Soda Sales Drop to 17-Year Low: How Will the Industry Respond?

New York City Mayor Michael Bloomberg may not have needed to try limiting soda sales in the city after all, according to a report released this week by industry newsletter Beverage Digest. The report indicates that Americans are choosing to forgo soda more often, as sales of all of the major brands, including Coke and Pepsi, went down by 1.2% in 2012. Though the sales figures for the flagship soda brands that Americans know and love are an indication of a gradual shift away from sugary beverages, the soda companies have little to worry about. 

The soda industry is using the news of the sales downturn to promote their claim that sugar sweetened beverages are not a significant cause of the obesity problem in the U.S. Their claim is that since obesity rates are continuing to increase even as soda sales decline, sugar sweetened beverages can’t possibly be a factor in the weight gain. Coke has go so far as to release new ads in an attempt to prove that the company is responsive when it comes to obesity awareness. Unfortunately for Coke, the ads were widely panned as an attempt by the soda giant to simply shift sales to products that are deemed less harmful rather than as a genuine attempt to address the damage that their primary products have done to the American waistline.

In fact, all of the major beverage makers have taken up the redirection tact in some form. Though sales of the flagship brands — Coke, Pepsi, and Mountain Dew — have all taken a serious hit over the past decade, the soft drink makers have pivoted to other products. Sales of energy drinks have surged in recent years, in large part due to the perception that they provide some benefit to the consumer without the nasty side effects such as weigh gain that come with drinking soda. Recent research, however, has called into question the benign nature of energy drinks, citing their high caffeine content as a risk factor. Increasing sales of coffee, water products, and other items that incur less wrath from the health conscious are another part of the industry pivot. Starbucks is not the only beneficiary of this trend as all of the major soda makers also have alternative beverage lines that are increasingly gaining in sales.

Though the numbers for the flagship brands are down, the soda industry need not fear. Americans are still keen on paying to ingest beverages of all types. There is little doubt that as soda sales continue to slide, the industry will just create new products, all in an effort to keep American wages flowing into their coffers, even as American waistlines continue to expand.

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Nate Abrams

I'm a systems guy, which means that I look at almost everything in terms of interconnections, feedback loops, architecture and scale. In other words, I look for the big picture and the deeply buried reasons for why things are the way they are.

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