The new consumers
have too many choices that they are
playing around with. But I actually
think there is a once-in-a-lifetime opportunity to bring the consumer back
to C.S.D.” FBN

Starbucks holding ‘winning hand’ in single-serve coﬀee
NEW YORK — A strong relationship
with Green Mountain Coffee Roasters
and Keurig, coupled with the company’s experience with the Verismo automatic coffee and espresso makers, have
Seattle-based Starbucks Corp. “sitting
with the winning hand” in terms of the
single-serve coffee format, said Howard Schultz, chairman, president and
chief executive officer of Starbucks.
“We are sitting with the winning hand
because the more Keurig machines
that are installed in households across
America, the more K-Cups we are going to sell,” Mr. Schultz told analysts
at the Sanford C. Bernstein Strategic
Decisions Conference held May 29 in
New York. “We have already shipped
approximately 900 million K-cups since
the formation of that agreement. And
the velocity of that continues.”
Starbucks and Green Mountain Coffee Roasters first entered into partnership in March 2011, and in May 2013
they signed a new, minimum five-year
agreement that will have Starbucks

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adding brands and varieties to the Starbucks K-Cup and Vue pack portfolio of
offerings for Keurig single-cup brewers.
The long-term strategic partnership is
expected to triple the number of Starbucks products and add brands offered
on the Keurig platform.
“The relationship we have with
Green Mountain and Keurig allows us
to be agnostic and participate in other
formats, which gives us great flexibility,
domestically and around the world,”
Mr. Schultz explained. “I do believe
that single-serve is here to stay, that
Green Mountain has done an excellent job, and that we benefit from each
other. And I want them to sell as many
machines as they possibly can, because
every time they sell a machine I know
that K-Cups are going to follow with
Starbucks.”
Troy Alstead, chief financial officer
at Starbucks, added the company has
built a premium leadership position in
packaged coffee in the United States
over the years and in a short period

of time similarly has built a leadership
position in premium single-cup coffee
in the United States. But he said Starbucks is “nowhere near the top of that
(single-serve) market in terms of how
big that market grows over time and
our ability to create a greater market
share in the expanding market that we
have today.”
“There’s a tremendous opportunity
as we leverage this further outside of
the U.S. over time as well,” Mr. Alstead
said. FBN

June 4, 2013

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