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Anopel
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Journalist by profession. I have been writing for various publications for seven years. I have also taught for two years. My interests lie in the business sector, and I also like to cover the fashion industry. I analyze, research and write feature pieces and comprehensive stories regarding business.
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  • Carbonated Beverages VS Healthier Options- Let The Race Begin! 0 comments
    Oct 25, 2013 9:48 AM | about stocks: DPS, KO, PEP

    The industry trends are changing, with consumers becoming health savvy. Consumer preferences have changed from carbonated beverages to low-calorie healthy drinks, for two reasons- weight control, and adopting a healthy lifestyle. However, neither Coca-Cola, with its Diet Coke, or PepsiCo, with its Diet Pepsi, have been able to discover an alternative to natural cane sugar.
    Carbonated drinks have been losing ground, with their sales going up to only 2.2% year-over-year in 2012. Companies making such beverages have been losing their market position, with consumers moving from carbonated drinks to beverages like sports drinks and ready-to-drink tea. With that stated, there is a boom in the bottled water category. Consumers are now opting for flavored water over harmful carbonated beverages. The energy drinks industry is growing four times more, as compared to the carbonated drinks industry.
    Coke manufactured in Mexico has a consumer base in American. Americans are of the view that it has a much better taste as compared to the Coke sold in their cities. Hence, Coca-Cola and PepsiCo maintain their typical ingredients in the Mexican and Thailand markets. On the flip side, Coca-Cola is investing in research and development so as to provide healthy options to its consumers. PepsiCo and Dr. Pepper Snapple are following Coca-Cola's lead.
    The beverage industry thrives on volumetric earnings. One is of the view that if they invest in healthier options for the consumers, they could maintain their market share. The diet soft drinks industry has experienced a volumetric growth, as compared to the non-diet segment. Coca-Cola is at the top of the game, with the usage of Stevia and Coke Zero. Since the consumers are bending towards low-calorie options, Coca-Cola introduced Stevia in its Coke Zero brands, with the claim that it contains 60% less calories as compared to other sweeteners. However, Pepsi is of the view that Stevia doesn't gel well with carbonated beverages, and while it looks for other alternatives, Diet Coke takes the bigger chunk of the market in terms of sales.
    Statistics suggest the average American drinks about 42 gallons of carbonated soft drinks a year. The consumer preferences might have changed, but clearly, there is always room for a bottle of Coke in their fridges. However, with the change in choices, it must be noted that the carbonated beverage companies need to strategize so as to provide healthier alternatives to their consumers. This is the only way they'd preserve their reputation.
    Fresh juices and low-fat milk are being marketed in schools, restaurants and hospitals at a rapid pace. The American Medical Association banned the marketing of carbonated energy drinks to those under 18 years of age. This would result in low market share, thinner profits and a decrease in consumers. Moreover, Coca-Cola and Pepsi cannot deny the court battle of The New York City Health Department, which is fighting for a ban of sugary drinks in restaurants. This goes to show that, with the changes in consumer trends and preferences, Coca-Cola and PepsiCo need to strategize, develop, research and produce healthier options. There are no two ways about it.

    Themes: Consumer Staples Stocks: DPS, KO, PEP
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