2014 Beverage Report--Trend: The Stairway to Health. Countertrend: The Road to Flavor

Consumers alternately demand wellness and big tastes, and they’re willing to pay for both

By
Steve Holtz, Online News Director & Beverage Editor

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Carbonated Soft Drinks: Encroaching on Soda

While the battle between Coke and Pepsi continues, other types of beverages have stolen their ground with CSD consumers, according to consultant Mary Pellettieri.

“CSDs are combating the iced teas and the coffee drinks of the world,” she says. “People still desire carbonation, but they’re tired of diet and cola. They’re tired of the flavors. I suspect we’re going to see more coming out of CSDs that bring different elements of flavor that we haven’t explored.”

That’s been the long-term strategy at Dr Pepper Snapple Group for years, and today the company—makers of 7UP, Sunkist and A&W Root Beer, among other brands—proudly crows about flavors being the in-thing in CSDs.

“[CSD] growth is being driven by non-colas,” says DPSG's Ivan Alvarado. “We expect that trend to continue as consumers seek greater variety and choice.”

PepsiCo isn’t shying away from flavor, either. Its Mtn. Dew KickStart positioned the company nicely with a hybrid of CSD and energy drink, and a sales pitch that opened the morning day-part to sodas. Initially introduced in fruit punch and orange citrus, the company has since added limeade and black-cherry flavors to the line, those targeting the evening day-part.

Coca-Cola Co., meanwhile, will go back to its roots in 2014 to drive sales, actively using sampling programs of its Coca-Cola Classic across the country to drive trial and sales.

“When you look at the number of 18- to 24-year-olds that have not tried Coke in the past, it’s kind of shocking,” says Ray Faust, senior vice president of portfolio commercialization for Coca-Cola Refreshments, Atlanta. “That’s why in 2014, you’re going to see a lot of trial and sampling against Coke Classic.”

The company is also developing new packaging to catch consumers’ eyes, beginning with a chill-activated can that changes color with temperature; a reshaped 6-pack that fits easily in a refrigerator; and new package sizes, such as 16- and 19.2-ounce cans.

“Our insights team found people like cans,” Faust says. “We did some pilots [in 2013 of the 16-ounce can] and every one of them was positive.” The 16-ounce can rolled out in November.

Still, it’s an uphill climb for CSDs, according to BMC's Gary Hemphill. “Carbonated soft drinks are expected to decline for the 10th consecutive year in 2014,” he says. “Consumers are broadening their drink repertoire and want healthier refreshment. Keep in mind, though, despite the declines, this is still the most popular beverage in the United States.”


Just the Stats: CSDs

2013 unit growth in c-stores through Dec. 1: -4.2%

Bright spots: Flavored sodas growing; hybrid beverages gain traction.

Pain points: Diets sliding; overall decline expected to continue.

If CSDs were a musical entertainer, it would be: The Rolling Stones. No one expects new material to really rock their world. And when your original audience is in its 70s, yeah, you’re going to lose a few fans.

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