PepsiCo Will Quench Your Thirst with LIFEWTR

On December 9, snack food and beverage giant PepsiCo (PEP) announced the launch of LIFEWTR—a premium bottled water brand. LIFEWTR will be launched across the US in February 2017. The new premium bottled water brand will be available in two sizes—700 milliliter and one liter. It will be sold at a suggested retail prices of $2.06 and $2.70, respectively.

LIFEWTR is a purified water product. It’s pH balanced with electrolytes added for taste. PepsiCo will be launching LIFEWTR with attractive packaging featuring upcoming artists’ work.

PepsiCo’s LIFEWTR will compete with brands like Coca-Cola’s (KO) Smartwater. PepsiCo already has a strong presence in the bottled water market through its Aquafina bottled water brand. It’s one of the company’s $22 billion brands. Each brand generates over $1 billion in retail sales.

PepsiCo’s LIFEWTR brand will help the company grow beyond traditional soda beverages. Soda beverages are losing their fizz as more consumers are opting for healthier drinks.

As reflected in the above graph, the carbonated or soda beverage volumes of PepsiCo’s North America Beverages segment fell in each of the first three quarters of fiscal 2016. In fiscal 3Q16, PepsiCo’s North America Beverages segment experienced a 3% fall in its carbonated beverage volumes while non-carbonated beverage volumes rose 7%.

Persistent weakness in soda volumes is making PepsiCo focus on its non-carbonated beverage portfolio. Besides bottled water, PepsiCo is also expanding its presence in other categories of non-carbonated beverages. On November 22, PepsiCo announced its acquisition of KeVita—a manufacturer of fermented probiotic and kombucha beverages. On the same day, smaller rival Dr Pepper Snapple (DPS) announced its acquisition of Bai Brands.

We’ll discuss how PepsiCo will benefit from its expansion in the bottled water space in the next part of this series.