PepsiCo, SodaStream, and Starbucks: 4 Intriguing Product Stories

Recent product news investors in these popular brands should be watching.

Mar 17, 2014 at 4:30PM

Last week's beverage industry headlines revealed some interesting product introductions for snack/beverage giant PepsiCo (NYSE:PEP), home carbonation system maker SodaStream (NASDAQ:SODA), and Starbucks (NASDAQ:SBUX). It's important for companies to keep coming out with new products in order to hold consumer interest. It also demonstrates lack of complacency and shows that these companies are on the move.

New Ruffles potato chips
PepsiCo recently introduced a new Ruffles brand "Classic Hot Wing Flavored Potato Chip" inspired by the company's new relationship with restaurant chain Buffalo Wild Wings. This represents the first co-branded product since PepsiCo announced its partnership with the restaurant chain in December, according to PepsiCo's press release. The release goes on to mention that this new potato chip will "pair perfectly" with its "new Ruffles Creamy Buffalo Ranch Dip." This highlights PepsiCo's expertise in selling beverages and snacks tailored to the appropriate occasions -- such as eating chips in a Buffalo Wild Wings while watching a game and waiting for the main course. 

Sunny D and SodaStream
SodaStream was really shown up by Keurig Green Mountain and Coca-Cola when they announced their partnership to create a homemade carbonation system of their own. However, that doesn't keep SodaStream from forging ahead and forming new partnerships of its own. Coca-Cola may have Keurig, but SodaStream wants to ensure it partners with everyone else. It recently partnered up with Sunny Delight Beverages to develop SodaStream versions of its flavors such as Original Orange and Orange-Strawberry. Now people can enjoy a homemade Sunny Delight carbonated beverage. 

Starbucks, the innovation machine
Starbucks recently announced several new products, including the Vanilla Macchiato in response to the popularity of its Hazelnut Macchiato and Caramel Macchiato products. According to the press release, the drinks are topped off with a drizzle "made with a mix of brown sugar, butter, Madagascar Bourbon vanilla and a slight hint of salt." The drink comes in both hot and cold versions.  

Also, Starbucks introduced a new "Tribute Blend" comprised of all-time customer coffee favorites such as Sun-Dried Ethiopia, Aged Sumatra, Colombia, and Papua New Guinea. Finally, Starbucks came out with four new breakfast sandwiches: slow-roasted ham and swiss, vegetable and fontiago, egg and cheddar, and a "new and improved" reduced-fat turkey bacon.

Starbucks' voluntary recall
Not everything was smooth sailing for Starbucks, however. Schwartz Bros. Restaurants, which does business as Gretchen's Shoebox Express, recalled, on a voluntary basis, a small amount of Greek yogurt raspberry and lemon parfaits sold with the Starbucks label in the Seattle and Portland area, according to the press release on Starbucks' website. The affected products possessed the "enjoy by" date of March 5. The products didn't possess the proper labeling and didn't describe the presence of eggs, presenting a potential problem for people who are allergic to them. Starbucks, demonstrating its customer-centric attitude, took swift action and removed the products from area stores. 

Things to look for
In the future, look for PepsiCo to leverage its relationships with client companies such as Yum! Brands and Buffalo Wild Wings to come up with snacks and beverages to meet the appropriate social occasion for their customers. This will help sustain top- and bottom-line growth for PepsiCo. Look for SodaStream to continue its efforts to carbonate the beverage world by partnering with virtually everyone -- except maybe Coca-Cola. Speculation that SodaStream may partner up with PepsiCo is worth keeping an eye on. Expect Howard Schultz to keep complacency from knocking on Starbucks' door by introducing new products.

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William Bias owns shares of Coca-Cola. The Motley Fool recommends Buffalo Wild Wings, Coca-Cola, Keurig Green Mountain, PepsiCo, SodaStream, and Starbucks. The Motley Fool owns shares of Buffalo Wild Wings, Coca-Cola, PepsiCo, SodaStream, and Starbucks 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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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