Pepsi unveils low-calorie Gatorade 'G2'

NEW YORK (CNNMoney.com) -- PepsiCo., the No. 2 beverage company after Coca-Cola, on Friday unveiled its new offerings of non-carbonated drinks - including a low-calorie Gatorade called "G2" - in an effort to offset flat sales of fizzy drinks in the United States.

Pepsi (Charts) said the new Gatorade drink represents the first brand extension in the sports drink category. G2, a low-calorie electrolyte beverage with 25 calories per eight-ounce serving, is designed to keep athletes hydrated when they're not training or competing, the company said.

Pepsi said its new low-calorie Gatorade drink called "G2" and the new caffeinated Propel Water beverage should reach store shelves in early 2008.

Pepsi says all the electrolytes in the original Gatorade are also in G2.

G2 is expected to be Pepsi's largest new product launch since Propel Fit Water. G2 comes in three flavors - fruit punch, orange and grape. The drink is expected to hit store shelves in early 2008, priced at $1.29 to $1.49 for the single bottles.

Pepsi and Coke (Charts, Fortune 500) are struggling with soft sales of carbonated drinks. Both companies saw their share of the soda market fall in 2006 for the second straight year, led by weak sales of Coke Classic and regular Pepsi.

But vitamin-infused energy drinks and bottled water showed strength as health-conscious consumers continued to switch to low-sugar and nonfizzy drinks. To that end, both Coke and Pepsi are now aggressively pursuing that trend.

In the bottled water category, Pepsi will roll out "Propel Invigorating Water," which is a new vitamin-enhanced water that is mildly caffeinated and lightly flavored, with 20 calories per eight-ounce serving.

Propel Invigorating water will launch in three flavors - strawberry, citrus and berry, priced at 99 cents to $1.59 for a single bottle.

Additionally, Pepsi said its SoBe Life Water brand is being reformulated with sucrose, antioxidants, vitamins and natural herbs.

"Pepsi already is the leader in non-carbonated drinks. These new additions strengthen its lead but Coke is also well-positioned to gain market share with Glaceau, its Fuze drinks and Powerade," said John Sicher, editor of trade publication Beverage Digest.

The company said Pepsi bottlers will start distributing G2 and the new Propel drink to convenience stores, gas stations and independent retail outlets later this year.