Aishwarya Ramesh
Points of View

Will Pepsi's 'sugar tweak' have a domino effect beyond calories and carbs?

The new Pepsi formula will have less sugar and more fizz. How will the change be received?

Pepsi, as we know it, is about to change. According to an Economic Times (ET) report, the cola giant announced that it’s changing its formulation to be less sweet and more fizzy. This move is set to place Pepsi on par with competitors like Coca-Cola and Thums Up, claims the report.

"Pepsi has traditionally been a sweeter drink, compared with rivals, like Coke and Thums Up. This is a move aimed at closing in on the category leader Thums Up. It comes on the eve of the crucial summer quarter this year, after last year's near washout quarter that coincided with the peak lockdown," an official directly aware of the matter told ET.

On April 23, 1985, The Coca-Cola Company (USA) also made an attempt to change its formula, but was met with widespread indignation. It was dubbed as a ‘marketing blunder’ by many. According to the company website, by June 1985, Coca-Cola was getting 1,500 calls daily on its consumer hotline, compared with 400 before the taste change from disgruntled customers, who wanted the old formulation back.

Vintage ad of Coca Cola with the new formula
Vintage ad of Coca Cola with the new formula

In July 1985, the company gave in and introduced ‘Coca-Cola Classic’ – another beverage in its portfolio which had the old variation. Shortly after, in 1987, 7Up also attempted to change its formulation (by making it less sweet) in a bid to draw attention to a brand that was taking a backseat in consumers’ minds.

Another vintage coke ad
Another vintage coke ad

Closer home, in India, Coca-Cola’s Fanta also changed its formula. In 2017, the company announced that Fanta would contain less sugar and its fruit variants would be made of locally sourced ingredients.

Fanta with improved flavour and taste
Fanta with improved flavour and taste

Pepsi is attempting something similar. What ripple effect will its attempt to lower sugar in its formula have? We spoke to a few experts to find out.

Edited excerpts:

Lloyd Mathias, investor and business strategist (former executive VP marketing at PepsiCo India)

I’m a little surprised to hear that PepsiCo India is actually reworking its flagship product by altering sweetness and fizz. For one, it’s a path fraught with danger, given the backlash that Coke faced when it introduced ‘new Coke’ in response to the Pepsi Challenge, back in the 1980s. Coca-Cola was then forced into bringing back the original formulation as ‘Classic Coke’.

Lloyd Mathias
Lloyd Mathias

Second, it does seem like Pepsi’s admission to follow the leader – Thums Up, and conceding that its product needed altering. Also, the soft drink consumers know fully well that the product is calorific, and those who are concerned can switch to the Diet or Lite versions. Tinkering with the main product is never a good idea.

Vani Gupta Dandia, marketing-led business consultant, CherryPeachPlum (former category director, Indian snacks and foods, PepsiCo)

Brands are built over years and years. Pepsi is one such iconic brand. Pepsi is Pepsi for its taste, challenger legacy (versus Coca-Cola), and youthfulness. The appeal of Pepsi, and what it's stood for, is linked to its sweeter taste.

Those who love it, love it for what it is. They may not care how many spoons of sugar it contains. There's a time and place for everything in life and in the mouth. So, if I was a Pepsi brand head, I wouldn't touch the magic formula of the product.

Maybe, they may acquire new customers in the process. But if I was in its place, I'd worry more about losing those who love Pepsi for what it was. The health-conscious variety won't feel better because Pepsi reduced sugar content. They'll opt for juices, or other beverages, instead.

Vani Gupta Dandia
Vani Gupta Dandia

Pepsi should address this need with a new variant. How can it mess with its flagship 'hero' product? That’s the whole idea of portfolio strategy – to meet different consumer requirements with a wider portfolio that straddles different needs as well as consumer segments. That’s what they're doing with its portfolio of brands – from Quaker and Tropicana to Pepsi and 7Up. Why wouldn't they do that within the main Pepsi brand too?

Years back, it introduced a product called 'Pepsi Max' to fight Thums Up. That died down very soon, but the idea was strategically right. That is just what they should be doing again. Isn't that why Pepsi abroad has a zillion different flavours?

Ruchira Jain, founder, Elevate Insights (former director insights, PepsiCo)

In the context of the consumers becoming more sugar-conscious and the palate itself evolving over time, sugar reduction is a win-win, as it also helps in cost reduction. Pepsi is, anyway, the sweeter flavour profile amongst the three colas and, therefore, this move may help improve brand perception amongst non-users. There is significant regulatory pressure to reduce sugar and salt too.

Ruchira Jain
Ruchira Jain

In the last few years, sugar substitutes have really improved, and this may be helping flavour delivery as well. Finally, it comes down to brand lovers accepting the changed product. I am sure PepsiCo has done rigorous testing before bringing this to the market, and will continue to monitor the actual changeover closely.

Shripad Kulkarni, media transformation consultant, marcom advisor for challenger brands

All soft drinks companies will have to reduce sugar content worldwide... This must be a part of that plan, as regulation and sin tax also play up. The category will have to transform.

Shripad Kulkarni
Shripad Kulkarni

The trick, I think will be to reduce the sugar content in stages so the change in perceived taste is not significant to have a direct negative effect on volumes. They would have done consumer research to figure out the extent of reduction (in stages) and the masking of taste with fizz etc.

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