Soda has provided enthusiasts of this popular drink with a caffeine boost for decades. However, the struggling industry is now in dire need of a revival as consumers increasingly gravitate towards healthier alternatives such as water and tea. According to Beverage Digest, total soda consumption fell by 1.2% in 2015, with each individual consuming approximately 650 eight-ounce servings of carbonated soft drinks—the lowest figure recorded since 1985. Even diet soda, once a favorite, saw its 11th consecutive year of decline in 2015 based on the latest available data.
A growing number of consumers are abandoning soda in their efforts to cut down on sugar intake. In response to this trend, soda companies have attempted to replicate the taste of sugar or high fructose corn syrup using sweeteners like stevia. Additionally, both PepsiCo and Coca-Cola have downsized their packaging to smaller bottles and cans, which have gained popularity among shoppers and allow for higher prices per ounce.
Local governments have also played a role in the decrease in soda consumption by imposing taxes on sugary drinks. For instance, a 1.5-cent-per-ounce tax on sugary beverages in Philadelphia has led to sales drops of up to 50% in some local grocery stores, prompting soda manufacturers to announce layoffs. Chris Konyk, a business consultant and soft drink expert at Salient Management Company, pointed out that media discussions often link soda consumption to health issues like obesity and diabetes. “The soft drink companies are a big and easy target to attack,” he noted, adding that this ongoing scrutiny has led consumers to alter their purchasing habits regarding soft drinks.
Consumers who once enjoyed a soda with every meal or snack are now seeking products they view as healthier. Last year, bottled water surpassed carbonated soft drinks to become the leading beverage category by volume in the U.S. Furthermore, the total U.S. wholesale value of the tea industry has surged from $1.8 billion in 1990 to over $10.8 billion in 2016.
With consumers increasingly pursuing healthier drink options, beverage companies face growing pressure to reformulate their products, develop new ones, or expand their portfolios by acquiring other brands. According to Nielsen’s 2016 Global Ingredients Study, 68% of North American consumers are willing to pay more for products free of undesirable ingredients. Additionally, 61% believe that a shorter ingredient list indicates a healthier product.
Konyk stated, “The beverage companies are repositioning themselves to be leaders in healthy beverage alternatives. If a product has real or perceived health benefits, soft drink companies are considering adding it to their lineup.” A significant challenge, however, is the prevailing notion that drinks produced by soda companies are unhealthy. Analysts predict that soda manufacturers will work to change this perception through innovative advertising and marketing strategies.
Coca-Cola, Dr Pepper Snapple, and PepsiCo have all committed to reducing the calorie content of sugary drinks consumed by Americans by 20% before 2025. Coke’s portfolio now includes brands like Honest Tea, Zico, Odwalla, PowerAde, Peace Tea, Vitamin Water, Simply, and Dasani, while Pepsi has bolstered its offerings with Duke’s, Miranda, Naked Juices, and Aquafina.
“The soft drink companies are continually researching the next trend and have aggressively acquired or partnered with healthy brands,” Konyk remarked. “I don’t see the surge in healthy alternatives ending anytime soon.” For over two decades, PepsiCo has been evolving its beverage portfolio. A company representative shared that low- and no-calorie beverages now account for nearly half of its sales volume, up from just 24% two decades ago. The company is optimistic that by 2025, at least two-thirds of its global beverage portfolio will consist of options with 100 calories or fewer from added sugars per 12-ounce serving.
“We’re responding to changing consumer and societal needs,” the spokesperson stated. The company has recently launched IZZE Fusions and Lemon Lemon, modernized soft drinks featuring bubbles, unique flavors, and lower calorie counts. IZZE Fusions, available in orange, mango, and strawberry melon, contain 60 calories per 12-ounce can and are sweetened with a blend of cane sugar and stevia without any artificial sweeteners or flavors. Another innovation from PepsiCo is Mountain Dew Kickstart, which has generated estimated annual retail sales of over $400 million in the past decade. Targeting millennials, this mid-calorie cola has 60-80 calories per 16-ounce can and comes in 12 flavors. PepsiCo also offers Stubborn Soda, which is crafted from natural flavors without high fructose corn syrup, artificial sweeteners, or azo dyes.
James Quincey, Coca-Cola’s incoming CEO, told analysts in February, “The company has outgrown Coke.” He emphasized the need to reduce sugar content and expand its presence in the overall beverage market, stating, “The company needs to be bigger than the core brand.”
Dr Pepper Snapple, on the other hand, has reported resilience in sales, with carbonated soft drinks growing by 2% in the fourth quarter of 2016 compared to the same period the previous year, largely driven by its citrus soda brand, Squirt. Last November, the beverage maker acquired Bai Brands, a manufacturer of enhanced water, for $1.7 billion in cash, aiming to lead in the healthy beverage sector.
Larry Young, CEO of Dr Pepper Snapple, attributed the success of soft drinks to better pricing, communication, and “product and package innovation across our priority brands to address consumers’ changing needs.” Despite the current trend towards health-conscious products, carbonated soft drinks remain vital to beverage companies, as they generate the majority of their profits. New marketing campaigns targeting millennials, such as Coca-Cola’s personalized cans and Pepsi’s sustainability initiatives, are part of the strategy to attract consumers.
“Everything in moderation is what some companies are banking on as they get creative with their packaging,” Konyk said. “I believe the marketing strategies will support this and focus on a theme of reward or indulgence.”
David Portalatin, a food and beverage analyst with NPD Group, warned that despite the decline in carbonated soft drink consumption, soda is unlikely to disappear anytime soon. He noted that when consumers purchase beverages away from home, soda remains the most likely choice. “Everyone talks about health, but the trend away from home suggests that consumers are also concerned about cost,” he added.
In addition to considering healthier beverage options, consumers might also benefit from supplements like calcium citrate. For those curious about how to take calcium citrate, it’s typically recommended to consume it with food for better absorption. As consumers continue to explore various health options, including calcium citrate, the beverage industry will need to adapt and innovate to meet these evolving preferences.