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PepsiCo and Coca-Cola creating the cola of the future

PepsiCo, in collaboration with San Diego-based biotech firm Senomyx, is in the late stages of developing a “taste modifier” that would essentially fool taste buds into thinking they are getting more sugar than delivered.

The ingredient, which is called “S617” and still requires regulatory approval, would theoretically allow for PepsiCo to lower the amount of sugar and high-fructose corn syrup in full-calorie beverages such as regular Pepsi, while keeping the same sweet cola taste.

Coca-Cola, meanwhile, continues to experiment with steviol glycosides, which are the sweet, calorie-free extracts from South American stevia plants. The first cola version, called Coca-Cola Life, was launched in Argentina in the summer.

In the US, the company is examining results from a recent test market of stevia-infused line extensions Sprite Select and Fanta Select.

New formulations could potentially serve as the basis for future advertising efforts for both companies, while providing shelter from health critics and politicians who blame soda for the nation’s obesity epidemic.

The negative attention has hurt sales: Soda consumption continues to fall. Last year it declined 1.2%, which brought the category to 1996 levels, according to Beverage Digest.

It could also help them better compete in the latest cola battleground: mid-calorie sodas, which contain some, but fewer, calories than regular sodas.

“Getting new sweetener technology appears to be absolutely critical,” said John Sicher, editor and publisher of Beverage Digest. “Whether these companies can get natural sweeteners that bring the calories way down and preserve good taste is really going to be what people are looking for over the next year or two.”

A recent Senomyx earnings statement heightened speculation about PepsiCo’s plans. It said that regulatory filings for S617 are “on track” and that it anticipates that the ingredient will be introduced into products in 2014.

The company also works with food and flavour companies, so it’s possible that the launch might not involve PepsiCo. But Senomyx is wedded to the soda marketer through a four-year, $30-million deal struck in 2010 aimed, according to a press release issued at the time, at commercialising “sweet enhancers and natural high-potency sweeteners” in order to launch “lower-calorie, great-tasting PepsiCo beverages.” (The pact includes an additional $32-million in “committed research and development payments.”) Senomyx expects to book about $30-million in revenue for 2013.

PespiCo CEO Indra Nooyi on an October earnings call hinted at products coming to market in 2014, adding that “we are staying on the path of innovating along natural sweeteners and thinking about flavoring agents to make sugar taste more sugary.”…..

Advertising Age: Read the full article