The two powerhouse companies both posted sales gains, together commanding 73% of the $52 billion carbonated soft-drink market.
Alternative beverages such as juices and teas, which two years ago were enjoying skyrocketing growth, showed mixed results in '95. The two giant cola companies made sure they stayed on the growth track among alternatives, though, claiming a collective 27.4% of case volumes in that segment, up from 24.3% in '94, according to industry newsletter Beverage Digest.
Coca-Cola Classic increased case volume 5% across all distribution channels in the U.S. last year, according to Beverage Digest.. Its leading dollar share of the carbonated soft-drink market rose slightly, from 19.8% to 20.2%.
Pepsi boosted its volume 2%, while its dollar share dropped from 15.7% to 15.5%.
Along with their diet counterparts, the two brands accounted for more than half of total category sales. Total carbonated soft-drink volume grew 3% to 9.04 billion cases.
"Coke and Pepsi still continue to push their alternative brands, which represent a relatively small portion of overall drink sales from these companies, but in '95 they really got refocused on building their core brands," says Gary Hemphill, VP at consultancy Beverage Marketing Corp.
All-channel alternative beverage volume grew 9% to 1.38 billion cases, according to BD, a slowdown compared with 24% growth in 1994. The ready-to-drink tea, shelf-stable juice, sports drink and still-water segments all showed gains, while sparkling waters and natural sodas suffered losses.
Among alternative brands, Quaker Oats' Snapple was a notable loser, with volume down 18% to 82.8 million cases. Quaker's Gatorade increased volume 9.7% to 170 million. Quaker ranked second among alternatives with an 18.3% share to Perrier Group's 27.7% lead.
ARIZONA MOVES UP
Other gainers included Arizona Iced Tea, up 33.3% to 40 million cases, and teas marketed by Coca-Cola and Pepsi-Cola under licensing agreements: Nestea (Coca-Cola), up 13.6% to 56.9 million, and Lipton (Pepsi-Cola), up 27.8%, to 115 million.
Among soft drinks, impressive increases in particular came from non-cola carbonated varieties.
Coca-Cola's Sprite increased volume 16% to 439.3 million cases and dollar share 0.6 share points to 4.9% behind a 50% increase in media spending to $50 million. Pepsi-Cola's Mountain Dew grew 10.6% to 503.2 million cases and its share advanced 0.4 points to 5.6% behind a 200% increase in spending to $30 million. Both brands' hip, entertaining advertising has effectively targeted teen males.
Attempting to build on their successes with lemon-lime beverages, both Pepsi-Cola and Coca-Cola are continuing to selectively focus resources on non-cola offerings. In particular, 1996 has turned into the year of root beer, with Pepsi-Cola making a big push behind its small, relatively unknown Mug brand and Coca-Cola pushing its newly acquired Barq's brand to seize category leadership from Cadbury Schweppes' A&W brand.
Cadbury became the industry's third-rated marketer by adding Dr Pepper and 7UP to its stable of brands in '95. Both brands continued trends from before the acquisition. Dr Pepper kept its position as one of the decade's fastest-growing soft drinks, while 7UP remained sluggish.
Coke attributed much of its '95 sales increase to national distribution of clear plastic bottles that for the first time shared the brand's signature contour with traditional glass bottles. Pepsi, on the other hand, derived increased sales from new sizes of plastic bottles and a cardboard cube 24-pack.
"Both companies increased their emphasis on immediate consumption," Mr. Hemphill says, "putting lots of effort into the fountain and cold single-serve sides of the business."
In addition to improving convenience-store merchandising, he says, both companies added distribution points in places like supermarket checkout aisles and home-video and other retail stores.
One might think soft drinks were a mature market given the relatively fixed market share positions (albeit a 1% share equals $524.3 million) and the relatively slow year-to-year movement in case volume. But Coca-Cola Chairman-CEO Roberto Goizueta scoffs at such a thought:
"The average human body requires at least 64 ounces of liquid every day just to survive, and our beverages currently account for not even two of those ounces," he wrote in the latest annual report.
In other words, Pepsi isn't Coke's biggest competition. Tap water is.