News highlights, market trends, and original data analysis related to the U.S. retail food & beverage industry … by Jay Nargundkar
A potentially major announcement was just made at the Clinton Global Initiative in New York: Coca-Cola, Pepsi, and Dr. Pepper Snapple have agreed to a pledge that aims to reduce American per-capita calorie consumption of sugary drinks by 20% over the next ten years. Profound changes may be coming to soda fountains, vending machines, grocery and convenience store shelves, and even the advertising that drives customers to those venues.
Such a pledge has precedent — in 2006, leading cereal manufacturers pledged to not target young children in advertising for their high-sugar products. Whether that has been effective is up for debate. Same goes for the results of the 2010 Michelle Obama-inspired “Healthy Weight Commitment Foundation” pledge.
Skeptics today may reasonably assume that Coke, Pepsi, and Dr. Pepper aren’t out to intentionally trim their revenues going forward. Given that, here’s how the big soda manufacturers will look to meet this pledge while still growing their businesses:
1. Smaller portion sizes
Former NYC mayor Michael Bloomberg was much maligned for seeking to restrict sales of large-format sugary drinks in his city, but he may have just been a little ahead of the curve. In the past couple years, both Coke and Pepsi have watched their trials of “mini” 7-8oz. cans perform very well; per a Reuters report last month, Coke has seen double-digit growth in mini can sales, Pepsi a solid 24% increase this year.
2. Introducing the next wave of zero-calorie/low-calorie sweeteners
Diet soda sales have been in the tank for years, but the next wave of low-calories sodas will be “naturally” sweetened with stevia leaf extract, and perhaps further down the road, with monkfruit. Consumers’ first big exposure to stevia could come in the form of the green-labeled (note the unsubtle reference to “natural”) Coca-Cola Life, which will be on shelves nationwide next month. This edition of Coke is partially sweetened with stevia, allowing it to have almost half the calories of a comparably-sized regular Coke. It has been available in Argentina and Chile since last year.
3. Migrating consumers to other beverages in their portfolios
The big soda companies have been preparing for the eventuality of a public turning away from sodas by steadily diversifying their portfolio — fast-growing segments like teas, infused waters, sparkling fruit drinks, and energy shots are among their offerings. As an emphasis on their tentpole brands declines, they can start to transition the focus of their marketing toward brands of theirs that are not as bad on the caloric front.
Coke can, for example, push Honest Tea, Zico coconut water, Monster energy shots, Dasani Drops water flavorings, and Glaceau Fruitwater. Pepsi can steer customers to Naked juices, IZZE sparkling drinks, and Gatorade’s artificially-sweetened G2 edition, among others.
Even by making good on this new calorie-cutting pledge, Big Soda manufacturers have a plan for what’s next!