Filed under: Company News, Coca-Cola Company, Pepsico, Amazon.com, Investing
Call it “Throwback Thirst-Day.” The world’s largest soft drink company has tossed nostalgic consumers a bone, and now it’s time to see if its closest rival follows suit. Coca-Cola (KO) delighted fans of Surge — the heavily caffeinated citrus-flavored soft drink that hit the market in 1996 but was pulled five years later — by bringing it back earlier this month.
Why, after a 13-year hiatus, would Coca-Cola try to breathe new life into a product that failed to make a dent in the market dominance of PepsiCo’s (PEP) similar Mountain Dew? The short answer is that the fans had spoken.
The longer answer is that the world has changed to the point where there are more distribution outlets than ever. You no longer need to engage a massive distribution network of retailers to get your fizzed-up pop to consumers. Surge is here, and it may not be long before Crystal Pepsi and other discontinued cult beverages come back to life.
The World Is Your Soda Fountain
You won’t find the reborn flavor of Surge at a supermarket or convenience store. Don’t waste your time hitting up Coca-Cola vending machines. Amazon.com (AMZN) is the lone distributor of the neon green soda.
The initial supply sold out in hours, with folks paying $17 for a 12-pack of 16-ounce cans. Some are apparently willing to pay far more. Coca-Cola has yet to restock Amazon with Surge, and one opportunistic resellers was asking $142.95 (plus $11.42 in shipping) for a 12-pack through Amazon. On one hand, the gouging shows the ugly side of limiting availability. On the other hand, it proves that long-gone sodas still hit a soft spot with sentimental millennials and Gen Xers.
Can PepsiCo strike a similar distribution deal with Amazon to bring back the short-lived Crystal Pepsi — as well as other discontinued fan favorites, including Apple Slice, Josta and Pepsi Blue? That’s certainly a possibility, but there are far more outlets than Amazon to consider.
One Machine, 100 Choices
There are now more than 20,000 Coca-Cola Freestyle machines across the country, which allow consumers to chose from more than 100 soda flavor combinations at a single fountain. PepsiCo is finally fighting back: It introduced the similar Pepsi Spire in May.
Crystal Pepsi would seem like a natural product to differentiate the Pepsi Spire machine. The clear, caffeine-free soda was only available in 1992 and 1993, but it has become an legendary brand since then.
We also have home-based carbonation to consider. SodaStream (SODA) and Keurig Green Mountain’s (GMCR) upcoming Keurig Cold are giving brands a new way to reach the thirsty. If PepsiCo doesn’t plan on bringing back Josta, Crystal Pepsi or Apple Slice in cans and bottles, then it has little to lose in giving the home market a shot at the syrups.
Surge and Destroy
One big source of fuel for Coca-Cola’s Surge revival — even in its limited form — was the popularity of the soda in social media. Facebook’s (FB) Surge Movement page is now topping 150,000 “likes,” and a fund-raising campaign was enough to buy a billboard that was placed near the beverage behemoth’s headquarters, urging Coca-Cola to consider bringing back the drink.
There aren’t any discontinued PepsiCo beverages that have garnered that kind of fanaticism. A “Bring Back Crystal Pepsi” page has only garnered a little over 3,400 followers, with the soda’s official product page attracting just a few more “likes” than that.
However, with soda sales sliding in this country and Coca-Cola making a play with this throwback move, it’s really just a matter of time before PepsiCo goes retro. Crystal Pepsi was originally marketed as the “clear alternative” to dark, caffeinated colas. Now it might be the clear alternative to take on Coca-Cola’s Surge movement.
Motley Fool contributor Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool recommends Amazon.com, Coca-Cola, Keurig Green Mountain, PepsiCo and SodaStream. The Motley Fool owns shares of Amazon.com, PepsiCo, and SodaStream and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.
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Source: Investing
