- PepsiCo is launching a functional water called Driftwell aimed at combating stress and inducing relaxation, according to an emailed release. The enhanced water contains 200 grams of L-theanine, an amino acid found in tea and some herbal mushrooms, and 10% of the daily value of magnesium.
- Driftwell, which comes in blackberry lavender flavor, will be available through e-commerce sites beginning in December before it appears on grocery store shelves in the first quarter of 2021.
- Soda consumption has declined for years as consumers turn away from the sugary drinks, prompting beverage manufacturers to innovate and expand into other beverages like tea and carbonated water. Analysts have predicted that major growth in beverages will come through functional offerings.
PepsiCo is slowly but surely reducing its reliance on its namesake soda brand. In recent years, the company has introduced or acquired energy drinks, non-alcoholic rosé, a coffee-cola concept, the at-home water carbonator company SodaStream and CytoSport, a maker of protein powders and shakes under the Muscle Milk brand. Now the company is delving into functional beverages through a relaxation niche that has seen an uptick in demand during the pandemic.
Relaxation beverages are a small segment in the overall functional water beverage category worth $2.97 billion in the U.S., according to data from Euromonitor International cited by CNBC. Despite the current size, growth predictions for the segment have attracted companies big and small. Euromonitor anticipated the category will grow 5% this year.
It's no surprise that functional beverages have seen an infusion of investment from venture capital companies. Last year, VCs put more than $170 million toward functional beverage companies — up from $111 million in 2017, according to Pitchbook data.
Employees at PepsiCo's R&D laboratories came up with the idea for Driftwell through an internal idea pitch competition and in less than a year, the company was able to develop and release it. PepsiCo's eagerness to move forward quickly with the idea not only shows consumer demand for offerings like it but the competition that exists in the space — the New York-based company can't sit back and watch other brands hit the market.
PepsiCo is easing into this category with a nootropic ingredient that has been trending thanks to its associations with relaxation and the fact that it is legal. Other smaller beverage brands do have similar products. Koios offers nootropic functional drinks with amino acids like L-tyrosine and L-theanine. CBD is another ingredient that is growing in popularity in the relaxation space, but it is also one that poses regulatory hurdles.
So far, PepsiCo has been skirting the regulatory quagmire associated with CBD, but it still wants to capitalize on the growing popularity of functionality. This holds true now more than ever as reports of the coronavirus pandemic taking a toll on stress levels becomes apparent.
Some studies have shown the efficacy of L-theanine in helping people unwind. According to a 2017 study in Science Direct, this amino acid can maintain normal sleep, improve memory function and nullify the effect of neurotoxins. Similarly, a 2019 study from NCBI shows L-theanine reduced sleep disturbance and "it has the potential to become a nutraceutical ingredient that mitigates and prevents stress-related psychic confusion in modern society."
While the long-term success of this sleep aid is unknown, this latest product debut indicates PepsiCo is keenly aware of consumer trends in the beverage space. This week, PepsiCo also announced the appointment of Athina Kanioura as the company’s executive vice president and chief strategy and transformation officer. Kanioura specializes in transforming businesses with an emphasis on data, a skill which could help PepsiCo with product launches.
With only a handful of items becoming successful money makers for the long haul, it may take PepsiCo a few tries to strike gold. However, with a new data-driven strategy officer at the helm and a willingness to try new avenues, the company is doing what it can to increases its chance of success.