US fizzy drinks lose pop on health fears

March 31, 2014 9:04 pm

US fizzy drinks lose pop on health fears

By Shannon Bond in New York

Americans drank fewer fizzy drinks last year, accelerating a sales decline dogging Coca-Cola and PepsiCo as they face mounting health concerns over sugar and artificial sweeteners.

Even as the beverage giants boosted their marketing spending, sales of carbonated soft drinks fell 3 per cent in 2013 to 8.9bn cases, the lowest level since 1995, according to Beverage Digest, an industry publication. It was the ninth straight year of decline and much sharper than falls of 1.2 per cent in 2012 and 1 per cent in 2011.

The decline was moderated by the continued popularity of energy drinks such as Monster and Red Bull, which increased sales by 5 per cent. Stripping those out, carbonated sales fell 3.3 per cent, compared with 1.7 per cent last year.

The worsening performance of fizzy drinks dragged down the overall bottled beverage category, which includes water, teas, juices and sports drinks such as Gatorade. Total sales volume fell for the first time since 2009, down 1.6 per cent, after growing 1 per cent in 2012 and 0.8 per cent in 2011.

Consumers have been turning away from sugary colas for nearly a decade, choosing instead to sip flavoured water, tea and juice drinks. Public health advocates have drawn links between added sugar and health problems – including obesity, diabetes and cancer – and backed ad campaigns warning about fizzy drinks.

Coca-Cola, which holds 42.4 per cent of the US fizzy drinks market, fared slightly better than second-place PepsiCo. Coke’s sales slipped 2.2 per cent last year, half the rate of Pepsi’s 4.4 per cent decline. Sales of number-three drink maker Dr Pepper Snapple fell 2.4 per cent.

Overall, Coca-Cola and Dr Pepper Snapple gained market share, while PepsiCo lost ground.

Monday’s figures also confirmed reports that sales of diet drinks are falling faster than regular sodas, which executives have blamed on worries over the health effects of artificial sweeteners like aspartame.

Diet carbonated soft drinks are now struggling. At least some consumers seem to be shying away from the legacy diet sweeteners, according to sources

– Beverage Digest

Diet Coke and Diet Pepsi sales volumes were each down nearly 7 per cent and both brands lost market share. Sales of PepsiCo’s Diet Mountain Dew brand fell 3.1 per cent.

“Diet carbonated soft drinks are now struggling. At least some consumers seem to be shying away from the legacy diet sweeteners, according to sources,” Beverage Digest said.

In recent years, drinks makers have maintained revenue growth amid slowing fizzy drink sales by lifting prices, but were unable to do so last year. When Coca-Cola reported its latest earnings in February, it said North American revenue was flat in 2013. Pepsi’s Americas beverages division reported a 2 per cent revenue loss.

Beverage Digest’s figures bore out that trend: even with a 2 per cent increase in pricing last year, the value of the fizzy drink market fell 1 per cent to $76.2bn. John Sicher, editor, said that marked the first year the overall retail value had declined since the publication began tracking the figure in 1998.

Coca-Cola shares closed down 0.7 per cent at $38.66 in New York. PepsiCo was up 0.7 per cent at $83.50.