PepsiCo, Inc. (NASDAQ:PEP) has broadened its second Mountain Dew–Trolli collaboration, introducing a new flavor and expanding distribution across multiple retail channels. The move comes as the company grapples with a 4% decline in North American beverage volumes, making low-commitment product trials increasingly important for growth.
The new Mango Pineapple Punch variety, available in both regular and Zero Sugar options, launched nationally on August 24. It is now sold at retail stores, at Pizza Hut locations, and as part of a bundle on Walmart.com. This year's rollout includes two formulations and two packaging sizes, a significant expansion from last year's Cherry Lemon flavor, which debuted exclusively as a Zero Sugar product at Walmart before expanding to other retailers.
The five format-channel combinations provide a broader test of consumer appeal. The rollout includes regular and Zero Sugar at retail, regular in 20-ounce bottles at Pizza Hut, and both versions in the Walmart.com kit, which also features Trolli Spicy Crawlers candy. The product will be available through October, with the Pizza Hut offering lasting until that time.
Michael Smith, vice president of marketing for Mountain Dew, highlighted the success of last year's partnership, noting the excitement it generated. PepsiCo described Cherry Lemon as one of Mountain Dew's fastest-selling offerings, though it did not disclose specific sales figures.
The launch comes amid a challenging financial backdrop. PepsiCo Beverages North America reported a 7% increase in revenue for the quarter ending June 13, but unit volumes fell 4%, with carbonated soft drink sales down 3%. Revenue growth was driven by pricing actions and product mix adjustments rather than increased demand.
Company-wide, PepsiCo reported total revenue of $24.18 billion for the quarter, a 6% increase year-over-year, surpassing the $23.97 billion consensus estimate. However, adjusted earnings per share came in at $2.20, one cent below the $2.21 expected by analysts.
PepsiCo's stock closed Monday at $144.67, up 0.83%, but slipped 0.40% in premarket trading Tuesday to $144.09. The stock trades at a price-to-earnings ratio of 18.98 and offers a dividend yield of 4.09%. The average analyst price target of $158.06 implies a potential 9.3% upside from Monday's close, yet sentiment remains cautious, with two-thirds of analysts rating the stock as Hold.
The valuation gap with peers is notable. Coca-Cola (NYSE:KO) trades at a P/E of 27.71, while Keurig Dr Pepper (NASDAQ:KDP) is at 32.95. PepsiCo's multiple is roughly 31.5% lower than Coca-Cola's, reflecting its defensive income characteristics but also the drag from weak beverage volumes.
This rollout is a small-scale test for a company expected to generate nearly $94 billion in revenue in 2025. The key metrics to watch include retail sell-through, the proportion of Zero Sugar sales, and repeat orders from Pizza Hut. These will determine whether wider distribution can drive trial before any long-term shelf placement decisions are made.
Investors should be mindful of risks: limited editions often produce temporary shipment spikes that fade quickly. If repeat sales stall or retailers discount leftover inventory before October, the added complexity of five variants could outweigh the benefits. The critical test will be whether the gap between disclosed beverage revenue and unit volume narrows, indicating that innovation is genuinely driving demand rather than just price and mix changes.
