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PepsiCo Discovers Consumers Will Pay More For Orange Juice With Less Juice (PEP)

Source: http://www.businessinsider.com/pepscico-discovers-consumers-will-pay-more-for-watered-down-orange-juice-2012-2

This post originally appeared at Newser. 

PepsiCo’s plan to increase profit margins for its Tropicana orange juice is simple: Just add water. Apparently some consumers are already doing that on their own, in order to get a less-thick or lower-calorie beverage. “They themselves add water before drinking OJ,” a PepsiCo exec tells Bloomberg. “So why not add the water ourselves and charge for it?” Tropicana lost market share to Coca-Cola Co.’s Minute Maid and Simply Orange brands after PepsiCo repackaged its juice three years ago.

Now, instead of continuing to compete in the 100% juice category, PepsiCo will focus on different products with higher profit margins. One such product—Trop50, which contains 42% orange juice and uses a low-calorie stevia-based sweetener—has already been successful. Says the exec, “We have lost perspective here on the primary reason we are in business, which is to make money.” Consumers will always know what they’re getting, thanks to strict FDA juice labeling guidelines.

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