Pepsi to Test Formula With Extra Caffeine : Trying to Capitalize on Reduced Coffee Drinking

Pepsi-Cola Co. wants a spot on the breakfast table and a chance at those other moments in the morning when people generally reach for the coffee.

Starting next month, the soft drink giant will begin test-marketing Pepsi A.M., a cola drink with about 28% more caffeine per ounce than regular Pepsi but 77% less than coffee or tea.

Although at least one small producer already is marketing a cola with a higher-than-normal caffeine level, the Pepsi test represents the most aggressive move yet by a major beverage company to encourage soft drink consumption in the morning.

Breakfast Trends

The soft drink makers say they capture only a fraction of the market for beverages consumed in the morning, and industry analysts say recent declines in coffee consumption provide an opening for soft drink marketers.

Coffee is included in 38% of the breakfasts eaten at home, according to a recent National Eating Trends survey by the research concern NPD Group. That was down from 44% just four years ago.

Carbonated soft drinks, however, were included in only 2% of the breakfasts eaten at home, the same as in a 1985 survey, NPD Group said.

For the past three years, Pepsi’s bigger rival, Coca-Cola Co., has been providing its bottlers with advertising for use at their discretion that promotes “Coca-Cola in the morning.”

Anthony Tortorici, spokesman for Atlanta-based Coca-Cola, said the Coca-Cola bottler there had noticed that people often bought soft drinks rather than coffee in the morning at convenience stores.

He developed an ad campaign to publicize Coca-Cola in the morning, and after the campaign proved successful in the Atlanta area, it was adapted for use by Coca-Cola bottlers across the country.

Tortorici said bottlers serving about 40% of the country are using the “Coca-Cola in the morning” campaign, which consists mainly of radio commercials played during the time many people spend driving to work.

Pepsi-Cola, which is based in Somers, N.Y., periodically has tried marketing campaigns that positioned Pepsi as an alternative to coffee in the morning. Tod MacKenzie, a Pepsi spokesman, said Pepsi has done so in campaigns with Wendy’s International Inc. and with Dunkin’ Donuts Inc.

But Pepsi intends to go further in its test, altering the drink itself by including 4.1 milligrams of caffeine per ounce of Pepsi A.M., compared to 3.2 milligrams for regular Pepsi and 18 milligrams for a typical ounce of coffee.

Testing in Midwest

MacKenzie said Pepsi A.M. also has less carbonation than regular Pepsi, giving it a smoother taste and addressing the consumer preference for less effervescence in their morning beverages.

The test will be done in the Midwest, but MacKenzie said he could not identify the precise locations. He said it would be supported by a multimedia advertising campaign and there was no timetable for the test.

“It’s a relatively small test to see what happens,” said Emanuel Goldman, beverage industry analyst for Paine Webber Inc. in San Francisco. “They will get a sense of whether it is worth pursuing.”

John C. Maxwell Jr., beverage industry analyst for Wheat First Securities in Richmond, Va., said it is hard to break consumer habits.

“These things are not done overnight. It takes years to train people that a soft drink in the morning is just as good or better than coffee,” he said.