UPDATE: Mystery surrounding PepsiCo's next move for Diet Pepsi remains. The company canceled the online presentation for bottlers on Thursday that could have revealed plans for turning around the brand's sales, according to The Wall Street Journal. PepsiCo declined to comment.
Dive Brief:
- PepsiCo could announce more changes to its fizzling Diet Pepsi brand as early as this week, per executives' recent notifications to bottlers about an upcoming discussion on Thursday, a person familiar with the matter told The Wall Street Journal.
- PepsiCo swapped out aspartame in Diet Pepsi for another artificial sweetener last year, and consumers didn't respond well to the reformulation. Social media comments and sales results since the switch back that sentiment: Diet Pepsi sales in the U.S. dropped 12% in the 12 weeks ending May 21 compared to a 6.7% decline for diet soda overall, according to estimates by Wells Fargo Securities, based on Nielsen data.
- Potential solutions could be selling the aspartame version of Diet Pepsi through e-commerce channels; pulling a 1985 "New Coke" reversal and bringing the previous version back while discontinuing the reformulated version; or shaking up the brand name to avoid consumers' distaste for the word "diet."
Dive Insight:
With its reformulation, PepsiCo was responding to consumer sentiment and concerns about aspartame, which the FDA deems safe but has been linked to everything from cancer to weight gain. However, PepsiCo lost ground with both loyal and new potential Diet Pepsi drinkers for two reasons: flavor and the category itself.
Loyal Diet Pepsi fans don't care for the new flavor, which continues to be a crucial factor in purchasing decisions, even beyond health implications. Also, Diet Pepsi is still a diet soda, which is a category that has floundered for years.
Diet Pepsi sales fell 8.5% in the year before the product went aspartame-free, and in the past 52 weeks, sales have dropped 9.3%, according to Wells Fargo estimates. Across the board, diet soda sales saw a 5.4% decline in the most recent 52-week period.
While Diet Pepsi still remains the No. 2 diet soda in the U.S., both Coca-Cola and Dr Pepper Snapple diet brands stole market share from PepsiCo since the reformulation, according to The Wall Street Journal.
E-commerce is one option to enable consumers to purchase the aspartame version of Diet Pepsi, and it's a channel soda companies have used for other strategies, such as reintroducing throwback brands. And while the Diet Pepsi conundrum may not be on quite the same scale as New Coke (trademark brand versus diet variety), analysts will undoubtedly compare the two.