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PepsiCo, Inc. (PEP) Challenges Energy Drinks with Mountain Dew Kickstart

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PepsiCo, Inc. (NYSE:PEP), despite its extensive success in the soft drink world, has never been able to crack into the growing energy drink market. The company looks to be trying once again, this time with Mountain Dew Kickstart. The drink, which hit shelves Feb. 25, is an energy drink alternative. What does this mean for the industry?

PepsiFinally, a foothold in energy drinks?

PepsiCo, Inc. (NYSE:PEP)’s primary energy drink is called Amp, which was originally launched in 2001. Back then, the drink was labeled under Pepsi’s popular Mountain Dew brand (“Amp from Mountain Dew”). In 2009, Mountain Dew was dropped from the label, making Amp its own brand.

Although Amp is top-five-selling energy drink, it has always lagged far behind market leaders Red Bull and Monster Beverage Corp (NASDAQ:MNST). Late in 2012, Pepsi relaunched Amp with an updated flavor. Yet reviews of the updated Amp have been mixed, with BevReview claiming that Pepsi had “ruined” Amp’s flavor profile.

With Mountain Dew Kickstart, PepsiCo, Inc. (NYSE:PEP) looks to be trying a different strategy. Kickstart is clearly part of the Mountain Dew umbrella, a fact that should support sales (in 2009, Beverage Digest ranked Mountain Dew the number four soft drink brand).

At least from a marketing standpoint, PepsiCo, Inc. (NYSE:PEP) seems intent on going after the energy drink market with Kickstart. Browsing the official Kickstart website, one finds dozens of pictures of young people engaged in activities such as skateboarding, surfing and skiing — similar to the marketing campaigns from Monster and Red Bull. Both have made partnerships with “extreme” sports athletes a focal point of their advertising efforts (Red Bull has gone so far as to create a series of air racing competitions).

However, Kickstart isn’t wholly an energy drink. A 16 oz can of Kickstart packs “only” 92 milligrams of caffeine. That’s more than regular Mountain Dew, but far less than the 160 milligrams found in a can of Monster. Further, the marketing behind energy drinks has never tied them to a particular time of day; Kickstart has been hailed as a morning alternative to coffee.

Can Kickstart steal sales from Monster?

As major brands like Red Bull and Rockstar remain off U.S. exchanges, Monster is the only pure energy drink play available to investors. Should Monster shareholders fear Kickstart?

Kickstart is only a few weeks old, so it isn’t clear yet as to whether or not Kickstart could eat away at Monster’s sales. That said, it doesn’t appear to be a major threat for the time being.

Monster was one of the first brands to popularize the 16 oz can. The bigger size cans allowed it to compete against market leader Red Bull from a value standpoint. Thus, many of Monster’s fans likely won’t care for Kickstart’s reduced caffeine. Furthermore, Monster has embraced a sort of shotgun strategy when it comes to its varieties. At the time of this writing, Monster’s website lists over 30 different flavors.

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