In C-Stores, Mt. Dew Code Red Ranks #6 in 20-oz.
Bottler: 'Off the Charts.'

Having hit market in late April, Mt. Dew's Code Red line extension now ranks #8 in overall C-store data with 2.7 share; holds #6 spot in 20-oz packages (table). Code Red is cherry-flavored version of Mt. Dew; it is now sold only in 20-oz and 1-liter PET. Pepsi executive says take-home packaging debuts this fall. Ahead of Sprite. Of top-10 CSD brands in 20-oz packaging in C-stores (table), Code Red is just behind Diet Coke and ahead of Sprite. 20-oz is biggest volume package in C-stores.

Data. Table shows for C-stores: top-10 brands in 20-oz for 4-weeks ending June 16; market shares; and volume gain/loss vs comparable period last year. Other packages, channels. In C-stores, Code Red holds #8 ranking in both 1-liter and overall. In drug chains, Code Red is #21 overall and #6 in 20-oz. In supermarkets, Coke Red is #3 in 20-oz ranking, ahead of regular Mt. Dew; however, 20-oz is not major package in supermarket channel. Pepsi executive says, "in some places, (grocers) are building Code Red warm, single-serve displays using 20-oz and 1-liter." Note. In C-stores, only 20-oz CSDs gaining volume -- beyond Code Red -- are diets. BD previously reports on channel weakness due in part to pay-at-the-pump which encourages consumers to fill up and drive away, not entering store (BD 6/8/01).

Bottlers. Pepsi bottlers are enthusiastic: 1) Code Red "is absolutely off the charts. It exceeded Pepsi's (estimate) for full-year volume in its first eight weeks." 2) "Everybody's enthused." 3) "Our 20-oz Mt. Dew business (overall including Code Red) is up +20%."

Cannibalization. In C-store data for 4-week period, regular Mt. Dew volume (all packages) totals 5.2 mil cases, down -2.9%, or about 156,000 cases. But Code Red volume for same period totals 1+ mil cases. So, even if all of Mt. Dew's volume loss were assumed to be from Code Red cannibalization, most Code Red volume is still incremental. But, Mt. Dew's loss probably not mainly due to Code Red, as Mt. Dew was down -1.9% in 4-week period ending April 21, before Code Red launched.

Cannibalization views. PBG chairman/CEO Craig Weatherup recently notes much of Code Red volume sourced from products "like Mistic, Snapple and SoBe, and that's what the strategy is." Other Pepsi bottlers. Bottlers say early results indicate cannibalization of Mt. Dew minimal: 1) "We're seeing only 15%-20% cannibalization of (regular) Dew. (Code Red) appears to be taking a bite out of Dr Pepper." 2) "Almost all (Code Red) volume is incremental." 3) "Cannibalization is an issue. It's too early to know for certain what the impact will be on (regular Mt. Dew). But from the field, I haven't heard too much concern." Longevity? Asked whether Code Red has staying power or is flash-in-the-pan, top-10 Pepsi bottler notes: "With the growth of flavor(ed CSDs) and cherry flavor in particular, that leads us to believe that this will stay around. I definitely think it has staying power."

Skew. Code Red partly targeted to urban demographic groups and to Mt. Dew consumers who might be tempted to try non-carbs and/or energy drinks like Red Bull. Pepsi's senior vice president of strategy and marketing Dawn Hudson recently quips to Atlanta Constitution: "Some still think of green Dew as hick Dew. Red could change that."