PepsiCo and Coca-Cola face a challenge because of their size. The two companies stand as the stewards of dozens of popular beverage brands that have devoted followings.
Coca-Cola (KO) -) has had to address this issue over the past few years as it killed off hundreds of brands. Those were likely financially smart decisions as none of the eliminated brands accounted for a meaningful percentage of sales. But these decisions are emotionally difficult for customers.
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Somebody, probably tens of thousands of somebodies, had a deep affection for every brand Coca-Cola has dropped since its great purge of about half its brands in 2020. At the time of the move, former Coca-Cola Global Innovation Head Cath Coetzer explained, in the least sympathetic way possible, why the cuts were made.
“We’re prioritizing bets that have scale potential across beverage categories, consumer need states, and drinking occasions. Because scale is the algorithm that truly drives growth," she said.
Coetzer, who is still an executive for the company, seemed to miss the deep connection customers have with certain brands. She may be right in a technical sense, but someone who considered Tab their favorite beverage probably isn't consoled by talking about algorithmic growth.
PepsiCo (PEP) -), of course, has made similar decisions. In 2023 it killed Sierra Mist and replaced it with Starry, a similar lemon-lime drink that's targeted at younger drinkers.
Now, the beverage giant has killed another big-name beverage line and fans of the brand will be devastated.
Image source: TheStreet
PepsiCo discontinues a popular MTN Dew line
Coca-Cola has explained that eliminating some beverages enables it to focus more on others.
"Discontinuing the Odwalla range of products, for example, frees up resources to invest in growing trademarks like Minute Maid and Simply and fund the launch of promising innovations like Topo Chico Hard Seltzer, Coca‑Cola Energy, and AHA flavored sparkling water," the company said.
That's not incorrect but it's cold comfort for fans of Odwalla, a fresh-juice line that's not equivalent to any of the other brands the company cited.
PepsiCo appears to use similar logic in its decision to kill MTN Dew Energy. The company made reference to that on the website for Rockstar Energy, another PepsiCo energy-drink brand.
"After careful consideration, we will be discontinuing MTN Dew Energy. We are incredibly grateful for your support. Fear not, Rockstar has your back for your energy needs. Find your flavor today," the company posted.
That's a bit tone deaf, almost as if the company were posting "we're sorry your lost your spouse, but look at all these good-looking people you could date."
Losing a soda is, of course, not the same as losing a spouse, but it's a loss and both Coke and Pepsi seem to take a fairly cavalier attitude toward the emotions of their customers.
PepsiCo did not return a request for comment on the end of MTN Dew Energy. The news was first reported on the SodaSeekers Instagram page.
?MTN DEW Energy is no more! Official channels announced earlier this year that the MTN Dew Energy line would be discontinued moving forward. At this time, there is no sign MTN Dew Kickstart is in danger of being discontinued," the Instagram page shared.
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Pepsi has seen some changes in consumer behavior. PepsiCo Chief Executive Ramon Laguarta addressed the issue during his company's third-quarter-earnings call.
"There's two big variables that we're trying to optimize," he said. "One is consumer interaction with our brands. And the proxy we're using for that is units or specific purchasing act. And then the other one is obviously margin for the overall business. And those are the two variables that we're maximizing."
The CEO also explained how purchasing patterns have changed.
"In both cases, units are growing much faster than volume," he said. "And we're seeing that — you mentioned consumers moving to smaller packs. We're also, in a way, facilitating that through our pricing and mix strategy.
"And then we're obviously optimizing margin ... as you saw, it was a good improvement in our margin across the company and the particular businesses that you referred to. So that's how we're thinking about volume and margin."
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