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PepsiCo (PEP) Explores Functional Drinks, To Launch Driftwell

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Amid the COVID-19-ridden market, where a lifestyle shift has been a cause of anxiety in people, PepsiCo Inc. (PEP - Free Report) is ready to launch its latest beverage in the functional category — Driftwell, per media sources. This product rollout is guided by the idea of helping consumers to deal with stress, relax and promote good sleep. Though developed before the COVID-19 outbreak, Driftwell is being launched now on recognizing the need for a relaxing drink.

Driftwell is an enhanced water drink, containing L-theanine, which is an amino acid often found in green tea, black tea and mushrooms. It is usually used to relieve anxiety and improve mental health. Additionally, the new drink contains 10% of the daily value of magnesium. The company plans to launch the drink in small cans of 7.5 ounces and one flavor — blackberry lavender. Additionally, it is a calorie-free and sugar-free drink.

The company expects to launch the health and wellness drink nationwide through its online portals in December 2020. The drink is likely to hit the store shelves in the first quarter of 2021.

Notably, the launch comes at a time when more people are complaining of sleeping troubles due to anxiety and stress related to the pandemic. The launch is likely to position the company well to take advantage of the growing over-the-counter sleep aid industry, which is worth $1 billion.

We note that shares of this Zacks Rank #3 (Hold) company have gained 1.4% in the past year against the industry’s decline of 4.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



The Backdrop

Beverage companies on the whole are scrambling for ways to attract consumers through newer product categories and infusing healthy ingredients in their drinks.

Driven by health awareness among consumers, the market for energy and functional drinks has been growing over the past few months. Drinks containing vitamins, herbs, plants and minerals with a potential health benefit as well as probiotic-infused kombuchas, turmeric-based "golden milks" and high-energy teas are gaining popularity among consumers.

To capitalize on this trend, beverage companies are constantly introducing drinks that provide health-related benefits. Notably, Coca-Cola (KO - Free Report) introduced the Coca-Cola Energy drinks earlier this year, which contains Vitamin-B, which boosts energy levels. In January, the company also introduced AHA in the sparkling water category, containing caffeine in each of its flavors that included citrus and green tea, and black cherry and coffee.

Last week, Molson Coors Beverage Company (TAP - Free Report) announced plans to launch its non-alcoholic product line, with four new brands, starting this fall. The first of these brands to be launched is HUZZAH in the seltzer category. The full-flavored seltzer will include probiotics to support a healthy gut, with lesser sugar and calorie content. The company plans to launch HUZZAH on the online platform,, along with select retailers in South California. The brand will be launched in three flavors — Strawberry & Hibiscus, Juicy Pear, and Raspberry & Lemon.

Other brands lined up for launch under the plan are MadVine — a 100% plant-based diet soda with zero calories, sugar and artificial ingredients, and Golden Wing — a grain-based milk alternative made of top-quality barley and no additives, stabilizers or frothing agents, containing proteins and nutrients.

Additionally, Boston Beer (SAM - Free Report) is turning to the non-alcoholic beverage space, with the launch of Just the Haze, an India pale ale with 0.5% alcohol by volume, in early 2021. Further, Boston Beer has been the beneficiary of the rise in non-alcoholic beverage trends as its Truly hard seltzer continues to gain popularity. The company has also been making fortune in recent times through growth in the hard seltzer, cider, tea and kombucha categories, while it significantly lost share for its Samuel Adams lager beer in recent years.

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