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The U.S. soft-drink industry last year posted its largest volume growth since 1988, according to the "Jesse Meyers' Beverage Digest" report of 1994's best selling beverages.

Coca-Cola Co. still rules the roost among companies, rising 1%from 1993 to a 41.5% share of the market in 1994. The company's Coke Classic remains the top brand with a 20.4% share.

The report also covered new categories this year, chronicling the fierce competition erupting in the ready-to-drink tea, sports drink and non-carbonated drink markets where Quaker Oats Co. beverages were front-runners despite flagging market shares.

"This is the continuation of the high-profile soft-drink industry," said Mr. Meyers, publisher of Beverage Digest, of the industry's 3.8% volume increase, bringing 1994 retail sales to $50.08 billion, up 2% from 1993.

He attributes the uptick to marketing innovations by top brands, like Coca-Cola's polar bear spots.

As for the industry leader, Coke is still it. Concentrating marketing efforts on individual brands instead of the company name has paid off. Not only did Coke Classic hold on to the top spot among brands, Coca-Cola's line of juices won the still drink, or non-carbonated, category.

PepsiCo was the bridesmaid once again in both company and individual brand rankings. The 1994 figures indicate the gap is widening, with Pepsi only inching up one-tenth of a share point from 1993, when the company had a 32.2% market share and its flagship brand had 17.7%.

But the most impressive showing was PepsiCo's Mountain Dew. Though the brand finished sixth for the second year in a row, it grew faster than any other carbonated product. Mountain Dew's volume jumped 75% from 1988 to 500 million cases in 1994, the sixth brand to pass that mark.

"Mountain Dew seems to be Pepsi's military secret," said Mr. Meyers, crediting its success to the drink's popularity among young males. "They talk little about it and it just keeps growing."

Mountain Dew was backed by $24.5 million in advertising in 1993. BBDO Worldwide, New York, handles the account.

Not so healthy was the sagging diet soda segment. Continuing their three-year slide, Diet Coke, Caffeine-Free Diet Coke and Diet Pepsi each lost 0.1 of a point in market share, which Mr. Meyers attributed to consumers switching to ready-to-drink teas.

In the ready-to-drink tea segment, PepsiCo's Lipton brand edged out the rest with a 31.4% market share, up 13%; trailed by Quaker's Snapple at 25.7%, off 19.4%; and Coca-Cola's Nestea at 21.7%, down 11.1%.

Quaker's Gatorade, the sports drink segment leader with a 78.2% share, lost ground to Coke's and Pepsi's stronger distribution practices. Quaker has jettisoned its pet food operations to concentrate on its beverages and cereals.

Dr Pepper/Seven-Up Cos. finished a distant third in the overall soft-drink category with an 11.4% share. Even after merging with No. 4 Cadbury-Schweppes, the company shouldn't give the top two any real competition.

"They're not in hailing distance," said Mr. Meyers. "As Coke and Pepsi go, so goes the nation."

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