PepsiCo launches oats-based dairy drinks

PepsiCo Inc has launched its first dairy product with JD.com Inc in China to tap into the growing consumer preference for healthy drinks. It is the first launch of a new product exclusively through e-commerce outside the US.

The company, which makes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana, has introduced Quaker High Fiber Oats Dairy Drink to China on Friday exclusively on e-commerce website JD.com Inc for two months. A 350 milliliter single bottle of the oats beverage is priced at about 5.9 yuan (0.93 U.S.dollars).

JD has over 100 million annual active users, a mature e-commerce operating platform and a self-owned logistics system covering all of China, PepsiCo said. Online and offline interactions will also help the company in terms of making fast product innovations and catering to varied customer preferences, it said.

Mike Spanos, CEO and president of PepsiCo Greater China, said: "Due to the continued development of the Chinese economy, demand for healthy and nutritious dairy drink products has been rising steadily. Entering China's dairy beverage market is a crucial part of our growth strategy, as it opens new opportunities for PepsiCo in China and will allow more Chinese consumers to enjoy our products," said Spanos.

According to results of the China Health and Nutrition Survey, 90% of the Chinese daily dietary fiber intake is lower than the recommended daily intake, hence intestinal health problems tend to be high.

It is worthwhile to know that the amount of dietary fiber Oates Dairy Drink (350ml) is equal to that in 1.5 bowls (35g per bowl) of oats, which can help clean and maintain the intestinal health.

Industry analysts said PepsiCo will increasingly expand its presence in the non-carbonated soft drink market to diversify its product portfolio and tap into the growth opportunities for health drinks.

According to data from Kantar Worldpanel China, a market research firm, the growth in the market value of carbonated soft drinks fell by 3 percent from 7.5 billion yuan in 2013 to 7.3 billion yuan in 2014, while functional drinks grew by 11 percent from 4.7 billion yuan in 2013 to 5.2 billion yuan in 2014.

"With the changes in lifestyle and taste, Chinese consumers are increasingly looking for health and functional benefits in their everyday beverage choices," said Jason Yu, general manager of Kantar Worldpanel China.

Its findings showed that there was saturation, and hence more price competition in the carbonated soft drink market. In contrast, there was rapid growth in the functional drink, juice, premium packaged water and yogurt segments.

Cross-category drinks have been a trend among beverage producers to break the traditional boundaries and to meet the diversified demands from consumers in China, according to Julia Lee, food &drink analyst with Mintel Information Consulting (Shanghai) Co Ltd.