100 LEADING NATIONAL ADVERTISERS; IRASCIBLE COLA GIANTS NUDGE SOFT DRINKS FORWARD

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The 1995 launch of Royal Crown Draft proved a fitting hybrid to two rapidly converging trends in the soft-drink market.

A pricy, long-neck amber bottle on the outside, a cola with all-natural ingredients on the inside, the beverage exudes the confidence of a New Age drink and the resolve of a grizzled cola elite defending its turf.

Soft-drink volume has struggled in the 1%-2% growth range throughout the '90s as consumers have turned increasingly to sports drinks and New Age concoctions. That struggle eased in 1994, evidenced by soft-drink unit volume growth of 3.8% accompanied by a 2% advance in retail sales to $50.08 billion, according to Beverage Digest. The boost in unit volume was the biggest gain since 1988, notes BD, and shows the cola giants' tenacity in protecting their franchises.

Coca-Cola Co. at 41.5% share of unit volume and Pepsi-Cola Co. at 32.3% singlehandedly spurred growth through packaging, aggressive pricing and wave after wave of advertising.

Coca-Cola introduced the large-sized contour bottle and Pepsi-Cola the Cube, a value-priced 24-pack that took a larger share of its packaging mix. These maneuverings pushed volume growth ahead of growth in revenues.

Excessive promotion is one reason volume outpaced sales. Promotional allowances are so commonly employed in the industry that they're viewed as a form of pricing and considered a reduction of sales rather than a marketing cost.

Coca-Cola pulled out all the ad-spending stops by boosting media outlays 22% to $204 million for regular and diet soft drinks, much of that in support of the polar bear/animated sun ads created by Hollywood's Creative Artists Agency. Pepsi-Cola's Shaq Attack had less fizz as its soft drink spending slipped 16% to $136.6 million, according to Competitive Media Reporting.

Coca-Cola and Pepsi-Cola also are probing deep into the heart of New Age territory with new drinks.

In iced teas, the Nestea line of ready-to-serve beverages is marketed by Coca-Cola in a joint venture with Nestle, and Lipton's ready-to-serve line is handled by Pepsi-Cola in a joint venture with Unilever. The market, however, is showing signs of maturing.

The ready-to-serve iced-tea segment grew an estimated 30% in 1994 but is projected to calm to 10%-15% growth this year, says Michael C. Bellas, president of Beverage Marketing Corp. He predicts scaled-down growth for sports drinks as well.

Iced teas, sports drinks and ready-to-serve juices are part of a $5.19 billion market, up 9.8%, for so-called alternative soft drinks, according to Information Resources Inc. data for mass merchandisers, supermarkets and drugstores. That market jumps to an estimated $7 billion with the addition of bottled waters and the pooling of convenience store and vending machines sales.

Snapple, the leading New Ager and sold in the same cooler with iced teas, is stumbling. Sales have fallen about 15% since Quaker Oats Co. acquired the line at the end of '94. Quaker's Gatorade also is under pressure from new sports drinks, PowerAde from Coca-Cola and All Sport from Pepsi-Cola.

To stay fresh in the ever-evolving juice drink segment, Pepsi is toying with a copycat of Coca-Cola's Fruitopia called Drenchers, designed to attract Generation X tastebuds. Pepsi already is well positioned in the juice side of the New Age cooler via its development and distribution contract with Ocean Spray Cranberries.

Pepsi's Mountain Dew is on course to surpass Diet Pepsi in sales this year; Coke's Sprite is showing strength with a 0.3 share point rise in 1994.

Acquisitions have sent Cadbury Beverages North America into the heat of battle on this un-cola front. The company in effect is a combo of No. 4 Cadbury/A&W (5.5%) and No. 3 Dr Pepper/7UP (11.4%) (see chart above), the latter bought in January.

Cadbury's most pressing challenge is to re-invigorate 7UP. The "uncola" brand's '94 share didn't budge from '93's 2.5%.

The majors seem more in command than ever.

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