Food and Drink - Spring 2014 - 57

food trends

C

Carbonated soft drinks, or CSDs as they are known in the retail
food industry, have been riding a wave of popularity and
growth that has lasted for decades. Diet sodas in particular
have consistently seen year-over-year growth that seemed to
have no ceiling. Soft drinks were the original "expandable consumable," meaning that the more people bought, the more they
drank. Just try to find a six-pack of soda today.

Some recent data seems to indicate that
the wave is losing momentum.
According to new Nielsen numbers,
regular soda sales have dropped by
about two percent over the last year,
but diet soda, which was once the king
of the hill, has declined by nearly seven
percent in the same period.
Carbonated soft drinks remain at the
top in terms of overall consumption in
the United States, but the combined
proliferation of alternatives and growing health concerns are beginning to
impact sales.
The trend is likely to continue as the
boomers decline and millennials take
over as the primary consumer.

Growing Health Concerns
From the health perspective, there are a
couple of concerns slowing consumer
thirst for soda. First is the growing
unease around the consumption of artificial sweeteners. Diet drinks have long
fought the battle to combine "real sugar"
taste with a no-calorie sweetener, but
over time most of the artificial sweeteners have not lived up to the hype for one
reason or another.
The FDA outlawed cyclamates, one of
the first successful artificial sweeteners,
in 1969 over cancer and liver damage
concerns. Soda with cyclamates is still
widely available in the U.K., however.
Today the leading sweeteners are
Aspartame, Saccharin and Sucralose.
The FDA tried to ban Saccharin in the
1970s but failed; it continues to be used
around the world as a sugar substitute.
The plant-based sweetener Stevia has
some appeal due to its "natural" origins,

but tends to leave a bitter aftertaste.
The overall consumer trend seems to
be leaning in the direction of less
processed and more natural foods, and
artificial sweeteners are caught up in
that shift. A recent Mintel survey shows
that consumers under 35 tend to view
artificial sweeteners as "unhealthy."
In addition, some recent studies have
shown that consuming diet drinks does
nothing to help one lose weight, so the
perceived benefit is less an enticement
than it once was.
A recent opinion paper published in
the medical journal Trends in
Endocrinology and Metabolism makes a
case that frequent consumption of diet
soda can trigger "metabolic derangements," which inhibits the body's ability
to effectively manage caloric intake.
Other studies show connections
between diet soda and heart disease,
diabetes and obesity.
Full-sugar soft drinks haven't fallen
as badly as their diet brethren, but they
continue to suffer from consumer
health concerns as well. In the United
States, virtually all soft drinks are
sweetened with high fructose corn
syrup, which has its own detractors.
Many restaurants are now offering
Coke from Mexico because the fact
that it is sweetened with sugar instead
of corn syrup appeals to the "less
processed" consumer crowd.

Alternatives to Soda
The other chink in the CSD armor is the
growth of alternatives to soda. Vitaminfortified water, teas of every type and
flavor, and of course, energy drinks or

isotonics, have moved in and taken
both shelf space and consumer dollars
from CSDs. Coconut water is the latest
fad, with supply barely keeping up with
consumer demand.
Plain old bottled water seems to be
holding its own, as well, although the
sustainability crowd tends to frown on
all that plastic.
There is now a new high-end juice
segment catering to serious health
mavens. Some of these offerings go for
$12 a bottle, and the dmand is still
exceeding supply.
The major manufacturers aren't taking these changes lying down. Coke
recently made a major investment in a
coconut water company, and both
Coke and Pepsi continue to experiment
with so-called "mid-calorie" sodas
that use a combination of sugar and
artificial sweeteners to balance taste
and calories. Change is required to
maintain dominance.
Of course, marketing dollars continue to pour out, as well. Diet Coke has
brought in Taylor Swift to appeal to
younger consumers and is even putting
her autograph on cans.
The millennial generation is most
likely to experiment with alternative
drinks and also tends to see soda as a
"treat" rather than a staple the way
boomers once did.
While soda is still the big dog when
it comes to soft drinks, it's clear that the
CSD growth boom is over and it's time
to look for other avenues.
As the millennials grow up and have
families, their habits will impact the
market in even greater ways. Retailers
and manufacturers need to stay close
to the desires and beliefs of this group
if they want to stay viable over the next
10 years. The soft drink category is
only the beginning.
Jeff Weidauer is vice president of marketing and strategy for Vestcom
International Inc., a Little Rock, Ark.based provider of integrated shopper
marketing solutions. He can be reached
at jweidauer@vestcom.com.
food & drink * spring 2014 * www.fooddrink-magazine.com

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