Pepsi Seems Likely To Launch New Dairy Line.
New Colas? New Water?

Pepsi appears highly likely to introduce new dairy-based products this year. Both PepsiCo CEO Steve Reinemund (BD 11/7/03) and PepsiCo Beverages and Foods chairman Gary Rodkin recently hint strongly at that. For example, at recent BD Future Smarts conference in NYC on Dec. 8, Rodkin says: "As we look at dairy, clearly we're exploring, but only the value-added end of dairy; not the commodity side. That's not something we have any interest in." Adds "value-added side (is) growing very rapidly. It could be an opportunity for us to get into protein." Names? Recently, Pepsi applies for three trademarks covering "dairy-based beverages": 1) "Smooth Moos," which was used in prior Pepsi test for shelf-stable dairy product (BD 11/3/94). 2) "Milkquakes." 3) "Milk Chillers." Plus. Several bottlers also say Pepsi will likely introduce dairy-based drink this year.

Colas. Bottlers say Pepsi has interest in both mid-calorie and energy colas. Rodkin recently notes: "As we look into 2004, maybe the most important objective we have is cola." Bottler: "I've heard much about a mid-calorie cola." Bottlers also say Pepsi has expressed interest in energy cola. Names? Pepsi recently applies for three trademarks: 1) "Pepsi LS"; BD speculates "LS" could stand for "low-sugar." 2) "Pepsi Edge." 3) "Pepsi X." Pepsi uses name "Pepsi X" on energy cola in middle east; product packed in 8.4-oz cans (BD 10/24/03). 'Further along'? Bottlers seem to have no consensus whether energy or mid-calorie is "further along," but all say they've heard Pepsi is considering both -- with emphasis on "considering."

Water. Word coming out of Pepsi and its bottlers recently also seems to suggest system may test another water to supplement Aquafina at lower price point. Rodkin -- asked recently about adding low-priced water -- says: "We've stuck by Aquafina thus far, but we're open. We're looking and we're exploring ways to try and find opportunities to cover the landscape, but it would have to be with a mandate that it's never at the expense of Aquafina." Pepsi bottler -- noting "irrational" competitive pricing -- says: "It's difficult to be in the water business just with Aquafina, particularly in supermarkets in multi-packs." Details? Bottlers speculate on several possibilities: 1) use of Pepsi's "H2OH!" brand as lower-priced water. Source says Pepsi may test H2OH! in California plus possibly other markets. If test goes forward, H2OH! would be reverse-osmosis purified water and delivered DSD. 2) possible acquisition or license deal with Crystal Geyser.