Grammar

From: Gilbert W. Ho <[email protected]>

Subject: Analysis of Pepsi XL

Cc:

Attached:

Max,

Herewith is a summation of the research project assigned to Richard Adams and I vis-à-vis Pepsi XL. As you know, this is the reduced-sugar cola drink being introduced by our company's No. 1 competitor.

In just under one year, Pepsi-Cola developed this innovative drink. It contains mix of 50 percent sugar (high-fructose corn syrup) and 50 percent artificial sweetener (aspartame). Apparently, Pepsi-Cola plans to spend over $8 million to introduce the drink and to ascertain consumers' reactions to it. It will be tested on the shelfs of grocerys, mass merchants, and conveneince stores in five citys in Florida.

The company's spokesperson said, "The 'X' stands for excelent taste, and the 'L' for less sugar." Aimed at young adults who don't like the taste of aspartame but who want to control calorys, the new cola is a hybrid sugar and diet drink. Our studys have shown that similar drinks tried in this country in the 1990s were unsuccessful. However, a 50-calorie low-sugar cola introduced in Canada two year ago was well received. In Japan a 40-calorie soda was not successful until it was marketed heavily.

Neither Mr. Adams nor myself hypothesize that this country's consumers will be interested in a midcalorie cola at this time. In fact, all of we analysts in the lab were flabbergasted at Wall Street's favorable response to the Pepsi announcement. Pepsi-Cola's stock value augmented sharply.

If the decision were up to Mr. Adams or I, him and I would take a wait-and-see attitude toward the introduction of our own low-sugar drink. We do not want to badmouth the new drink, but we believe it is smarter to consider our own drink after we monitor the success of Pepsi XL. We cannot send our full report until June 1.

Gil

Gilbert W. Ho

Research and Development

Office: (914) 682-9811

Cell: (914) 358-3802