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Pepsi hopes mid-calorie formula will make sales pop

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NEW YORK

Pepsi hopes to win back soda drinkers with a compromise.

Some people don't like the calories in regular soda, but loathe the taste of diet. So the nation's No. 2 cola company is rolling out "Pepsi Next," a mid-calorie drink that has about half the calories of regular Pepsi at 60 calories per can.

The cola, which is slated to hit store shelves nationally by the end of the month, is Pepsi's biggest product launch in years. The drink comes as people increasingly move away from sugary drinks to water and other lower-calorie beverages because of health concerns. It's also an attempt by Pepsi to revive the cola wars against Coke and others.

Pepsi Next isn't the first drink to try to hit the sweet spot between diet and regular cola. Dr Pepper rolled out its low-calorie Dr Pepper Ten, which has 10 calories. The company said the drink, which has sugar, helped boost its fourth-quarter sales.

But coming up with a successful "mid-calorie soda," which has more calories, has been more challenging for beverage makers. In 2001, Coke rolled out "C2," and Pepsi in 2004 introduced its "Pepsi Edge," both of which had about half the calories of regular soda. Both products were taken off the market by 2006 because of poor sales.

"The problem was that consumers either wanted regular soda or a diet drink with zero calories — not something in between," said John Sicher, editor and publisher of Beverage Digest.

Pepsi's second stab at an in-between soda follows its lower-calorie variations of its other drinks. Gatorade, a unit of Pepsi, has "G2," which at 20 calories has half the calories of the original version. And the company's Tropicana unit introduced "Trop50," which is half of the 110 calories in a regular 8-ounce glass of orange juice.

But orange juice and sports drinks have nutritional benefits that a drink maker can market. A mid-calorie soda is a tougher sell because it provides only empty calories. So health-conscious drinkers usually go after diet soda instead.

Sales in the $74 billion soft drink industry have been fizzling out, with volume falling to 9.4 billion cases in 2010, down from slightly over 10 billion cases in 2005, according to Beverage Digest, which tracks the industry. But diet soda made up 29.9 percent of the carbonated drink market in 2010, up from 24.7 percent a decade earlier.

Market share for Coke, the nation's top-selling brand, dropped to 17 percent in 2010 from 20.4 percent in 2000, according to Beverage Digest. Diet Coke over that same time rose to 9.9 percent, from 8.7 percent.

Meanwhile, Pepsi had its share in the carbonated soft drink market fall to 9.5 percent, from 13.6 percent, while Diet Pepsi's share remained steady at 5.3 percent. To keep up with changing tastes, Coke and Pepsi have introduced newer versions of their diet drinks — Coke Zero and Pepsi Max — that promise a taste that's more like their regular sodas.

And PepsiCo Inc., based in Purchase, N.Y., said earlier this month that it plans to increase marketing for its brands by $500 million to $600 million this year. A centerpiece of that will be the company's first global ad campaign this summer, a peak time for the soda market.

     
     
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