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PepsiCo plans to distribute Gatorade direct to retailers

By Guy Montague-Jones , 02-Sep-2010

PepsiCo is planning to begin distributing its Gatorade sports drinks direct to stores from its own and independent bottlers in the US and Canada.

The new approach is the first major step towards improving product delivery systems that PepsiCo has taken following the acquisition of two of its bottlers earlier in the year.

Rather than being distributed using the existing warehouse system, Gatorade products sold to convenience stores, dollar stores and other UDS (up and down street) retailers in the US and Canada will be delivered through a direct store delivery system from January 2011.

Speed and flexibility

Eric Foss, CEO of Pepsi Beverages Company, said the new model is particularly suited to Gatorade products sold via these channels because of the particular need for speed and flexibility.

Meanwhile, the company said it remains dedicated to the existing warehouse system, which will still be used to distribute Tropicana, Quaker and Naked Juice products through convenience, UDS and dollar channels.

The switch to the direct store delivery system for Gatorade comes as a result of the acquisitions of Pepsi Bottling Group and PepsiAmericas earlier in the year.

Synergies

PepsiCo hailed the Gatorade move as the first large step towards ‘optimising delivery systems’ resulting from the deal. In total, the company has a target of achieving $400m in annual pre-tax synergies from the bottling acquisitions by 2012.

“As a company, we are committed to bringing a wider variety of products to market more quickly and efficiently than ever before,” said Massimo d’Amore, CEO of PepsiCo Beverages Americas.

Brand revamp

D’Amore added that the new Gatorade distribution system makes sense for the brand as it seeks to redefine the sports nutrition category through the G-Series.

PepsiCo is keen to reinvigorate Gatorade sales after a brand revamp in 2009 failed to prevent a significant drop in volumes. According to data from the Beverage Marketing Corporation (BMC), Gatorade volumes were down 15.5 per cent to 895.8 million gallons last year. Despite the decline, the brand remains a dominate force in the US sports drinks with a market share of 75 per cent.