UPDATE 2-Pepsi to distribute Gatorade straight to stores

* Direct distribution to start Jan. 1

* Part of $400 million cost savings target

* Shares rise 2 percent (Adds analyst comments, details distribution, share activity)

NEW YORK, Sept 1 (Reuters) - PepsiCo (PEP.N) 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 bottlers.

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" accounts.

The company said on 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 2012.

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 (PEP.N) 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)