Healthy creativity needed in carbonated drinks

Related tags Coca-cola

The carbonated drinks market has suffered from the country's
increasing interest in weight and wellness and it needs to be more
creative if it is to avoid stagnating, reports Philippa

A report published last week by Fitch Ratings suggested that the recent trend of adding nutrients to fizzy drinks - a la 7UP Plus - will be part of the push for further creativity and attempt to make them appear healthier. 7UP Plus, launched in June, is fortified with calcium, vitamin C and fruit juice.

In 2003 beverage industry volume was 13.48 billion 192-ounce cases, a 3.2 percent increase from the prior year. During this period, carbonated soft drinks (CSDs) represented around 29 percent of US volume and $63.9 billion of retail value. Forty percent of last year's remaining sales volume was roughly divided between beer and milk, with about 11 percent each, and coffee and bottled water with 9 percent each.

Despite CSD's leading hold on the market, it trailed the pack as far as growth was concerned, increasing by only 1 percent, while bottled water volume - including vitamin added varieties - grew by almost 22 percent and non-carbonated drinks by 4.7 percent.

Fitch noted that categories such as bottled water and sports drinks have grown because consumers associate them with a healthier lifestyle.

"We will see the drinks companies trying to be more creative and more wellness orientated with products such as PepsiEdge [Pepsi's new low-carb beverage] and 7UP Plus,"​ Fitch analyst Carla Norfleet Taylor told​.

The need to give off a "healthy vibe"​ also accounts for Pepsi Co's recent acquisition of Quaker Oats said Norfleet Taylor.

These changes, though, as the figures indicate, have not been plain sailing and the fizzy drinks industry has a difficult challenge ahead.

Pepsi and Coca Cola won't admit that their low-carb alternative are not doing well, though Coke did note recently that their C2 product was incorrectly priced, but they won't pull the plug on them because they see the potential they could have, said Norfleet Taylor.

She does not believe though that nutrient added or low-carb CSDs will catch-on and influence the market in the same way diet drinks did.

"We have not seen any indication that 7UP Plus will be revolutionary in the same way that diet sodas were, proliferating into a multitude of flavours,"​ said Norfleet Taylor, though she didn't think there was any danger of the companies finding creativity a problem.

"History indicates that these companies have development pipelines that are continually evolving,"​ she added.

As Norfleet Taylor pointed out, one of the problems facing the drinks industry is that even if manufacturers add nutrients and state that the drink is low in calories, carbonated drinks have an unhealthy image.

"The industry will have to put a better spin on itself with improved advertising that gives a health twist to products,"​ said Norfleet Taylor.

This is one reason why she thinks the carbonated soft drinks market will stay in the hands of the big players. "It would take a huge advertising campaign for saller companies to capture a share of the market."

She did think, however, that there was the potential for sports nutrition to take a larger share of the market with people believing, rightly or wrongly, that they are healthier than normal fizzy drinks.

The obesity rate in America has doubled during the last three decades, according to the Centres for Disease Control, from 14.5 percent in 1971 to 30.9 percent in 2000.

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