Pepsi Takes Healthier Approach with Gatorade

07/09/07 PepsiCo has announced plans to significantly expand its leading non-carbonated portfolio in the US. The announcement features unprecedented news behind four of PepsiCo’s mega-brands and further strengthens the company’s partnership with its bottlers, and includes the following:

• The introduction of two new products from the makers of Gatorade, the #1 selling sports drink brand: G2 -- Gatorade’s first differentiated beverage since the original Thirst Quencher -- and a unique enhanced water from Propel called Propel Invigorating Water.
• Maximizing the reach of G2 and the Propel line by leveraging PepsiCo’s bottlers and providing distribution rights to the new family of Gatorade products in select channels.
• Simultaneously restaging PepsiCo’s two enhanced waters: Aquafina Alive and SoBe Life Water.

“Today’s news marks the biggest development in PepsiCo’s non-carb business since bringing Gatorade into the portfolio,” said John Compton, Chief Executive Officer of PepsiCo North America. “These innovative new products give our unparalleled portfolio even greater strength, and build on PepsiCo’s strong leadership positions in water, isotonics and tea. At the same time, together with our bottling partners, we are leveraging the best of our advantaged distribution systems to ensure consumers have handy access to these beverages and their unique benefits and varieties, wherever and whenever they work or play.”

Since Gatorade was introduced in 1967, the iconic brand has focused on satisfying active thirst, amassing an unmatched, loyal user base and generating more than $5 billion in U.S. retail sales. Now, for the first time, the company will expand the Gatorade trademark beyond active occasions to a new platform. G2, a low calorie electrolyte beverage with just 25 calories per 8-oz. serving, will help keep athletes hydrated off the field so they are better prepared for competition on the field. With the addition of G2, the broadened Gatorade line will better meet the hydration needs of athletes on a 24/7 basis. G2 will be the company’s largest new product launch since Propel Fit Water.

Propel was introduced nationally in 2002 and defined the enhanced water category by providing added benefits. Propel Invigorating Water is designed to not only hydrate and nourish, but also address a key consumer need by providing a boost for active people throughout the day. The new vitamin-enhanced water is mildly caffeinated and lightly flavored, with only 20 calories per 8-oz. serving.

“We've applied science, along with our extensive knowledge of the needs of athletes and decades-long hydration expertise, to help develop G2,” said Bob Murray, Ph.D., Director of the Gatorade Sports Science Institute. “Like Gatorade Thirst Quencher, G2 was very methodically developed to meet a specific athlete need. In fact, in some research studies as many as 50 to 75 percent of athletes show up to practice or games inadequately hydrated, which means they need to do a better job hydrating when they're off the field to help better prepare them for when they're on the field.”

Pepsi bottlers currently deliver SoBe, Aquafina and other Pepsi-Cola products in all channels of trade. Beginning later this year, the expanded Gatorade arrangement will enable Pepsi bottlers to distribute G2 and the Propel line to small format customers, including convenience stores, gas stations and independent retail outlets.

“Extending our bottlers’ distribution muscle into the Gatorade brand lineup while broadening our hydration portfolio is a great demonstration of our partnership in action,” said Dawn Hudson, President and Chief Executive Officer of Pepsi-Cola North America. “This is a winning proposition for everyone involved – our consumers, our customers, our bottlers and PepsiCo.”

SoBe Life Water is being reformulated with sucrose (table sugar), antioxidants, vitamins and natural herbs. Each flavor will have a unique blend of ingredients offering a distinct benefit. SoBe Life Water’s new formulations will have just 35 calories per serving – 30% fewer than before. Lightly flavored Aquafina Alive offers consumers added, recognizable benefits without extra calories. It is being reformulated with a new sweetener blend, additional nutrients and fewer calories.