The next generation might not be the Pepsi
generation – or the Coke generation, for that matter.
For years, soda has been the quintessential drink, considered
the perfect thirst quencher, morning pick-me-up or accompaniment
to lunch or dinner.
But that is slowly changing.
As we look for greater variety in drinks and strive
for more healthful diets, consumption of soda –
with its 250 calories and 67 grams of sugar in a 20-ounce
bottle – is slipping.
Data released Wednesday by Beverage Digest, the industry
trade publication, shows that, for the first time in 20
years, the number of cases of soda sold in the United
States declined. Case volume in 2005 was down 0.7 percent,
to 10.2 billion cases.
Coke’s flagship brand, Coca-Cola Classic, was
down 2 percent and original Pepsi from PepsiCo was down
3.2 percent.
In recent years, soda has come under increasing fire
from critics who see it as little more than liquid candy
and blame it for contributing to America’s looming
problem of childhood obesity. Results of a study that
were released Monday link soda to weight gain among teenagers.
While soft drinks remain the country’s most heavily
consumed beverage, the category is losing ground to bottled
water, sports drinks like Gatorade and Powerade, and energy
drinks like Red Bull and Full Throttle. Last year’s
volume data for these drinks is not yet available, but
John Sicher, publisher of Beverage Digest, said he expected
that growth in these categories would be up by double
digits.
“Traditional carbonated soft drinks have got a
tough road ahead,” Sicher said. “The migration
to water and sports drinks and other noncarbonated drinks
seems to be permanent.”
In a research report Wednesday, William Pecoriello,
a beverage analyst at Morgan Stanley, said he expected
the soda category to continue to decline at a 1 percent
clip over the next few years. His research shows that
64 percent of the growth in bottled water is a result
of people switching from soda to what nutritionists say
is the most wholesome beverage anyone can drink.
Even diet sodas, once a booming category, have slacked
off. Diet Pepsi’s case volume was down in 2005 by
1.9 percent and Diet Coke’s was virtually unchanged,
up only 0.1 percent, according to Beverage Digest.
Pecoriello attributed this to changing attitudes about
diet soda. “According to our research, consumers
say they don’t like the taste, are worried about
artificial sweeteners” and, he wrote, they do not
view diet soft drinks as healthful.
PepsiCo says that for years it has been paying attention
to the fact that consumer tastes are moving away from
soft drinks.
“For the past 10 years, we’ve been looking
at ourselves as a total beverage company because that’s
where consumers are taking us,” said David DeCecco,
a spokesman for Pepsi. “That’s why innovation
is so important for us.”
In 2001, Pepsi bought the South Beach Beverage Co.,
adding energy drinks and teas to its product lineup, and
Quaker Oats, which owns Gatorade and a variety of food
brands. As a result, Pepsi’s percentage of total
revenue coming from carbonated soft drinks is considerably
less than Coca-Cola’s.
Coke, on the other hand, has continued to promote carbonated
soft drinks. The company says it believes that, despite
the recent industry downturn, its carbonated soft drink
business can grow in the United States.
In remarks to investors, Coke’s chief executive,
E. Neville Isdell, emphasized the growth of Coke’s
flagship soda brand in markets like China and Russia.
Coke has, however, also diversified into drinks like
bottled water, energy drinks, sports drinks, tea and refrigerated
juices, but it is not the market leader in any of these
areas.
John Faucher, an analyst at JP Morgan, said soda’s
declining popularity is due not just to changing health
trends and attempts to cut calories, but consumers’
wandering taste buds. “A lot of this is about variety,”
he said. “Consumers want new exciting beverages.”
