CSDs Remain Relevant Through Innovation

March 11, 2015
CSD Staff
Group of various soda drinks in aluminum cans isolated on whiteEveryone says consumers are shunning carbonated soft drinks (CSD) for healthier beverage options. Yet CSD still dominates in the beverage market, controlling at least a 20% slice.
Consumers’ desire for healthier beverages is spurring movment in the category. The Big Three soft drink companies—Coca-Cola Co., PepsiCo and Dr Pepper Snapple Group—last year pledged their support for the Balance Calories Initiative, which would reduce beverage calories consumed per person nationally by 20% by 2025.
Always marketable, Coca-Cola in 2014 launched the “Share a Coke” campaign in the U.S., and has seen a rise in U.S. soft drink volumes since. The company labeled Coca-Cola, Coke Zero and Diet Coke bottles with common names of individuals, hoping customers would buy more volume and later on share their experience through social media.
To make up for weak volume gains, there’s now a focus on “mini-cans” and smaller bottles in the U.S. that are positioned as premium offerings to push up revenue.
Meghann Eaton, category specialist for Massachusetts-based VERC Enterprises, said these efforts have begun to strike a chord with its customers.
“They are trying to satisfy the customers that are reading labels and worried about artificial sugars and flavors,” Eaton said. “Coke has Coke Life and is trying different sizes, like the 8.5-ounce aluminum bottles. Pepsi brought back the real sugar line and added more flavors.”
SUGAR AND SPICE
Balancing taste and health is a constant battle in the CSD market, an effort that hasn’t gone unnoticed by analysts, but hasn’t worked to correct slumping low-calorie and zero-calorie cola sales, spurred in part because of consumer concerns over alternative sweeteners.
“There is a lot of effort being put behind sweetener innovation—in particular efforts to develop a zero-calorie, natural sweetener that offers great taste,” said Gary Hemphill, managing director of research for the Beverage Marketing Corp., a data research firm that covers the beverage industry. “It’s been a difficult hurdle, but companies continue to put a lot of effort behind the concept because they believe such innovation will help improve the performance of the diet carbonated soft drink category.”
For example, Pepsi recently rolled out its Stevia-based mid-calorie soda Pepsi True.
In fact, CSD makers are stepping up their game, introducing new products that challenge traditional market concepts—and beginning this year—even how consumers view the beleaguered category. Some makers seem to be reversing mass production of lines, opting for individualistic offerings instead.
“We are seeing increasing numbers of craft sodas coming onto the market—emulating the success of craft beers in the beer category,” Hemphill said. “Craft sodas are never likely to be as big of an idea as craft beer, but we do believe they offer a potential source of growth in a struggling category.”
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