A growing number of consumers are abandoning soda as they look to reduce their sugar consumption. To help stem the decline, soda companies have tried to mimic the taste of sugar or high fructose corn syrup using stevia and other sweeteners. PepsiCo and Coca-Cola also have turned to smaller bottles and cans, which have been popular with shoppers and allow the soda companies to charge more per ounce.
Local governments also have contributed to the decline in soda consumption by levying taxes on the sugary beverage. In Philadelphia, a 1.5-cent-per-ounce tax on sugary beverages has caused sales in some local grocery stores to drop as much as 50%, prompting soda manufacturers to announce layoffs.
“If you listen to any media outlet as they discuss soft drinks and the various beverage companies, you hear the claim that obesity, diabetes and other health concerns are directly related to soda and other sugar enhanced-beverages,” Chris Konyk, a business consultant and soft drink expert at Salient Management Company, told Food Dive. “The soft drink companies are a big and easy target to attack. Because this diatribe has been unrelenting for years, the consumer has started to change their buying habits where soft drinks are concerned.”
Consumers who once felt comfortable drinking a soda with every meal or snack are now looking for products they perceive to be healthier. Last year, bottled water surpassed carbonated soft drinks to become the largest beverage category by volume in the U.S. And the total U.S. wholesale value of the tea industry has more than quadrupled — from $1.8 billion in 1990 to more than $10.8 billion in 2016.
A change is coming
With consumers looking for healthier drink alternatives, there is more pressure on the beverage industry to reformulate their products, develop new ones or boost their portfolio by purchasing other brands.
According to Nielsen’s recent 2016 Global Ingredients Study, 68% of North American consumers said they would pay more for products free of undesirable ingredients. Additionally, 61% believed a shorter ingredient list meant a healthier product.
“The beverage companies are repositioning themselves to be the leader in healthy beverage alternatives," Konyk said. "If it has real or perceived healthy attributes, the soft drink companies are entertaining the idea of incorporating it into their portfolio,” he said.
One challenge, he noted, is the perception that if the drink comes from a soda company it's not healthy. Analysts believe soda makers will try to sway consumers to think differently through creative advertising and marketing strategies.
Coca-Cola, Dr Pepper Snapple and PepsiCo have all made a commitment to reduce the number of sugary drink calories that Americans consume by 20% before 2025. Coke has Honest Tea, Zico, Odwalla, PowerAde, Peace Tea, Vitamin Water, Simply and Dasani in its arsenal of healthy options, while Pepsi has strengthened its portfolio with Duke’s, Miranda, Naked Juices and Aquafina.
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