Pepsi Passes Diet Coke in Market Share as Artificial Sweeteners Fall Out of Favor

Pepsi Reclaims No. 2 Soda Spot That Was Lost in 2010

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Credit: Bloomberg

Diet Coke's reign as the nation's No. 2 soda brand is over -- and it didn't last long.

Pepsi, which fell to No. 3 in 2010, has reclaimed the second slot behind regular Coke, according to 2014 U.S. carbonated soft drink market share data released today by trade publication Beverage Digest. Both Pepsi and Diet Coke lost volume in 2014. But as consumers shied away from artificial sweeteners, Diet Coke fared much worse, falling 6.6%. Pepsi lost only 1.8%.

That gave Pepsi an 8.8% share, compared with 8.5% for Diet Coke. Just as telling is the fact that No.1 Coke actually eked out 0.1% volume growth last year, marking its first growth year since 2000, according to Beverage Digest. Brand Coke controls a dominating 17.6% share of the soda category.

The rankings are evidence of how changing consumer tastes can alter brand fortunes in a short amount of time.

When Diet Coke wrestled the No. 2 spot from Pepsi in 2010, it was seen as an historic shift in the cola wars. It marked the first time in decades that PepsiCo ceded the soft-drink category's two leading share positions to rival Coca-Cola Co.

Some analysts saw the shift as an indictment on Pepsi's marketing approach, which at the time was led by the "Refresh Project." The campaign rolled out in early 2010 and was marked by investments in community-building projects. The brand's typical star-studded ads got less support. Pepsi even sat out the Super Bowl for the first time in 23 years.

But the effort was scrapped a couple of years later. And Pepsi has since returned to its glitzy marketing ways, including recent sponsorships of Super Bowl halftime shows.

But the recent market share swings might have less to do with marketing and more to do with taste preferences and a gravitation by consumers to ingredients that carry a natural image. Fewer drinkers want artificial sweeteners like aspartame that carry negative health perceptions.

"Diets are facing tremendous sweetener headwinds," said John Sicher, editor and publisher of Beverage Digest. "In my view, aspartame is safe," he added. But "there certainly is a subset of consumers who have had a withdrawal of enthusiasm about aspartame, and that is affecting Diet Coke and the other big diet soda brands."

Top 10 CSD Brands 2014 by CSD Share, Sortable by Other Measures
Brand CSD Share Share Vol
Coke 17.6 0.2 0.1%
Pepsi-Cola 8.8 -0.1 -1.8%
Diet Coke 8.5 -0.5 -6.6%
Mt. Dew 6.9 -1.1%
Dr Pepper 6.8 0.1 0.5%
Sprite 6.0 0.1 1.0%
Diet Pepsi 4.3 -0.2 -5.2%
Fanta 2.2 0.2 5.0%
Diet Mt. Dew 2.0 -0.1 -3.0%
Coke Zero 1.8 -0.1 -2.0%
Top 10 CSD Brands 2014 may not work on your platform. Please view it on

Indeed, among the top 10 soda brands, regular brands out-performed diets across the board last year. No. 7-ranked Diet Pepsi, for instance, lost 5.2% volume, according to Beverage Digest. Coke-owned Sprite grew by 1%. Coke-owned Fanta was up by 5%, passing PepsiCo-owned Diet Mtn Dew for eighth place. Diet Dr Pepper, while not a top-10 brand, fell by 7.9%.

A Coca-Cola spokeswoman said: "Diet Coke performance has been improving slightly, but we still have a lot more work to do. We're committed to doing that and committed to getting the brand back on the road to sales growth again. Central to that is the positive reinforcement of brand equities and brand attributes like taste, refreshment and uplift, and that's a major part of our focus with the Diet Coke 'Get A Taste' campaign."

In a statement, PepsiCo said: "We're pleased with the progress we made in 2014. We delivered top-line growth and strong innovation and we gained LRB (liquid refreshment beverages) value share relative to our primary competitor in measured channels. Our diverse beverage portfolio strategy continues to position PepsiCo for sustainable, long-term growth."

Regular Coke's gain, while small, is psychologically significant. It shows that there just might be some life left for sugary soda brands, which have been under constant assault by health critics. The growth -- and slowing rate of decline for other regular brands -- helped the total soft drink category to a decent year. Volume for all carbonated soft drink brands fell by 0.9%, compared with a 3% drop in 2013 and a 1.2% decline in 2012, according to Beverage Digest.

Also, the "liquid refreshment beverages" category -- which includes soda, energy drinks, bottled water, sports drinks and juice drinks -- grew volume by 1.7%, compared with a 1.6% drop in 2013. Part of the growth was spurred by a stronger performance by bottled water, Beverage Digest noted.

Coca-Cola Co. has 33.6% LRB share, after losing 0.5 share points, according to Beverage Digest. PepsiCo's share is 25.4% after dropping 0.3% share points.

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