Category: General Blogs
Last month, as this issue was going to press, Coca-Cola, PepsiCo and Dr Pepper Snapple Group, made the announcement that they were committed to cutting the number of calories in the drinks Americans consume by 20 percent by 2025.
The announcement was staged for maximum effect in NY at the Clinton Global Initiative, the high-profile meeting staged each year by former President Bill Clinton, who quickly went on record with his tacit approval: “This is huge,” Clinton told the New York Times. “I’ve heard it could mean a couple of pounds of weight lost each year in some cases.”
It was the type of announcement that these consumer marketing companies do very well, and it comes at the time when the soda makers are fighting the soda tax coming to a vote next month in San Francisco and Berkeley, California. The proponents of the tax say they need to raise the sort of sums that can be used in consumer education to blunt the soda makers’ considerable promotional efforts.
The plan seemed to take aim at that very point. In addition to the calorie-reduction goal, the soda companies pledged to expand the presence of low- and no-calorie drinks, as well as drinks sold in smaller containers; and to educate consumers and encourage them to reduce the calories they are drinking.
Put into action, the plan will change how soda and other drinks are merchandised in grocery stores, where and how they are presented in vending machines, and in coolers in stores and even at fountain dispensers in restaurants and movie theaters. Said Susan Neely of the American Beverage Association: “We’ll use the most critical levers we have at our disposal, and the focus really will be on transforming the beverage landscape over the next 10 years.”
Are the soda companies proactively trying to protect themselves from the tax in California or anywhere else? Undoubtedly they are. But here’s what they are also addressing: that consumers are already making their choice for lower-calorie and no-calorie beverages.
Sales of soda have been declining for more than a decade. Sales of bottle water, on the other hand, have soared. In fact, if those trends continue, bottled water sold by volume is expected to surpass sales of carbonated soft drinks within the next two years.
We in the trade know how the landscape has changed. Entire categories like RTD teas have entered the mainstream and new lower-calorie drinks are entering the market every day. Smaller package sizes are already on the market and doing very well, and at a higher margin. These products are what consumers are looking for; they don’t need a tax to move them to healthier alternatives.
That thought is no more evident than in the sales of refrigerated orange juice. Per capita consumption is down 45 percent from its 1998 peak, according to the USDA. How are juice marketers, with Coke and Pepsi the largest, responding: by offering lower-calorie versions of their Minute Maid and Tropicana brands.
Have Coke, Pepsi and DPSG addressed the ongoing obesity politics with this bold announcement? They have, but think of it as a wake-up call for the industry. With this announcement they have acknowledged what they’ve known for a long time: not that they’ve been the cause of the obesity epidemic, but that they must be more proactive in giving consumers what they want.