As high fat and sugar drinks fall out of favour, PepsiCo UK is banking on premium and health-conscious consumers to drive demand for healthier options on the market.
With investors increasingly reluctant to commit to soft drink and energy stocks, The Drum spoke with PepsiCo UK's top marketer to learn why it is scaling its sugar-free options in order to diversify their portfolios (or protect their market share).
"The big growth that we've observed across our beverage brands has been around no sugar" explained Natalie Redford, marketing director of PepsiCo UK. "We're really unlocking what that means." This shift is being seen around the globe.
"I think it's the new norm," Redford said. "Guilt-free, but not compromising. It's proven really successful for us in the UK."
And while the Advertising Standards Authority (ASA) ups its focus on cutting down high fat, salt, and sugar (HFSS) advertising, Redford said PepsiCo UK has responded to Government consultation relating to further advertising restrictions for products high in fat, salt and sugar.
"The great thing about the beverages and brands that I look after in my portfolio, and the ones that we advertise are no-sugar beverages that fall outside of the HFSS category," Redford said.
Of all carbonated brands included in her UK portfolio, Pepsi Max tops the sugar-free market for cola, and 7up Free leads the lemon and lime.
PepsiCo UK is channelling this healthier alternative approach through its advertising.
In a first of its kind event for the 7up Free brand, this weekend, PepsiCo UK has launched a pop-up shop to commemorate the return of its chilled-out 90s mascot, Fido Dido.
"We wanted to use the 'free' in 7up Free to mean more than just no sugar," Redford said. "We wanted to use the free to make a more 'emotional connection' with our customers."
With this thought in mind, Fido Dido House is an 'anti-pop-up.' While people normally 'do do do,' PepsiCo UK created an experience that allowed people to opt-out of the frenzy of hectic life, to feel free to just 'be.'
It claimed consumers are demanding more premium products; PepsiCo UK is increasing investment in this space.
In 2017, PepsiCo first launched Lifewtr - a premium water bottle brand - in North America in a bid to rival Coca-Cola’s Jennifer Aniston-endorsed Smartwater.
Serving as a canvas to showcase emerging artists' work, the brand caters to the need for healthier alternatives to carbonated, sugary drinks, while supporting arts and culture. Now, Lifewtr has launched in the UK market as Arto Lifewtr.
Redford spoke how "premiumisation is definitely a trend that [PepsiCo] is going exercise more of in the next five years and it's happening at every level."
She puts it down to the breadth and depth as a company that means PepsiCo can play across those segments and foresees this will be a general direction for the brand as it steps out from the more mainstream drinks industry.
"We're thinking how our brand can be served in a more premium way," Redford detailed. "Whether that be a premium experience or a premium product."
While moving towards healthier options is undoubtedly a strategic move for PepsiCo, it isn't always an easy one. It's main competitor Coca-Cola has to axe its Life brand, after-sales slumped in the UK, whereby the product accounted for less than 1% of its trademark sales.