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Soda Sales Down: Good News for Overall Country's Health, Bad News for Soda Companies

Update Date: Jul 24, 2013 07:49 PM EDT
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Good news for the overall health of the US, but bad news for Beyonce.

Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group Inc. all sold less soda in the second quarter in North America, dashing hopes for the moment that splashy new marketing and different sweetener mixes could get drinkers back.

The soda industry's downward spiral is due to consumers becoming more health conscious, which have made soda a target in efforts to lower the obesity rate. Larry Young, chief executive of Dr Pepper Snapple, s the latest to voice the concerns. On Wednesday's earnings conference call, Mr. Young said consumers "love the bubbles, they love the flavor, but they have concerns about artificial sweetener."

Despite pushing diet options for soda beverages, sales have failed to pick up. PepsiCo's decline for the quarter came despite its stepped-up marketing over the past year; the company signed pop star Beyonce to star in its ads and signed a multiyear deal to sponsor the Super Bowl halftime show.

PepsiCo also introduced a mid-calorie soda called Pepsi Next to win back people who've quit soda because they don't like the calories in regular or the taste of diet.

Meanwhile, Dr Pepper introduced a lineup of 10-calorie sodas, starting with Dr Pepper Ten. The idea is that they have just enough high-fructose corn syrup to taste better than diet. But the new drinks apparently aren't convincing enough people to pick up soda again.

The trade publication Beverage Digest says sales of diet sodas at Coca-Cola Co. and PepsiCo fell 6% and 8% by volume, respectively, in the first half of this year. Regular Coca-Cola was down 2%, while Pepsi fell 5%. Dr Pepper Snapple diet sodas sales volume fell 2%, not quite as far as its regular drinks. The publication cited a lack of marketing behind the brands as another reason behind their decline.

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