Pepsi Hits Millennial’s Sweet Spot with All-Plant Packaging

Companies who hope to win and sustain Millennial customers know the importance of product and marketing innovation.  Millennials love shiny things, especially when those things contribute to their personal efficiency, help to protect the environment or contribute to the greater good.

Pepsi’s announcement this week of innovative new plastic packaging sourced 100% from plant-based materials, may be a game changer in the cola wars in its ability to appeal to Millennials.

Why Package Innovation Matters

One of the most difficult aspects of managing an iconic mega-food brand is that it nearly impossible to offer meaningful product innovation. Think about it, do you really want to be the brand manager that messes with the recipe for Heinz Ketchup or (gasp) Coca-Cola?  The most you can hope for is an innovative new marketing approach like Pepsi Refresh or Coca-Cola’s ‘Open Happiness Machine’ viral video. Once in a great while, you may strike gold with a package innovation, as Heinz with its plastic squeeze bottle.

Believe it or not, ketchup only came in glass bottles until the mid-eighties, due to the considerable technology required to make a clear bottle that would resist the acidic nature of ketchup.  The bottle was an immediate hit and consolidated Heinz already sizeable share lead.  A few years later, the upside down squeeze bottle completed the evolution, until recently.

Last year, I toured Heinz Innovation Center outside Pittsburgh. Much of the R&D activity there still revolves around packaging, such as its Dip & Squeeze package. Heinz web site says the dipping package is its first significant food service side innovation in 42 years.

Introducing Plant Based Packaging Material

Heinz announced its latest package innovation, tapping Coca-Cola’s technology to put ketchup in bottles made of 30% recycled plant material starting next summer. Heinz seemed to get the jump even on Coke as it isn’t clear when they plan to roll the technology out for their own products.

Perhaps in response to the Coca-Cola package move, Pepsi made a packaging move of its own earlier this week when it announced that beginning in 2012, it would incorporate 100% recycled plant materials in its beverage packaging. As Coca-Cola say “it could take a few more years to develop the technology” to replace the other 70% of its packaging with plant-based material, this could provide Pepsi with an important short-term edge.  While it still needs to be recycled, the fact that it is made with recycled plant material puts it ahead on the ecological impact scale.  Significantly, Pepsi says the change will be imperceptible to consumers in appearance, functionality and cost. What’s not to like?

Pepsi Packaging: Will It Be The Choice of a New Generation?

In the cola wars where every little bit counts, this packaging offers serious bragging rights. While it may be subtle, in the cola and wider beverage wars, every little bit counts. This new package (and I hope they give it a proprietary name!), may give Pepsi an important edge. All things being equal, most Millennials would opt for the environmentally sound option.  Here’s what I said when asked for my opinion by Chicago Tribune writer, Greg Karp:

“It could be a game changer for them,” said Carol Phillips, a University of Notre Dame marketing professor and president of market research firm Brand Amplitude. “In the cola wars, every little bit means something. It’s a game of perception. It can tip the balance, at least for a while.” The environmentally friendly bottle can be a marketing edge, depending on how Pepsi exploits it, Phillips said. That’s especially true among so-called millennials or Generation Y, a primary target for soft-drink companies. “I think it’s big for the millennials,” she said. “Everybody would love a way to be green, especially if it doesn’t cost them any more.”

This innovation, combined with its ground-breaking Pepsi Refresh marketing effort, may indeed make Pepsi the choice of this next generation — at least for a while.

Note: For great insights into the Millennial marketing behind the Pepsi Refresh effort I highly recommend this YPulse interview with Pepsi exec, Maria Irazabel.