Why Would Pepsi Launch Mountain Dew Kickstart?

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Marketing and Business strategy presentation that analyzes why PepsiCo would launch a juice+energy drink+soda that is targeted at the morning consumption occasion. It seeks to do it in less than 20 …

Marketing and Business strategy presentation that analyzes why PepsiCo would launch a juice+energy drink+soda that is targeted at the morning consumption occasion. It seeks to do it in less than 20 slides.

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  • 1. Why would Pepsi Launch Kickstart? Business and Marketing Strategy in 20 Slides or Less By Dexter King September 15, 2013
  • 2. Agenda • Overview – pg. 3 • What is Mountain Dew: Kickstart? – pg. 4 • Hypothesis: Why Pepsi launched Kickstart – pg. 6 • The consumer and business case for Kickstart – pg. 8 • What is the future for Kickstart? – pg. 12 • Recap – pg. 14
  • 3. Overview • I’ve been wondering why Pepsi would launch a product called Mountain Dew Kickstart, which seemed to be targeted as a breakfast drink. • Similar products has been tried before but were not successful… what was Pepsi seeing that caused it to try this “innovation?” • I developed a hypothesis that Kickstart is Pepsi’s way of keeping Millennials in the Mountain Dew brand franchise and this presentation seeks to prove it in less than 20 slides. NOTE: This presentation should not be considered to be a product of, or endorsed by, any corporation, firm or agency. It is solely the product and property of Dexter King.
  • 4. “SIMON LOWDEN, CHIEF MARKETING OFFICER FOR PEPSICO’S AMERICAS BEVERAGES, SAYS THE IDEA FOR KICKSTART CAME ABOUT AFTER THE COMPANY LEARNED THROUGH CONSUMER RESEARCH THAT MOUNTAIN DEW FANS WERE LOOKING FOR AN ALTERNATIVE TO TRADITIONAL MORNING DRINKS SUCH AS COFFEE, TEAAND JUICE.” Huffington Post “Mountain Dew Kickstart: Soda Giant Unveils New Breakfast Drink” February 11, 2013
  • 5. What is Mountain Dew Kickstart? • Labeled as a “flavored sparkling juice beverage blend from concentrate… ” Kickstart is essentially a combination of soda, an energy drink and juice. • Kickstart is a carbonated beverage that contains 5% juice, has elevated levels of caffeine and a combination of Vitamins C, B3, B5 and B6.* • Kickstart also uses a combination of sweeteners (high fructose corn syrup + sucralose + Ace K) to reduce its calories to 80/bottle* *Source: PepsiCoBeverageFacts.com Kickstart Mountain Dew Red Bull % Juice 5% 0% 0% Calories/16oz 80 230* 240 Vitamins C 100%* B3 80% B5 60% B6 80% None B2 86% B3 108% B5 36% B6 106% B12 74% Caffeine/16oz 92 mg* 72 mg2 168 mg1 Sweeteners HFCS, Ace K, Sucralose* HFCS* Sucrose and Glucose1 Flavors Natural and Artificial* Natural* Artificial1 1Source RedBull.com: Approx from 80 mg per 8.4oz can 2Source EnergyFiend.com KICKSTART DEFINED
  • 6. “WE LAUNCHED KICKSTART YOUR DAY, A MORNING PROPOSITION FOR MILLENNIALS WHO WOULD RATHER DRINK A MOUNTAIN DEW PROPOSITION THAN COFFEE, AND THIS HAS PROVED INCREDIBLY SUCCESSFUL BUILDING A GREATER THAN $100 MILLION BUSINESS IN ITS FIRST YEAR OF LAUNCH.” PepsiCo President Zein Abdalla speaking at Barclays Back to School Conference Source: Food Navigator USA “Mountain Dew Kickstart generated more than $100M in first year, says PepsiCo” September 5, 2013
  • 7. Pepsi launched Kickstart to keep Milliennials, who are aging out of base Mountain Dew, in the brand franchise Millennials probably accounted for a significant portion of Mountain Dew’s volume and they would be very important to the brand’s growth prospects. • Millennials, or Echo Boomers, are Americans born between 1982 and 1995 and are close to a third of the US population.* • Milliennials number about 80 million and spend $170B a year.* • Most Millennials are adult age and the youngest would be 18 in 2013 and beginning to move into more adult behaviors and product choices. Kickstart would appear to be an innovation designed to keep Mountain Dew relevant to Millennials and the needs of their new adult lifestage. *Source: CBSNews.com; “The Echo Boomers” February 11, 2009 HYPOTHESIS
  • 8. KICKSTART’S MISSION IS BASED ON MAINTAINING RELEVANCY TO MILLENNIALS AND THEIR NEED STATES IN THE MORNING. WHAT ABOUT THE STRATEGIC BUSINESS CASE FOR KICKSTART? Brand DNA + Growth Prospects
  • 9. Kickstart’s relevancy is based on satisfying two consumer morning need states in a form that appeals to Millennials In the morning, consumers have two need states that need to be fulfilled: “Get Up and Go” and “Healthy Start to My Day” • “Get Up and Go” is about consumers’ need for something to give them energy and is satisfied by products like coffee, tea and energy drinks. • “Healthy Start to My Day” is about consumers’ need to start their day off by eating and drinking healthy. Products like smoothies, fruit juice, milk, nutritional supplements and weight loss beverages rule here. “Get Up and Go” • Caffeine • B-Complex Vitamins “Healthy Start to My Day” • Fruit Juice • Vitamin C • Low Calorie BUSINESS CASE – NEED STATES
  • 10. Energy drink “DNA” was chosen as the base for Kickstart because this beverage segment is the drink of the Millennial generation • Red Bull was launched in the US in 1997 and drove the energy drink market and it was rapidly adopted by the Millennial generation. • Red Bull purposefully chose sponsorships of sports and activities adored by the Millennial generation to position its product as a lifestyle brand for them. *Source: RedBull.com BUSINESS CASE – WHY AN ENERGY DRINK?
  • 11. Energy drinks are an $8B business that is growing over 14%1 and is one of the few beverage segments not led by Coke or Pepsi Energy drinks are the top growing segment in liquid refreshment and approx 80% of the market for these drinks is controlled by independent producers, Red Bull and Monster. Ready to Drink products (RTDs) with an energy component are also leading liquid refreshment growth at the expense of categories like CSDs Note: Monster is distributed in some parts of the US by Coca-Cola *Source: Dollar Sales; EnergyFiend.com 14.3% 9.5% 5.8% 4.9% 2.3% -1.5% -1.8% -4.1% 1.0% Energy Drinks RTD Coffee Bottled Water RTD Tea Sports Drinks Value Added Water CSDs Fruit Beverages TOTAL LRB US Liquid Refreshment 1 Volume Growth 2011-2012 Red Bull 42% Monster 37% Rockstar 11% Amp 4% NOS 4% Full Throttle 2% Top Selling Energy Drinks 2013* $ Sales, 52 Weeks Ending July 2013 1Source: Beverage Marketing Corp BUSINESS CASE – REVENUE AND VOLUME POTENTIAL
  • 12. “BUT AGAIN, THINKING ABOUT THAT AS A PLATFORM, ‘KICKSTART YOUR DAY’ CAN EASILY TRANSFORM INTO ‘KICKSTART YOUR NIGHT’AND THAT WILL FOLLOW, LEVERAGING AGAIN A LOT OF THE SAME TECHNOLOGY BUT TARGETING A DIFFERENT CONSUMER DEMAND SPACE” PepsiCo President Zein Abdalla speaking at Barclays Back to School Conference Source: Food Navigator USA “Mountain Dew Kickstart generated more than $100M in first year, says PepsiCo” September 5, 2013
  • 13. What is the Future for Kickstart? Kickstart has generated over $100 million* since its launch and appears to be gaining a foothold in the beverage market. • Kickstart has been targeted to the breakfast occasion but it is likely that it will also be used for between meals as a “pick me up” as this is where most energy drink usage occurs. Distribution in the at-work, convenience and vending channels will be key. • Energy drinks have come under fire partially because of their use in conjunction with alcohol when people are experiencing nightlife. Kickstart’s formulation may allow it to both be used on this occasion and not be quite the target for controversy. • As Kickstart expands its usage occasions it may need to take different forms to facilitate moving into segments like energy shots/additives. *Source: Food Navigator USA “Mountain Dew Kickstart generated more than $100M in first year, says PepsiCo” September 5, 2013 FUTURE ROADMAP
  • 14. • Kickstart was launched to retain Millennials in the Mountain Dew brand franchise as this consumer segment is aging out and moving into more adult beverage categories. • Kickstart’s energy drink + juice formulation allows it to satisfy to consumer “need states” during the breakfast occasion. • Kickstart also uses energy drink “DNA” as its base because Millennials are big drivers of energy drink volume and have essentially grown up using these beverages. • Drinks with an energy component are growing and represent billions of dollars in potential revenue. Kickstart is poised to capture volume in this space while also introducing innovation. • Kickstart can become a brand platform to move into multiple segments of the energy beverage space. Recap: Why Pepsi launched Kickstart? RECAP: HYPOTHESIS AND CONCLUSIONS
  • 15. About the Author – Dexter King Education: • BA, Economics, University of Virginia • MBA, The Fuqua School at Duke University Experience: • Brand Marketing and Management: Procter & Gamble, Coca-Cola, LVMH and Diageo • Marketing and Growth Strategy: McKinsey and Company The Fun Stuff I Love: • Photography, Cinema, Food (Bacon Cheeseburger Enthusiast) Contact • E: dexterking@gmail.com