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PepsiCo to Launch Craft Stubborn Soda Brand for Fountains

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Jun. 11 2015, Published 3:58 p.m. ET

Stubborn Soda

PepsiCo (PEP) plans to launch a new line of craft sodas called Stubborn Soda. The beverage giant will initially launch this line only for soda fountains. The new drink will contain natural flavors and contains sugarcane instead of high-fructose corn syrup.

Trade publication Beverage Digest was the first to report this launch. Stubborn Soda will be available in various flavors like black cherry with tarragon, lemon berry acai, orange hibiscus, pineapple cream, and agave vanilla cream.

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Investment in innovation

PepsiCo continues to invest aggressively in research and development. In fiscal 2014, PepsiCo increased its investment in research and development by 8% to $718 million. According to the company, product innovation accounted for 9% of its fiscal 2014 net revenue, up from ~8% in fiscal 2012. PepsiCo makes up over 4.5% of the Consumer Staples Select Sector SPDR Fund (XLP) and ~0.7% of the iShares Core S&P 500 ETF (IVV), respectively.

Apart from PepsiCo’s Stubborn Soda line, there have been some other interesting innovations in the craft soda space. In October 2014, PepsiCo launched Caleb’s, a craft soda named after the company’s founder. Caleb’s is made with fair trade–certified cane sugar, kola nuts from Africa, a blend of spices, and a hint of citrus. In March 2015, PepsiCo launched Mountain Dew Dewshine, a premium craft soda packaged in glass bottles.

PepsiCo and peers like Coca-Cola (KO) and Dr Pepper Snapple (DPS) are developing new products to fight the declining carbonated soft drink (or CSD) volumes in the US. These companies are introducing beverages with natural flavors and lower sugar content or natural sugar substitutes.

The next part of this series will explore some recent innovations in the noncarbonated beverage category.

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