| Soda Sales Fall for First Time in 20 Years |
[Mar. 9th, 2006|06:35 pm] |
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The next generation may not be the Pepsi generation — or the Coke generation, for that matter.
Coke's flagship brand, Coca-Cola Classic, was down 2 percent, and original Pepsi from PepsiCo was down 3.2 percent.
While soft drinks are still the country's most heavily consumed beverage, the category is losing ground to bottled water, sports drinks like Gatorade and Powerade and energy drinks like Red Bull and Full Throttle. Last year's volume data for these drinks is not yet available, but John Sicher, publisher of Beverage Digest, said he expected that the growth in these three categories would be up by double digits.
In a research report yesterday, William Pecoriello, a beverage analyst at Morgan Stanley, said he expected the soda category to continue to decline at a 1 percent clip over the next few years. His research shows that 64 percent of the growth in bottled water is a result of people switching from soda to what nutritionists say is the healthiest beverage anyone can drink.
Even diet sodas, once a booming category, have slacked off. Diet Pepsi's case volume was down by 1.9 percent in 2005 and Diet Coke's was virtually unchanged, up only 0.1 percent, according to Beverage Digest.
Coke, on the other hand, has continued to promote carbonated soft drinks. The company says it believes that, despite the recent industry downturn, its carbonated soft drink business can still grow in the United States. In recent remarks to investors, Coke's chief executive, E. Neville Isdell, emphasized the current growth of Coke's flagship soda brand in markets like China and Russia.
John Faucher, an analyst at J. P. Morgan Chase, said that soda's declining popularity was not just because of changing health trends and attempts to cut calories, but also because of wandering taste buds. "A lot of this is about variety," he said. "Consumers want new exciting beverages." |
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