Sales of sugary cola drinks may be on the decline these days, but that doesn’t mean Americans are abandoning their desire for fizz.
Carbonated drinks are showing up in categories long thought to be a mismatch — teas, waters and juices — and putting a little pep back in the step of beverage makers who maintain that sparkling products still rule the roost.
“I don’t think people ever stopped liking bubbles,” said Seth Goldman, co-founder and president of Honest Tea, which launched a zero-calorie soda, Honest Fizz, in January. “It’s fun and they [consumers] continue to look for that. But they want it in more varieties, including zero calories.”
The numbers bear that out, at least in sparkling waters. Volume in the segment is up more than 16 percent in the first half of 2013, according to industry publication Beverage Digest. Coca-Cola earlier this year added new product Fruitwater to the category — it already had a sparkling water entry from Seagram’s — and Pepsi is said to be working on an offering.
But newer carbonated drinks are gaining traction in other categories. Caribou Coffee, for instance, added four sparkling light teas and juices in May after successes with previously released fizzy drinks. Java giant Starbucks, which introduced the Refreshers sparkling juice line two years ago, recently ended a test of three “handcrafted” sodas in select stores in Atlanta, San Diego and Austin, Texas.
“Volume metrically, this is much smaller than other categories,” said Gary Hemphill, a spokesman for Beverage Marketing Corp. “But you are seeing a lot of innovation.”
The focus on new ways to incorporate bubbles isn’t happening just because of creativity. Beverage makers, including market leader Coca-Cola, are under pressure as soda sales, which make up about half of revenue, continue to take a beating from public health advocates and some consumers over calories and sugar content.
Even their diet variations have lately shown signs of weakness. Volume for diet carbonated soft drinks fell in 2012 and Beverage Digest publisher John Sicher said the landscape hasn’t really improved much in 2013.
“In first half retail data for this year, Coke’s and Pepsi’s overall regular CSD [carbonated soft drink] volume was down, but not as much as their diet volume,” Sicher wrote in research notes in July.
Industry experts suggests two things may be happening. First, lower-calorie products such as Coke Zero and Pepsi Next may be siphoning volume from Diet Coke and Diet Pepsi, respectively. But also, studies concluding that diet drinks, especially ones using aspartame, come with their own health risks that may be affecting the public’s perception of them.
Those factors, combined with labeling with words such as “naturally sweetened” and “organic,” may be giving the newer zero-calorie or reduced-sugar bubbly drinks more credibility among those consumers wanting to cut calories. The jury is still out on the truth of such claims, said Tim Mescon, an economist and president of Columbus State University.
Beverage makers, however, are cautious about reading too much into indications of potential relief for slipping cola sales.
“Coke is still the epicenter of our business,” said Stuart Kronauge, general manager of sparkling beverages for Coca-Cola North America. Colas have the highest yearly per capita consumption in nonalcoholic beverages at 43.8 gallons, her office said, using Nielsen data. And when it comes to drinking pop, consumption levels equal 603 million servings per day.
“Sparkling, as a category, is still a huge category,” Kronauge said.