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Coke's Flavored Water to Face Pepsi's Propel

Coca-Cola, which is trying to recharge lackluster sales with a lineup of new products, plans to introduce a drink to compete with Pepsico's Propel Fitness Water.

According to a report in the Atlanta Journal-Constitution, Coke's new drink will be called Powerade Option, playing off the company's sports drink brand. Coke and its U.S. bottlers will use Option to take on Propel, which is virtually unchallenged in its niche of low-calorie flavored waters.

In 2004, Propel sold 57 million cases in the United States, an increase of 62.4 percent from 2003, according to Beverage Digest.

While the introduction of new brands is often much-touted, Option had a modest unveiling. Coke offered samples of Option with little fanfare and no publicity last week at the annual Food Marketing Institute show in Chicago.

Then, on Wednesday, John Alm, president and CEO of bottler Coca-Cola Enterprises, highlighted the forthcoming drink during a presentation in New York. Like the Coke system's offerings in energy drinks, Powerade Option is meant to make Coke a player in a niche that has been in the grasp of rivals.

"We know that we have significant strides to be the total beverage company that we need to be," Alm said.

Propel, a Gatorade product, debuted in 1999, prior to Pepsico's purchase of Gatorade owner Quaker Oats. After its national rollout, Propel built a big lead.

"It continues to grow at staggering double-digit rates," said Gatorade spokesman Andy Horrow. "It's no surprise to us there are many, many, many more competitors entering the enhanced water category."

Coke plans to differentiate Option by marketing it as a diet sports drink. Coke spokesman Dan Schafer said Option, which will reach stores in July, will be targeted at those who want lower-calorie drinks for "non-sweat" occasions, when they aren't exercising.

Alm also disclosed that Coke plans to spend $500 million to boost its production capacity of noncarbonated drinks.
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