Beverage Industry

A United Front

May 1, 2006

A United Front

It’s not every day that you see the leaders of three fiercely competitive companies standing at the same podium, much less in the presence of a former U.S. president, but it’s an indication of how seriously the soft drink industry is taking the announcement of its new school vending guidelines that just such a gathering was held early this month. The Coca-Cola Co., PepsiCo, Cadbury Schweppes Americas Beverages and the American Beverage Association, along with the William J. Clinton Foundation and the American Heart Association, announced new standards for school vending that will remove most regular soft drinks from schools.
The companies teamed up with the Alliance for a Healthier Generation, an initiative formed by former President Bill Clinton and the American Heart Association, to create the new rules that are expected to be implemented in 75 percent of schools by the 2008-09 school year and nationwide the following year (for more details, see page 6).
The announcement was widely covered in the media, and for the most part, was well received. But in many ways, the industry had no other choice. It has become a scapegoat for childhood obesity, and legal challenges were on the way. It may have taken a while for the industry to realize how serious the sentiment was against its products, but when it got the message, it got it in a big way. And by developing a united stand on the matter, it seems to have appeased the critics. The Center for Science in the Public Interest, for example, announced it would drop its planned litigation against the soft drink companies.
Susan Neely, president of the American Beverage Association, commented on the announcement, saying, “We believe soft drinks can be an appropriate beverage choice among young people who are following a balanced diet. Yet, we recognize this initiative is about the unique school environment and not the products. It’s about giving students the skills to balance calories in with calories out.”
While you wouldn’t know it from industry critics, news reports or TV shows such as TLC’s “Honey We’re Killing the Kids,” the new guidelines also might be in keeping with overall consumer trends. Information Resources Inc.’s new Healthy Kids Report: Understanding the Role of Better-for-You Products in Kid-Driven Food and Beverage Categories indicates there is strong sales potential in healthful kids products. According to IRI, better-for-you products within kid-driven categories have grown 31 percent since 2002 vs. 7 percent for mainstream products, and better-for-you innovation has driven volume growth more than any other factor.
The report also indicates that households with kids are a fast-growing, high-spending demographic, driving 20 percent of key-category growth vs. 2 percent for households without kids. “Learning to serve these households will be a key competitive advantage for retailers and food and beverage manufacturers,” the report states. So while the soft drink industry might have felt its hand forced in this most recent move, it also surprisingly might be on the edge of its next opportunity. BI
Sneak Peek
June
Cover Profile — Mountain Valley Spring Water
The Top 100 Beverage Companies
Category Focus — Sports drinks
Distribution — Avoiding road hazards
Logistics — Routing hardware and software
July
State of the Industry Report Beverage R&D — Lab testing showcase
Packaging — Inspection equipment
Distribution — Product resource guide