Watering It Down
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Some consumers prefer orange juice that’s less thick. Others want juice with the “goodness” of oranges and fewer calories, said PepsiCo Global Beverages Chief Massimo D’Amore. And consumers will pay the same -- or more -- for such versions. “They themselves add water before drinking OJ,” D’Amore said. “So why not add the water ourselves and charge for it?”
PepsiCo’s Tropicana, the best-selling orange juice in the U.S., is trying to regain space in American refrigerators after a repackaging fiasco three years ago hurt the brand and allowed Coca-Cola Co. (KO) to outflank it. The brand lost market share last year to Coca-Cola’s Minute Maid and Simply Orange brands.
nstead of trying to match Coca-Cola step-for-step in the 100-percent orange-juice category, D’Amore is focusing on products with less juice, more innovation and, therefore, higher profit margins. Trop50, a 42 percent orange juice using a natural stevia-based low-calorie sweetener, has been a bright spot for the brand. Tropicana also will target Hispanic consumers with new juice drinks and blends. “We have lost perspective here on the primary reason we are in business, which is to make money,” D’Amore said.
Meanwhile, Coca-Cola has put in place a squeeze play, fielding products designed to get Tropicana shoppers to trade up or down, said Bonnie Herzog, an analyst for Wells Fargo & Co. in New York. Coca-Cola’s premium Simply Orange, at $3.79 for a 59- ounce bottle, sells for 40 cents more than Tropicana, while its Minute Maid “value” brand is almost a buck less. As a result, between 2008 and 2010, Tropicana lost market share to Coca- Cola’s OJ brands, says Euromonitor. “It’s a brilliant strategy,” Herzog said in an interview.