| Carbonated
Soft Drinks:
Seeking Growth
By
John Rodwan, Jr.
Reprinted
from the May 2005 issue of National Petroleum News.
Carbonated
soft drinks have struggled to match the intensifying competition from
other refreshment beverage categories, but they remain by far the
largest commercial beverage category in the United States and a major
presence in convenience/gas sites.
CSD volume
increased by a mere 0.7 percent in the United States in 2004, an increase
of about 72.5 million cases over 2003, according to data from Beverage
Marketing Corporation. Amid sluggish overall volume growth, diet and
private label soft drinks achieved solid performances.
Although
industry volume topped 10 billion cases for the fifth straight year,
per capita consumption fell for the sixth year in a row after several
decades of unabated growth. Total volume surpassed 10.2 billion cases
(15.4 billion gallons). The share of volume moving through c-stores
has steadily increased, from roughly 11 percent five years ago to
approximately 12 percent.
Per capita
consumption dipped to 53.7 gallons in 2004 from 53.8 gallons in 2003,
54.2 gallons in 2002, 54.3 gallons in 2001, 54.5 gallons in 2000 and
54.8 gallons in 1999.
Diet
soft drinks drove most of the category’s growth as consumers
increasingly sought out healthier beverages. Diet CSD volume increased
by 4.6 percent in 2004 to approach 4.6 billion gallons, which represented
nearly 30 percent of the total market.
Coca-Cola’s
volume declined by 1.0 percent. Its share decreased from 44.0 percent
in 2003 to 43.3 percent in 2004. Although regular Coca-Cola dipped
by 3.2 percent, Diet Coke and Diet Sprite both increased by 5 percent.
Line extensions such as Coke C2 and Diet Coke with Lime added volume.
Coca-Cola held its firm lead as the most popular CSD brand.
Pepsi-Cola
Company’s CSD volume grew by 0.4 percent for the year. The company’s
major diet brands enjoyed strong growth. Diet Mountain Dew, for instance,
enlarged by 15.3 percent in 2003. Diet Pepsi also outperformed the
overall CSD market in 2004, growing by 6.7 percent. New products introduced
in 2004 – such as Pepsi Edge and some seasonal offerings like
Holiday Spice – added some volume. However, other recently introduced
products, such as Mountain Dew Code Red and Pepsi Twist, which boosted
volume in their year of introduction, did not sustain growth in 2003
or 2004.
Of
the branded soft drink companies, Dr Pepper/Seven Up Inc. (DPSU),
the third largest soft drink company, saw volume increase the most,
with a 2.4 percent advance. The owner of brands such as Dr Pepper,
7UP, Royal Crown and A&W increased market share for the first
time in several years. Diet Dr Pepper surpassed 7UP in size to become
a top-10 brand.
Cott
Corporation, the leader in private label soft drinks, benefited from
increased presence in growing distribution channels, such as mass
merchandisers and club stores, and experienced a substantial 17.5
percent volume increase.
Although
CSDs face competition from other types of beverages, CSD volume remained
more than twice the size of the No. 2 category – fast-growing
bottled water.
John
Rodwan, Jr., is editorial director of New York-based research and
consulting firm Beverage Marketing Corporation.
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