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Carbonated Soft Drinks Face Tough Battle to Maintain Share

While Still Big Business, Category's Volume Decline Triples From '05

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CHICAGO (AdAge.com) -- Carbonated-soft-drink volume is falling fast, according to two industry reports issued today -- and one report says the rate of decline tripled since last year.
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A report from Beverage Digest says carbonated-soft-drink volume dropped 0.6% in 2006, three times the rate from the year prior. Energy drinks stemmed the decline, which would otherwise have been a 1.5% drop. Beverage Marketing, meanwhile, reports that carbonated-soft-drink volume last year fell 1.1% to a 50.9% share of the total beverage market, while the total liquid-refreshment category grew 2.8%.

The numbers indicate a pitched battle ahead, because even total liquid refreshment is also starting to slow, from a growth rate of 3.2% last year.

Other segments
By segment, energy drinks grew 49% to a 0.8% share, followed by ready-to-drink teas, shich surged 26.2% last year compared with 9% in 2005, Beverage Marketing said. Sports drinks grew 11.7% and ready-to-drink coffees grew 10.4%. But the four fastest-growing segments still make up just 7.8% of total volume.

"Beverages offering functional benefits are growing two to three times faster than conventional refreshment beverages," Michael Bellas, chairman-CEO of Beverage Marketing Corp., said in a statement." As a result, the majors are rushing vitamin-fortified soft drinks to market. Coca-Cola Co. is planning Diet Coke Plus and PepsiCo is planning Tava for this year; Cadbury Schweppes has had 7Up Plus on the market since 2004.

By mega-brands
Among the mega-brands, Gatorade saw its volume jump 12%, according to Beverage Marketing, to break the 1 billion gallon mark and supplant Sprite as the No. 5 trademark. No. 9 Pepsi's Aquafina grew 21.9% and No. 10 Coke's Dasani grew 20.1%. Meanwhile, the trademark portfolios for Coca-Cola and Pepsi-Cola saw volume fall 2.5% and 3.1%, respectively. No. 3 Mountain Dew grew 1.2% and No. 4 Dr Pepper grew 2.2%. Sprite and Minute Maid portfolio, part of the Coca-Cola Co., lost volume by 3.5% and 8.5%, respectively, while PepsiCo's Tropicana brands surged 10%.

PepsiCo's total volume grew 4.3%, while Coca-Cola Co. gained 0.2%, mainly on energy drinks and noncarbonated brands. Cadbury Schweppes gained 0.4% in total volume, on its 7Up, Dr Pepper and other soft drinks, while its non-carbonated brands slipped.

By company
Among the top beverage companies, both Coke and Pepsi lost 0.2% share of the market, while Cadbury gained 0.3%. With a volume gain of 8.5%, PepsiCo's Mountain Dew brand was the fastest-growing soft drink within Beverage Digest's list of top 10 brands. Coke's Fanta grew 7% and Cadbury's Diet Dr Pepper grew 6.4%. Of the leading beverage companies, Hansen Natural, maker of Monster energy drink, was the fastest gainer, thanks to a volume boost of 67.9%, jumping two spots ahead of Red Bull to the No. 6 spot.

According to Beverage Digest, Coca-Cola has a 42.9% of the total beverage category, compared with PepsiCo's 31.2%. But in dollars, according to Beverage Marketing, PepsiCo leads the beverage industry with $9.6 billion in estimated U.S. revenue, followed by Coca-Cola Co.'s $7 billion.
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