Beverage Industry logo
search
cart
facebook twitter linkedin youtube
  • Sign In
  • Create Account
  • Sign Out
  • My Account
Beverage Industry logo
  • NEWS
    • R&D News
    • Supplier News
  • PRODUCTS
    • New Products
    • Reader's Choice Poll
  • CATEGORIES
    • Alternative Drinks
    • Beer
    • Bottled Water
    • Cannabis Beverages
    • Carbonated Soft Drinks
    • Energy Drinks & Shots
    • Juice & Juice Drinks
    • Plant-Based Beverages
    • Sports Drinks
    • Tea and Coffee
    • Wine & Spirits
  • R&D
    • Beverage R&D Features
    • Ingredient Spotlight
  • PACKAGING
    • New Packages
    • Packaging Equipment
    • Packaging Material
  • OPERATIONS
    • Distribution
    • Plant Focus
  • TOP LISTS
    • Beer Market Report
    • Executive of the Year
    • State of the Beverage Industry
    • Top 100 Beverage Companies
    • Truck Report
    • Wholesaler of the Year
  • MEDIA
    • eBook
    • Podcast
    • Polls
    • Videos
    • Webinars
  • DIRECTORIES
    • Annual Manual
    • Contract Packaging Guide
    • Take a Tour
  • MORE
    • Classifieds
    • Channel Strategies
    • eNewsletters
    • Events
      • Membrane Technology Forum
    • Interactive Product Spotlights
    • Market Insights
    • Sponsor Insights
    • Store
    • White Papers
  • EMAG
    • eMagazine
    • Archived Issues
    • Advertise
  • SIGN UP!

2009 Soft Drink Report

By Sarah Theodore
March 15, 2009
PepsiCo redesigned its logo and packaging late last year.


The downward momentum in the carbonated soft drink segment and the overall slide in the economy conspired to bring U.S. CSD volumes down in 2008. But rather than bemoan the forces working against the category, some industry executives sound decidedly upbeat these days, predicting they will emerge from the downturn stronger than they went into it.
Coca-Cola Chief Executive Officer Muhtar Kent told investors at the Consumer Analyst Group of New York conference last month that the soft drink system “was built for times like these,” and added, “We will not waste this crisis, and there are many opportunities that come as a result of this crisis.”
 
“Today we are positioned better than ever to ward off the challenges of a world in financial crisis,” he said. “More importantly, we are aligning our company and system to capitalize on the new opportunities that exist for our industry just beyond the horizon.”
 
Non-alcohol beverages represent an affordable luxury to consumers of all income levels, he said, and despite the current turbulence, macroeconomic trends are in the industry’s favor. While that optimism stems from the strength of non-carbonated beverages as well as sparkling offerings, he pointed specifically to the revitalization of CSDs as one of the opportunities.
 
“The momentum that we are seeing globally in our sparkling beverage business is giving us, and I think our industry, more reason to believe we can win again with sparkling beverages and grow this essential category globally,” he said.
 
As they were last year, international sales were the high point for soft drink companies. Coca-Cola saw its sparkling beverage volume grow 4 percent internationally and 2 percent overall in 2008. Global volumes for flagship Coca-Cola increased 2 percent, while Coke Zero was up 35 percent, reaching nearly 600 million cases. Sprite volume was up 6 percent globally, and became a 2 billion case brand in 2008. It is one of only three Coca-Cola brands to reach that milestone.
 
PepsiCo saw its international beverage volume grow 10 percent overall. Great Britain stood out for its carbonated soft drink performance, in particular, with low double-digit volume growth based on the strength of its zero-calorie Pepsi Max product.
 
Domestically, carbonated soft drink volumes were down nearly 4.7 percent, and dollar sales slipped a little less than 1 percent through food, drug, convenience and mass merchandise outlets (excluding Wal-Mart), according to retail scanner data. That’s an improvement over the segment’s 5.8 percent decline through those outlets in 2007.
 
Volume through grocery suffered most, followed by the convenience channel, which likely reflects the sky-high fuel prices that kept consumers away from gas and convenience outlets during the early part of the year. Comparatively, U.S. drug stores saw only a slight decrease in volume and a sizeable jump of more than 6 percent in dollar sales, the largest of the measured outlets. Mass merchandise, too, fared relatively better in carbonated soft drink sales than other channels. All three major soft drink companies — PepsiCo, Coca-Cola and Dr Pepper Snapple Group — saw more significant dollar sales increases through drug and mass merchandise channels compared with other measured retail channels in 2008.
 
In general, flavors performed better than colas through the measured outlets last year. PepsiCo’s Slice brand, in both diet and regular, saw double-digit volume increases, and the Hispanic-targeted Manzanita Sol was up 23 percent. The exception to the cola rule was Coke Zero, which gained almost 22 percent in volume last year through the measured U.S. retail outlets and Diet Pepsi Max, up almost 64 percent.
 
Counting on innovation
Carbonated soft drink companies have implemented a number of measures designed to innovate within the CSD market and combat consumer spending fears, starting with changes to the “price pack architecture.” Like many packaged goods companies, soft drink companies are shrinking package sizes to bring price points down, or at least keep them in line with previous pricing rather than pass cost increases on to consumers.
 
New smaller portion sizes have drawn some consumer and media criticism, but both Coca-Cola’s Kent and PepsiCo Chairman and Chief Executive Officer Indra Nooyi pointed to pack-size changes as early successes in recent Wall Street analyst calls.
 
“We are partnering with our bottlers and retailers to develop price pack architecture offerings to deliver better consumer value by channel,” Nooyi said in an analyst call announcing PepsiCo’s year-end results. “We’ve seen some positive early read results in the 18-pack architecture and we will be in the market with a 16-ounce can priced at $0.99.”
 
On Coca-Cola’s behalf, Kent told analysts during his company’s year-end analyst call, “We’re doing a lot more work on ensuring that we have the right price points in this current environment, adding more packages that will bring the price point down in both the at-home market as well as in the immediate consumption market.” Like Nooyi, he said the company was seeing, “really good initial results in terms of the new price pack channel architecture with 16-ounce and some smaller packages.”
 
PepsiCo took packaging changes a big step further in 2008, with a redesign of its Pepsi branded products, Sierra Mist and others. Nooyi told investors the company “flawlessly executed the largest brand identity changeover in the history of the North American [liquid refreshment beverage] category, refreshing over 1,200 SKUs in all channels across the entire U.S. in less than six weeks, beginning at the end of the fourth quarter and culminating with a full-scale launch of our creative campaign for the Super Bowl.”
 
That creative included new advertising for brand Pepsi that puts a modern twist on the “Pepsi Generation,” incorporating footage from the 1960s with current images under the tagline “Every Generation Refreshes the World.”
 
Coca-Cola, too, added new advertising, with its “Open Happiness” campaign, which it says will be in most of its key markets by mid-year. And it showcased new fountain beverage machines that use microdosing technology to dispense more than 120 beverages, both carbonated and non-carbonated, from one machine in the same space as the current eight-valve machine.
 
Dr Pepper Snapple Group also has turned to innovation to help ride out the storm. It will launch a new smoother flavored version of Dr Pepper early this year, with Dr Pepper Cherry. While the company’s flagship product has a devout following, Larry Young, DPSG president and chief executive officer, told attendees at the Gabelli & Co. Best Ideas Conference in December that the new product is geared toward light users who find the original flavor a bit too strong.
 
The company also plans to add a diet version of Canada Dry Green Tea Ginger Ale, which he called a “hugely successful” launch. And it recently rolled out Cherry 7UP with Antioxidants.
 
“Putting functionality into CSDs is giving consumers a reason to come back and to stay in CSDs,” he said.
 
The company also gave Sunkist a recent facelift, and Young says it is giving A&W a more retro feel by adding aged vanilla to the formulation.
 
Dr Pepper Snapple Group is coming up on its first full year since its spinoff from Cadbury Schweppes, and Young says its priorities these days include increasing its cold drink availability and fountain presence, and expanding Dr Pepper from its base in the mid-portion of the country toward the coasts and in Hispanic markets.
 
Another area of potential innovation for soft drink companies this year will be diets. The late-2008 Food and Drug Administration approval of stevia-based rebaudioside A adds a new sweetener option to the diet mix. So far, Coca-Cola is the only company to incorporate the sweetener into a CSD with Sprite Green. PepsiCo added the sweetener to non-carbonated offerings, and Dr Pepper Snapple Group says it also is testing stevia as an option for CSDs.
 
The year ahead
While few soft drink executives are sounding as bullish about the industry’s potential as Coca-Cola’s Kent, most say they believe the current climate can be used to position the category for future growth. Even Kent, however, has warned investors that the company may not see those results in the near term.
 
Massimo D’Amore, chief executive officer for PepsiCo North America Beverages, told Wall Street analysts during Pepsi’s year-end call, “We conducted in-depth consumer research and our analysis indicates that the category will return to growth, at least in line with population growth, once we come out of this economic downturn. We are confident about this.”
 
And DPSG’s Young told the Gabelli & Co. audience in December, “Without a doubt, 2009 will be a challenging year for the industry and for us. We’re in unchartered territory and I suspect the normal rules of the road will not apply.”
 
But he added, “It will be more important for us to reinvest behind our brands, not in the traditional price offlays, but surgically, to create excitement, choice and a reason for consumers to come into and stay in the category.” BI
KEYWORDS: soft drink report

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Sarah Theodore is a contributor of Beverage Industry magazine. She is a Global Drinks Analyst with Mintel Food and Drink, Mintel International’s research platform dedicated to the food and drink business. She can be reached at stheodore@mintel.com.

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • Chocolate, Strawberry, Vanilla shakes

    Classic flavors provide reliable, consistent results for beverage-makers

    Classic flavors of chocolate, vanilla and strawberry...
    Ingredient Spotlight
    By: Chloe Alverson
  • Free Spirits Instant Bar Bundle

    Lifestyle trends drive growth for non-alcohol category

    As lifestyle trends continue to drive growth for the...
    Alternative Drinks
    By: Lauren Sabetta
  • Younger generation displays unique habits when it comes to beverage consumption

    Generation Z shakes things up in beverage

    Experts share that Gen Z is changing the standard on what...
    Beverage News
    By: Chloe Alverson
Subscribe For Free!
  • eNewsletters
  • Online Registration
  • Subscription Customer Service
  • eMagazine Subscription
  • Manage My Preferences

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the Beverage Industry audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of Beverage Industry or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • Fourpeople toasting with cocktails made with low-sugar ingredients, celebrating healthier drink options.
    Sponsored byCargill

    What’s Hot in Sugar Reduction: Beverages

  • chocolate milk
    Sponsored byCargill

    Sweetening the Future for Dairy and Dairy-Alternative Beverages

  • woman pouring a drink
    Sponsored byFFP

    Building a Beverage System: Meeting Consumer Demand for Precision Wellness

Popular Stories

halfday sodas

Beverage-makers turn to fiber, prebiotics and more to support consumer needs

smoothie

Opportunities abound for relaxation, stress-relief beverages

Mountain Dew Mango Rush

Mountain Dew, Little Caesars launch Mountain Dew Mango Rush

Vote for your favorite new product

Have your say in what makes it to the top this month!
Vote for your favorite new product and help us celebrate excellence.


VOTE NOW!

Events

April 16, 2025

2025 State of the Industry Series: Alcoholic Beverages

On Demand In Beverage Industry’s annual State of the Industry: The Alcohol Beverage Market, analysts at S&D Insights LLC delve into these trends and how they’re shaping the industry.

View All Submit An Event

Poll

Retail Coffee Segment

What retail coffee segments will fare well into the next year?
View Results Poll Archive

Products

Milk and Dairy Foods Nutrition, Processing and Healthy Aging

Milk and Dairy Foods Nutrition, Processing and Healthy Aging

See More Products

Related Articles

  • 2009 Beer Report: Beer defies the odds

    See More
  • 2009 Executive of the year Graham Mackay

    See More
  • The Best Packages of 2009

    See More

Related Products

See More Products
  • problems solved.jpg

    Soft Drink and Fruit Juice Problems Solved, 2E

  • 144433381X.jpg

    Chemistry and Technology of Soft Drinks and Fruit Juices, 3rd Edition

  • The-Soft-Drinks-Companion.gif

    The Soft Drinks Companion: A Technical Handbook for the Beverage Industry

See More Products

Events

View AllSubmit An Event
  • September 9, 2009

    Food Plant of the Future: Building Realistic Sustainability into Food and Beverage Plants

    AVAILABLE ON DEMAND   Using cost-effective design solutions, food and beverage processing facilities can meet the rigorous performance demands required in a processing and production environment and, at the same time, focus on sustainability. 
  • June 9, 2009

    Food Plant of the Future: Using Design to Increase Productivity and Drive Down Unit Costs

    AVAILABLE ON DEMAND   The need for food and beverage processors to drive down unit costs never ends. How can new/retrofitted plants be designed to optimize productivity? What solutions will have the biggest influence on productivity?
View AllSubmit An Event
×

Elevate your expertise in the beverage marketplace with unparalleled insights and connections.

Join thousands of beverage professionals today. Shouldn’t you know what they know?

JOIN NOW!
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • YouTube
    • X (Twitter)
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing