PepsiCo, Inc.’s PEP, namesake brand, Pepsi, knocked off arch-rival The Coca-Cola Company’s KO Diet Coke to secure the number two spot among soda brands, per the latest Beverage Digest report.
Reportedly, Diet Coke has been at the #2 spot since 2010 when it pushed Pepsi to the #3 spot.
Coca-Cola’s Coke, however, remains the most popular soft drink in the U.S., as measured by volume. However, its volume increased only 0.1% last year. Pepsi, Diet Coke and Mountain Dew trailed Coke and witnessed volume declines during the year.
Going by the report by Beverage Digest, a leading beverage industry newsletter, sales of carbonated beverages (CSDs or sodas) declined for the 10th straight year in 2014. Overall, soda volume slipped 0.9% in 2014. Both soda giants, Pepsi and Coca-Cola, suffered CSD volume declines.
Weak consumer spending environment, cross-category competition and growing health and wellness consciousness are hurting CSD category growth. Consumers are particularly vigilant about the high sugar content and related obesity concerns.
Among CSDs, the cola segment in particular has come under fire as consumers are opting for alternative beverage offerings. Also, possible new taxes levied on sugar-sweetened beverages and growing regulatory pressures are affecting CSD sales. Consumer tastes are swiftly shifting from CSDs to healthier beverages like energy drinks, tea juices and flavored waters.
The challenges in the CSD category have been felt by all major soft drink makers – Coke, Pepsi and Dr Pepper Snapple Group, Inc. DPS – leading to lower volumes and weak sales.
Notably, however, the 0.9% decline in 2014 was less than the 3% drop in 2013 due to improved marketing efforts by the cola giants.
The report suggested that the diet soft drinks performed worse than their regular versions. The slide in the regular soft drinks market started quite a few years back while the diet versions have begun to struggle of late with consumers becoming increasingly aware of artificial sweeteners, like aspartame.
As such, beverage companies are making naturally sweetened low-calorie drinks. Last year, Coca-Cola launched a reduced-calorie, naturally sweetened cola, Coca-Cola Life. Coca-Cola Life is sweetened with cane sugar and stevia leaf extract and contains 35% less calories than the leading colas. Pepsi also expects to launch a lower calorie, naturally sweetened non-cola product in the U.S. this year.
However, according to Beverage Digest, sales volume across the entire beverage industry, including non-carbonated beverages and water, increased 1.7% in 2014 better than a 1.6% decline seen the year before. Smaller players like Monster Beverage Corporation MNST and Red Bull gained market share.
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