Consumers not so sweet on soft drinks

As consumers continue to shy away from highly sweetened carbonated beverages in favor of what they see as more healthy alternatives, soda makers are responding by branching out into new areas and reformulating some of their most popular products.

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At Dr. Pepper Snapple Group, for example, the company has expanded distribution for its sparkling water brands, including Schweppes and Canada Dry, and taken some of its most popular soda brands in new directions with last year’s launch of the stevia-sweetened Dr. Pepper Natural. Similarly, Coca-Cola (Coca-Cola Life) and PepsiCo (Pepsi True) also are helping reshape soda’s image with their own stevia-sweetened products.



Marketers and health professionals say that substituting natural sweeteners, such as stevia and cane sugar, for the high-fructose corn syrup many have used for years provides a healthier beverage.



Stevia, they point out, does not affect a person’s glucose levels, an advantage for diabetics and hypoglycemics. Also, it has no carbohydrates or fat, making it ideal for dieters, especially those watching their intake of carbohydrates. A 12-ounce can of Dr. Pepper Natural, for instance, has 40% of the calories of a similarly sized can of regular Dr. Pepper.



Market researchers suggest that the increased use of stevia and the reduced calories and minimal aftertaste it provides also may be behind the significant drop-off in diet soda sales.



The publicity given to research suggesting that many of the artificial sweeteners used in diet drinks may be unhealthy and may actually increase one’s appetite, causing them to eat more, have led the sales of some of the most popular diet sodas to shrink over the past few years. According to Beverage Digest, sales of Diet Coke declined by more than 6% last year, while sales of Diet Pepsi dipped by 5%.



In response, PepsiCo has announced that it will replace the aspartame — a sweetener linked to health risks at high doses in animal studies — in Diet Pepsi with sucralose, an artificial sweetener considered to be safer.



While the reformulation of established beverages and the introduction of new, healthier versions of these products have not completely revived the carbonated beverage market, they have stabilized sales and caused them to move forward again after years of decline.



Recent IRI data shows that drug store sales of carbonated beverages during the 52 weeks ended May 17 hit nearly $4.39 billion, an increase of 1.1% over the same period a year earlier. Multi-outlet beverage sales during the year topped $19 billion, a 0.4% gain.



Earlier this year, however, Beverage Digest provided a broader and not nearly as optimistic picture of the domestic market, reporting that sales of carbonated beverages at retail and in restaurants fell 14% in 2014, marking the 10th consecutive annual decline.



Still, soft drink manufacturers’ rethinking of their business and the increased emphasis they are putting on other types of beverages has led many to express optimism for the future.



“For many years, this category was about cans and large bottles, and the key metric was gallons sold,” Coca-Cola Co. president Sandy Douglas told analysts at the Goldman Sachs Global Staples Forum in May. “That has run its course. The consumer has been clear as a bell, what they want is smaller packages. The consumer is boss and, if you follow the consumer effectively and quickly, there’s tremendous potential in beverages.”