The Diet Soda Business Is in Freefall
Low-Cal Carbonated Drinks Sank in 2013; Overall Soda Volumes Down 3%
A nearly decade-long decline in U.S. carbonated soft drink sales accelerated last year as more Americans turned their backs on artificially sweetened diet sodas, according to data published Monday.
The drop-off is a mounting problem for industry giants Coca-Cola Co. KO -0.21% , PepsiCo Inc. PEP -0.18% and Dr Pepper Snapple Group Inc., DPS -0.06% which have long depended on zero-calorie sodas to make up the difference as Americans became increasingly concerned about the health effects of sugared drinks.Overall soda volumes fell an estimated 3% in 2013, the ninth straight yearly contraction and more than double the 1.2% decline in 2012, according to Beverage Digest.
The trade publication and data service also estimated U.S. retail sales of carbonated soft drinks shrank 1% to $76.3 billion, the first downturn in dollar terms in at least 15 years, indicating that the companies were unable last year to offset volume declines by raising prices.There is no sign that 2014 will be any better. U.S. store sales of soda were down 1.9% in dollar terms for the 12 weeks ended March 15, according to Citi Research, which cited Nielsen scanner data.
The soda falloff is weighing on overall beverage sales. Beverage Marketing Corp., another industry tracker, estimated Monday that U.S. purchases of non-alcoholic drinks slipped 0.1% to 30.21 billion gallons last year, the first yearly decline since 2009, despite a 4.7% rise in bottled water volumes.There are some areas of growth, however. Beverage Marketing estimated that U.S. volumes of caffeinated energy drinks and ready-to-drink coffee rose 5.5% and 6.2% last year, respectively.
Sales of sports drinks edged up 0.6%, though volumes of fruit drinks dropped 1.9%.Diet sodas represent nearly a third of U.S. soda sales but have posted three straight years of declines.
A growing number of Americans are worried that aspartame and other artificial sweeteners are unhealthy, despite decades of studies by the Food and Drug Administration and other government agencies having found them to be safe. There is also a debate over how diet drinks might affect metabolism.Sales volumes of full-calorie Coke, the top-selling U.S. soda, slipped 0.5% last year but Diet Coke plunged 6.8%, according to Beverage Digest.
Consumption of Pepsi-Cola and Diet Pepsi dropped 3.6% and 6.9%, respectively. Diet Mountain Dew also declined more sharply than regular Mountain Dew, according to the data service.Coca-Cola Co., whose soda brands also include Sprite and Fanta, increased its market share of U.S. carbonated soft drinks to 42.4% from 42.0% in 2012, according to Beverage Digest.
PepsiCo, which also counts Mountain Dew among its brands, slipped to 27.7% from 28.1%. Dr Pepper Snapple's share inched up to 16.9% from 16.8%.Beverage giant Coke is far more exposed to soda than chief rival PepsiCo, which also has a huge snacks business.
About 60% of Coke's U.S. revenue comes from soda, compared with roughly 25% at PepsiCo. The bulk of Dr Pepper's sales are also tied to soda.
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