What’s the story behind Pepsi’s prebiotic cola push?

The year is 2025: US trade wars dominate the news, AI is taking over, and a can of soft drink is no longer just a fizzy treat. 

Whether shoppers are looking for a healthy energy kick, a boost to their immune system or just something to chill them out, the increasing popularity of functional drinks has seen a raft of exciting new brands jostling for the top spot in what is becoming an increasingly crowded category.

So, it was really only a matter of time before the soft drinks giants got in on the act. Coca-Cola launched Simply Pop earlier this year, but last week PepsiCo unveiled its functional cola – notably, under the flagship Pepsi brand.

Launching in both classic and cherry vanilla flavours, Pepsi Prebiotic Cola will be available online this autumn in what the soft drinks giant has called “the first significant innovation in the traditional cola category in 20 years”.

The NPD – which contains 3g of prebiotic fibre per can, alongside just 5g of cane sugar, 30 calories and no artificial sweeteners – comes shortly after PepsiCo entered the gut health soda category by splurging $1.95bn to buy Poppi in March.

So, why has Pepsi chosen now to extend its flagship cola into functional, and how likely is the move to be a success?

Growing functional trend

It’s no surprise PepsiCo feels the need to have a presence in functional. The category has exploded in size in recent years as shoppers seek healthier alternatives to mainstream sugar-filled soft drinks. And with the current US administration waging war against artificial ingredients in food and drink, demand for clean-label drinks isn’t going away anytime soon.

In the US – where Pepsi Prebiotic Cola is launching first – functional drinks has grown in size from $197m in 2020 to a value of $440m by 2024, according to Euromonitor International data. 

Much of that growth has been driven by exciting new challenger brands like Olipop and Poppi, disrupting the stranglehold enjoyed by larger players in soft drinks. Responding to the trend, US retailers such as Kroger, Walmart and Albertsons have all increased shelf space dedicated to functional beverages with added fibre, minerals and vitamins.

That’s made traditional soft drinks players sit up and take notice, as has the declining sales of their own drinks. Speaking to CNN, PepsiCo Beverages US CEO Ram Krishnan said the average number of times a consumer drinks traditional colas had dropped from 9.4 times a month to 7.7 times per month in the past two years [Kantar].

Diet colas were falling out of favour even faster, Krishnan added, pointing to a 27% decrease in consumption in the past three years.

“That’s the problem to solve for us: no one’s doing much to retain a lot of these consumer cohorts who are leaving for other options,” he told CNN.

Big soda, big moves

In February, The Coca-Cola Company hit back with its own prebiotic soda brand called Simply Pop. Meanwhile, the aforementioned acquisition of Poppi has given PepsiCo its own foothold in the category.

Having spent close to $2bn to acquire one of the category’s leading brands, launching a prebiotic line within its flagship brand looks like a strange decision by PepsiCo. Big brands acquiring smaller competitors which were stealing their market share is an established feature across fmcg, but launching a direct competitor from your most famous brand just months afterwards is significantly more unorthodox.

However, the two brands can co-exist and offer different consumers a route into functional, Krishnan believes, telling CNN they “complement each other by addressing both ends of the spectrum”.

“Poppi is the original modern soda category leader and then Pepsi is one of the founding fathers of cola.”

Risky business

Consumers already enamoured with the likes of Poppi and Olipop are unlikely to be the target market for Pepsi Prebiotic Cola. Instead, Pepsi looks to be betting on the brand recognition enjoyed by its eponymous drink to spur functional-curious consumers to enter the category for the first time.

However, while there’s no doubt Pepsi’s star power will bring some shoppers in, messing with the formula of an iconic product – even if clearly marketed as a brand extension – comes with risk. Just look at Coca-Cola Spiced, which launched to much fanfare in the US last February before being phased out around six months later after failing to woo younger drinkers.

Pepsi Prebiotic Cola contains just 5g of sugar – compared to the 15g of sugar in Pepsi’s classic formulation – and no artificial sweeteners. As such, the claim it will offer “the classic crisp, refreshing taste of Pepsi” looks to be a bold one by the brand.

Fail to deliver on that promise, and it’s unlikely Pepsi loyalists will return for a second swig.