Inspired by an understanding of the intersection of Pepsi’s brand and marketing strategies, EGG designed an “interactive” drink line to appeal to a core youth segment shared by beverage brand competitors: kids, but that was also a fun-but-healthy alternative to soda. While we saw a better path to general competitive positioning through brand recalibration, it was product – not brand – innovation (or innovation-by-acquisition) that would best reach and convert the next wave of Pepsi brand loyalists.
Client:
PepsiCo
To create an on-brand, healthy alternative to cola to better target the critical kids target segment with a proprietary (patentable) delivery system customized to turn drink making into a fun activity, while promoting healthier “soft-drinks” vs. competitors to future Pepsi brand adopters.
Parents were buying juice-packs for their kids, who as they moved into their tweens were leaving them untouched. But parents didn’t want to encourage transitioning to cola or energy drinks. If there was a way to bring in new natural fruit flavors and get usage by making it socially interactive, fun and peer-endorsed drink line all at the same time… (read on!)
Beverage companies spend over $900 million to advertise unhealthy sodas, and children and teens remain the core targets for advertising.* While some progress has been made regarding youth beverage marketing, improving the nutritional quality of these products is still at a snail’s pace** — in part, it’s a competitive bind for beverage market leaders. The youth market is their future core and backing off in competitive marketing would cede future share to competitors.
Still, Pepsi, the innovator brand always focused on end-customer needs, under CEO Indra Nooyi, made great strides in expanding their portfolio to include healthier alternatives, through smart acquisitions, including Naked Juice, advertised as Pepsi’s “good for you” product, and generating over $150 million in annual revenue. However, Naked Juice was still primarily an “adult” health drink, with blends including Naked’s “Green Machine” which contains 3.5g of sugar per ounce, more than Pepsi Cola’s 3.42g per ounce.
While part of our work would focus on formulations, we also needed to find something patentable for Pepsi to “own” in the long-term, so focused from the beginning on a unique delivery system in tandem with unique product to be.
* Source: Yale Rudd Center for Food Policy & Obesity.
** The Children’s Food and Beverage Advertising Initiative (CFBAI) regulates advertising placed in TV and other media where 35% or more of the audience is made up of children under 12 years of age. Rudd estimates children’s exposure to TV advertising for sugary drinks by preschoolers (2-5), children (6-11) and teenagers (12-17), as well other forms of marketing they encounter.
Our proposal was not rebranding current sodas and drinks to better target the youth market, but creating a new drink specifically for them that honestly connected to the brand’s core promises and values. Additionally, we aimed to aid Pepsi in thwarting the teen trend towards migrating to diet sodas (seen by parents as healthier) while replacing or increasing any diet Pepsi revenues from teens by doing so.
Our plan was to create the first (socially) interactive and “creator/maker directed” natural beverage line.
For patentability, more than reformulations we started start by looking at the 80/20 on highest ranked (by 12–18 year olds) natural tropical fruit juices, cross tabulated with best juice blend combinations. Focusing on highest rated (by kids and their parents) tropical fruit juices specifically with high natural sweetness profiles, yet with lower (or none) dextrose/corn syrup than adult fruit “drinks”, e.g. berry-based drinks and other fruits that required added sugar to reach a baseline sweetness. The final choices tested and approved included: coconut milk, lime-aid (with honey as sweetener for the U.S., coconut sugar for Europe and Asia), mango blend, banana blend, pineapple and strawberry blend.
We found that the client’s own juice/blend brands were produced by the plants they inherited when acquiring them, which were mostly domestic, and limited to standards based on their own supply chains. Orange, pineapple, apple, etc.
When we worked through our own extended supply base, we found that not only was over 40% of all juice sold domestically from South American fruit (to offset seasonality in domestic harvest periods), but many of those growers had their own ISO 9001 compliant juicing and bottling plants for their national markets. And that “direct” actual juice costs would be 20% lower than domestically processed comps. We worked with our NY-based chemical and flavor engineers and a juice formulation expert and these facilities to develop blends to our specifications while determining how to design a…
The client also requested its own brand development and suggested using a fun “but nostalgic” tropical style. As this is also the time we determined the core unique function, socially, would be in enabling kids to make their own unique custom blends/flavors with friends, we…
Naming & label design
We registered a trade-name that was fun but not goofy, as to not undermine the quality promise of the natural fruit juice, while still appealing to youthful users.
Over 6 months…
Working with the same polymers already used in the client’s supply chain, coordinating with their manufacturing engineers, we used temporary rubber molds, 3D printing and CNC machining to generate over 45 sets of four components*. The cap itself could be manufactured by the client’s V/I supply chain, and the iris valve required a marginal investment for set-up and contributed less than 2% cost to the entire product. We also found that the client’s production lines were well automated and easily modified – as proven with seasonal custom promo-printing runs, which meant it was ready-made for inserting this new line vs outsourcing the bottling and packaging.
*(The core cap and interior iris valve that both seals the chamber when the exterior cap is automatically screw-locked into place, but opens when the cap is turned 5 times, with an audible click were the most difficult to complete both individually and for functioning together.)
Looking at buying behavior, parents buy in primarily in 6 (80%) and 12 (20%) unit same-flavor case packs. This meant we could keep the same 6 starter SKUs organized in same-flavor packs and displays, and (as we proved), kids would be compelled to "blend with friends."
The tube slides down into cavity, locks into place for shipping. Unless the cap is turned after purchase seal will not be broken & chamber will not open. The connecting rubber cap is soft and bio-ingestible, and comfortable as a single “straw” head for users. 40% initial testers liked to use the tube as a straw on its own (even with other drinks). While we’d not considered this (the total cost for the added components was 0.18, less than 20% of the total cost), we added an element to the cap for use as a branded reusable keepsake.
01 // The final cost (comparison)
- In portfolio: Naked, Juice Protein Zone, 15.2 oz: $3.49
- Wholesale: $1.60
- Landed cost: $0.80
- Labor & materials (cap/bottle): $0.20
- Juice w/ processing: $0.60
- MixUps, line prices, est: 14oz: $3.50
- Wholesale: $1.60
- Landed cost:
- Materials (with additions): $0.25
- Juice (processed at source): $0.54
- Total: $0.79
+ 300% more fun!
02 // Config
In the end, the client wanted to do the final comp portion as co-share with fixed % for new tech vs. purchase/license of new IP. However, the initial market discussed for a summer promotional launch is Western Europe to coincide with their own (TBA) kids gaming tournament.
