PepsiCo’s Attempt at Entering the Chocolate Drink Market

PepsiCo decided to enter the chocolate drink market in the 1960s, challenging the established Yoo-hoo beverage. Despite their efforts, Pepsi faced a swift defeat in this sector.

The Birth of Yoo-hoo

Yoo-hoo began in the 1920s, created by Natale Olivieri in New Jersey. The drink was meant to complement fruit juices and quickly became a household name. By the 1960s, basketball icon Yogi Berra and his Yankees teammates had made Yoo-hoo synonymous with champions.

Introducing Devil Shake

Pepsi introduced ‘Devil Shake’ in 1966. A significant internal study with a budget of $100,000 predicted the new drink would outperform Yoo-hoo. However, Pepsi’s venture was short-lived, and the company sold Devil Shake’s operations to Yoo-hoo for a mere $1 within a year.

The critical misstep for Pepsi was not considering that Yoo-hoo owned the technology to keep the drink shelf-stable. The partnership saw Pepsi paying Yoo-hoo around $1 million to produce Devil Shake, leading to substantial financial losses.

Yoo-hoo’s Unique Production Process

Yoo-hoo’s shelf stability is achieved with a hydrostatic sterilizer. This method involves blending ingredients like water, cocoa powder, sugar, and stabilizers, heating and pasteurizing them, and then quickly cooling and packaging the product. Olivieri reportedly drew inspiration for this process from his wife’s tomato canning methods.

Enduring Popularity Amidst Flavor Flops

Yoo-hoo is known for its long-lasting appeal, despite some flavor experiments like chocolate-banana and island coconut not catching on. It markets itself as a nostalgic treat reminiscent of childhood.

Yoo-hoo’s parent company, Keurig Dr Pepper, remarks on the continued allure of classic flavors such as chocolate and strawberry, alongside new ones like cookies and cream.