Pepsi has launched its latest attempt to compete in the crowded lemon-lime soda market with the introduction of Starry. The soft drink, which is aimed at "a generation of irreverent optimists," is Pepsi's fourth attempt at a category that has proven tough to crack. Previous attempts include Sierra Mist, Slice, and Teem, dating back to the 1950s, with the exception of Storm, which never made it to market. "PepsiCo needs to try, try and try again until they get a brand that succeeds," said John Sicher, a beverage industry consultant whose clients have included Coca-Cola.
Pepsi is hoping that Starry will help it slow or even stop Coca-Cola's Sprite, which currently accounts for almost three-quarters of the 10% of lemon-lime carbonated soft drinks sold in the US. With soda consumption falling by 12% in the last decade as Gen Z consumers seek healthier options, the real battle for producers is stealing market share from one another. Starry, which is a bit softer and sweeter than Sprite, much like the palate distinction between Coke and Pepsi, has become the official soda of the NBA, after Pepsi switched out its Mountain Dew brand in favor of the new offering. The debut ad campaign features actress Keke Palmer sitting courtside sipping from a can of Starry, then entering a dream state where the young Philadelphia 76ers guard Tyrese Maxey appears.
Pepsi is investing heavily in targeting Generation Z over the next few years and hopes to tap into its Hispanic-focused business unit to sell Starry to multicultural consumers, a key market for lemon-lime sodas. If Starry proves successful, industry experts say it might be able to steal 5% to 10% of Sprite's customers. The lemon-lime soda segment was created in 1929 with the introduction of 7Up, which dominated the category until Coca-Cola introduced Sprite in 1961.
While Pepsi's marketing machine cranks up, Sprite is likely to push back with its own promotional blitz, according to trade journal Beverage Digest. The category is important for both companies, and even a few percentage points of share can make a huge difference. When it comes to the battle for market share, Coke is not likely to cede any ground without a fight. The fountain business, which accounts for drinks poured from a machine, is also a big part of Pepsi's focus for Starry. According to Beverage Digest, Coca-Cola brands control 70% of the $49 billion in annual soda fountain sales in the US. Parents with kids in tow at venues such as stadiums and theaters are more likely to go for a caffeine-free lemon-lime brand than a cola or a caffeinated citrus soda such as Mountain Dew or Coke's Mello Yello. "Lemon-lime allows for a bit of indulgence without the double whammy of sugar and caffeine," says Duane Stanford, the publisher of Beverage Digest.