PepsiCo, Inc. (PEP)’s Secret Billion Dollar Product

PepsiPepsiCo, Inc. (NYSE:PEP) has a secret new product.

Last year, PepsiCo, Inc. (NYSE:PEP) made a brief announcement that it was coming out with a new product, but not until this month were details made available.

Previously, all we knew was that the product would be a protein-based drink targeted at women. In the initial announcement, Pepsi stressed that this product, “Won’t show up on a shelf the way you envision it.” No one is exactly sure what that means.

But now that Pepsi has made the patent available, we have a better idea of the direction in which Pepsi is going: the new product will be a 4 oz protein shot targeted at women.

Pepsi is reaching into a new market here. It is essentially creating a new market segment, a protein shot. Traditionally, there have been energy and protein drinks, as well as energy shots. PepsiCo, Inc. (NYSE:PEP) is combining the two.

This product could easily become a billion dollar brand for Pepsi, especially with Pepsi being the first major player in this product category. Pepsi will use this product as part of its new PLAY — which stands for Protein, Liquid, Activity, and You-time — drink initiative.

However, the details of the product are still vague even after reading the patent. It appears that Pepsi might launch a number of products in this category. Here is a quote from the patent application, “The high protein beverage products disclosed here include…frozen ready to drink beverages, coffee beverages, tea beverages, dairy beverages, powdered beverages, liquid concentrates, strong water compositions, flavored waters, enhanced waters, fruit juice, and fruit juice flavored beverages.”

This rather broad description covers most drink categories and gives Pepsi the flexibility to move its protein product into any of these segments should it choose to.

This type of forward thinking, coupled with the anticipation of PepsiCo, Inc. (NYSE:PEP)’s new product, should give Pepsi an edge over The Coca-Cola Company (NYSE:KO) moving forward. Take a look at their stock performance year-to-date:

PEP data by YCharts

KO data by YCharts

Pepsi’s stock has definitely fared better this year. Year-to-date, The Coca-Cola Company (NYSE:KO) has grown a little over 14%, while PepsiCo, Inc. (NYSE:PEP) has risen over 20%. Both stocks had a big jump this past week as the Dow bounced back and Pepsi announced better than expected revenue growth.