Milly Gaines
There is no indication that PepsiCo will stop making Diet Pepsi, although the company is pushing retailers to carry Pepsi Zero Sugar instead. This is because the term zero sugar is more appealing to younger consumers than diet. In 2016, PepsiCo brought back the aspartame-sweetened Diet Pepsi, which had been discontinued the previous year, in response to customer demand. However, sales of Diet Pepsi have been in decline for years, with some consumers expressing an aversion to aspartame.
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What You'll Learn
- Diet Pepsi is not being discontinued, but Pepsi is pushing retailers to stock Pepsi Zero
- Sales of Diet Pepsi are in decline, with a 10.6% drop in volume sales in the first quarter
- Diet Pepsi was reformulated in 2015, removing aspartame, but the new recipe did not reverse the sales decline
- Pepsi Zero Sugar is being marketed more than Diet Pepsi, which some retailers are swapping to
- Diet Pepsi has faced bottling issues, with soft bottles and loose tops resulting in flat drinks
Diet Pepsi is not being discontinued, but Pepsi is pushing retailers to stock Pepsi Zero
In response to slow demand for the "classic" version of Diet Pepsi, Pepsi reformulated the drink in 2015, replacing aspartame with sucralose and acesulfame K. However, this change did little to improve sales, which continued to fall. In 2016, Pepsi brought back the aspartame-sweetened Diet Pepsi, now called "Diet Pepsi Classic Sweetener", while keeping the reformulated version as the primary diet cola offering. Despite these efforts, Diet Pepsi sales continued to decline, falling 10.6% in the first quarter, almost double Diet Coke's 5.7% decline during the same period.
Pepsi's push for Pepsi Zero is part of a broader strategy to revive interest in its diet cola offerings. While Diet Pepsi is not being discontinued, some retailers are choosing to stock Pepsi Zero instead of Diet Pepsi, or in addition to it, as they don't feel the need to carry multiple diet drink options. This has led to concerns from loyal Diet Pepsi drinkers, who worry about the drink's availability and potential discontinuation.
The decline in demand for Diet Pepsi and other "diet" sodas is part of a broader trend. Sales of diet soda have been falling for years, with a 5.1% decline in the year ending in April, according to data from Nielsen. This trend is also impacting other brands, such as Diet Coke, which has seen a similar decline in sales.
While the term "diet soda" may be falling out of favor, it's important to note that these drinks are not actually being discontinued. They are simply being rebranded and repackaged under different names, such as "zero sugar" or "no-calorie" beverages. This shift in branding is a response to changing consumer preferences and a desire to appeal to younger demographics.
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Sales of Diet Pepsi are in decline, with a 10.6% drop in volume sales in the first quarter
PepsiCo has been experiencing a decline in sales volume in recent quarters, with a 10.6% drop in volume sales in the first quarter of 2024. This decline has been attributed to various factors, including competition from other beverage companies, product recalls, and consumers becoming more cost-conscious due to inflation.
In 2024, PepsiCo's beverage unit volume dropped by 2%, marking the ninth consecutive quarter of volume declines. This negative trend may be concerning to investors as it could indicate weak demand for PepsiCo's products. However, it's important to note that the volume drops are not uniform across all product categories and regions. For example, while the Quaker Foods division experienced a significant 13% volume drop due to product recalls, the Frito-Lay North America segment saw only a minor 1% decline. Additionally, Latin America and parts of Asia showed growth, while Europe and China experienced weakness.
The decline in sales volume has also been influenced by increasing competition in the energy drink and sports drink market. For instance, Gatorade, one of PepsiCo's brands, lost market share to the sports drink brand PRIME, which is popular among younger consumers. However, PepsiCo remains optimistic about Gatorade's prospects due to its investments and commercial programs for the brand.
Despite the decline in sales volume, PepsiCo's financial performance remains strong. In the first quarter of 2024, the company achieved $2.04 billion in net income, a 2.3% net revenue growth, and a 6% increase in earnings per share. Additionally, PepsiCo's pricing strategy has led to margin expansion, contributing to decent revenue growth over the past two and a half years. Analysts continue to have a positive outlook on the company's long-term performance and expect year-over-year growth in adjusted EPS for 2024.
While there have been speculations about the discontinuation of Diet Pepsi, the company has not announced any plans to stop producing it. Instead, PepsiCo appears to be focusing on promoting Pepsi Zero Sugar as a preferred option for retailers and consumers who want a no-calorie beverage.
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Diet Pepsi was reformulated in 2015, removing aspartame, but the new recipe did not reverse the sales decline
Diet Pepsi has been facing an identity crisis since its sales peaked at $8.5 billion in 2009. In 2015, PepsiCo decided to remove aspartame, an artificial sweetener and sugar substitute, from its Diet Pepsi brand, including the regular product, its caffeine-free alternative, and Diet Pepsi Cherry. Aspartame was replaced with a blend of artificial sweeteners, sucralose, and acesulfame potassium. Despite the health controversies surrounding aspartame, Diet Coke retained the FDA-approved ingredient, and sales of Diet Pepsi continued to decline.
Aspartame has been a controversial ingredient for years, with concerns about its potential health effects, including weight gain and cancer. In 2023, the World Health Organization classified aspartame as a possible cancer-causing agent, which caused panic among consumers. However, studies have not found strong, consistent links between the sweetener and cancer, and the FDA has approved aspartame as safe for human consumption.
In 2018, PepsiCo decided to bring back aspartame in Diet Pepsi, hoping to reverse the sales decline and appeal to loyalists who preferred the original formula. This move caused confusion among consumers as the company shifted its marketing plan to focus on the original, aspartame-included formula and other core products.
While there has been a push by PepsiCo to promote Pepsi Zero Sugar, and some retailers have chosen to dispense only this option, Diet Pepsi is still available and is not being discontinued. The company wants to provide customers with options, including Pepsi, Diet Pepsi, and Pepsi Zero Sugar. However, the popularity of "zero sugar" among younger consumers and the increasing diversity of the beverage market may continue to impact sales of Diet Pepsi.
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Pepsi Zero Sugar is being marketed more than Diet Pepsi, which some retailers are swapping to
Pepsi Zero Sugar, formerly known as Diet Pepsi Max, has been aggressively marketed towards men, with a tagline of "maximum taste, zero sugar". The drink was initially released in 2007 as a dietetic product with double the caffeine of Pepsi's other colas and ginseng, giving it an energy drink-like appeal. In 2009, "diet" was dropped from the name, and the drink became known as Pepsi Max. In 2015, PepsiCo announced that Pepsi Max would be renamed Pepsi Zero Sugar in North America, while the international version retained the Pepsi Max name.
Pepsi Zero Sugar has been facing stiff competition from its main rival, Coke Zero Sugar, capturing less than 1% of overall soda sales compared to Coke's nearly 4%. This has led to reformulations of the drink in 2023 to reduce caffeine, remove ginseng, and tweak the sweetener system to better compete with Coke Zero Sugar.
The shift from "diet" to "zero sugar" in product names reflects a broader trend in the beverage industry. Zero sugar has become more popular than "diet" among younger consumers, such as Millennials and Gen Z, as it is perceived more positively. This shift is attributed to the complexity of the English language, where the word "diet" is associated with losing weight, while consumers are increasingly focused on reducing calories and fat in their diets. As a result, more beverage suppliers are using "zero sugar" instead of "diet" to appeal to this younger demographic.
Some retailers are swapping Diet Pepsi for Pepsi Zero Sugar, as they feel there is no need to dispense multiple diet drink options. However, this decision is not without controversy, as some loyal Diet Pepsi drinkers have expressed their dislike for the taste of Pepsi Zero Sugar and have threatened to switch to Diet Coke or water. Despite this, Pepsi continues to push retailers to carry Pepsi Zero Sugar, even if it means discontinuing Diet Pepsi.
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Diet Pepsi has faced bottling issues, with soft bottles and loose tops resulting in flat drinks
While there is no indication that PepsiCo is planning to quit making Diet Pepsi, the company has faced various challenges in recent years, including bottling issues and supply chain disruptions.
In 2021, PepsiCo's independent beverage bottlers in the US reported product out-of-stocks, including Diet Pepsi, amid rising consumer demand. This issue extended beyond the pandemic-related supply chain disruptions experienced by beverage companies. Several Pepsi franchise bottlers attributed the problem to the company's contract operations unit, citing reasons such as shortages at mixing centres and incongruent information technology systems. However, bottlers expected the issue to resolve within a few quarters and did not anticipate long-term sustainability issues.
Additionally, Diet Pepsi has faced specific bottling issues, with some consumers complaining about soft bottles and loose tops resulting in flat drinks. These bottling problems have contributed to consumer dissatisfaction and may have impacted sales.
Moreover, the company has been pushing its zero-sugar options, such as Pepsi Zero Sugar, which has led some retailers to drop Diet Pepsi from their offerings. This shift towards zero-sugar beverages is a strategic marketing decision aimed at appealing to younger consumers, who increasingly associate "zero sugar" with a healthier choice compared to "diet" drinks.
While Diet Pepsi faces competition from zero-sugar alternatives and bottling challenges, there is no indication that PepsiCo plans to discontinue the product entirely.
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Frequently asked questions
No, Diet Pepsi is not being discontinued. However, Pepsi is pushing all retailers to have Pepsi Zero Sugar, even if it means discontinuing Diet Pepsi.
Zero sugar has become more popular than the term "diet" among younger consumers, such as Millennials and Gen Z, as it is more positively received.
Diet Pepsi is sweetened with aspartame, while Pepsi Zero Sugar does not contain aspartame.
Yes, in 2015, Pepsi introduced a reformulated version of Diet Pepsi sweetened with sucralose and acesulfame K. However, due to customer backlash, Pepsi brought back the old formula of Diet Pepsi sweetened with aspartame in 2016.
Yes, sales of diet soda have been falling for years, with a 5.1% decline in the year ending in April. Coca-Cola is also facing similar challenges and has responded by adding a Coke-branded diet option.
