NEW YORK (Reuters) - PepsiCo plans to
distribute its Gatorade sports drink directly to convenience
stores and other retailers as part of its plan to improve
product delivery following the acquisition of some of its

Pepsi expects the direct-to-store delivery changes through
its own and independent bottlers to become effective on Jan 1.
The change, which Beverage Digest estimates accounts for some
25 percent of total Gatorade volume, also affects dollar
stores, gas station shops and other "up-and-down the street"

The company said Wednesday the savings from this new
distribution route for Gatorade are part of its $400 million
pretax annualized cost savings target it said it would achieve
from the bottler acquisitions once they are fully integrated in

PepsiCo brands that are first delivered to warehouses --
including Tropicana, Quaker and Naked Juice -- will not be
affected by this change, the company said.

Last year, PepsiCo Inc agreed to buy bottlers Pepsi
Bottling Group Inc and PepsiAmericas Inc to cut costs and boost
profits in North America. The acquisitions closed in March.

With the acquisitions, PepsiCo controls about 75 percent of
its bottling system by volume, according to Beverage Digest.

"We are still in major 'wait and see' mode on the Gatorade
turnaround, but feel that improved trends in the short term
should help sentiment," J.P. Morgan analyst John Faucher said
in a client note.

Pepsi's shares were up 2 percent at $64.96 in morning
trading on the New York Stock Exchange.
(Reporting by Phil Wahba and Lisa Baertlein in Los Angeles;
Editing by Derek Caney and Maureen Bavdek)