New products help beverage giants move forward

Move over coffee, orange juice, tea and even you ever-so-trendy vegetable smoothies. To get Americans going in the morning, Pepsi has a new suggestion: Mountain Dew Kickstart.

Yes, Mountain Dew in the morning.

Purchase, N.Y.-based PepsiCo Inc. is pitching Kickstart — an 80-calorie blend of fruit juice with one of the nation's bestselling carbonated sodas — as a breakfast drink and is boosting awareness with a multimillion-dollar ad campaign featuring young people skateboarding into a new day with Kickstart instead of their parent's cup of java or their friends' energy drinks.

It's a move that reflects the beverage industry's biggest challenge these days: maintaining sales growth as its bread-and-butter business, carbonated drinks, has flattened or declined.

That has meant a lot of new products on store shelves. For instance, in addition to Kickstart, Pepsi has launched Tropicana Farmstand, Gatorade Recover Protein Shakes and Pepsi Next in the past 18 months.

"PepsiCo has successfully built new capabilities to drive innovation and growth across our portfolio," said Gina Anderson, a spokeswoman for Pepsi. "We're highly focused on continuing to develop new product, packaging and equipment innovations that meet consumer needs and unlock new opportunities to grow our business."

Not to be outdone, the company's market-leading rival, Atlanta-based Coca-Cola Co., introduced Dasani Drops, a flavor enhancer for its water products, last year, as well as Fruitwater, a carbonated water drink, in April. The beverage giant also has extended its Simply juice and Minute Maid lines with additional flavors.

It is seen as Pepsi's answer to Coca-Cola's Freestyle dispenser, which the beverage giant launched more than two years ago. Freestyle offers 146 brand choices and has more than 12,000 dispensers in more than 7,000 outlets across the nation.

Other competitors, such as Dr Pepper Snapple Group, have stepped up with lower calorie products, such as Dr Pepper Snapple's recently introduced "Ten" line, featuring popular brands such as RC Cola, A&W Root Beer and 7 Up, all with 10 calories.

There is good reason for the expansions. Overall beverage consumption in the United States grew 1 percent in 2012, with teas, water and energy drinks leading the charge, according to Beverage Digest, a publication that tracks the industry. Meanwhile, sales of carbonated drinks — which represent nearly half of all nonalcoholic beverage business — fell 1.2 percent last year, continuing a slide that began in 2005.