Still think the cola wars are about
Coke vs. Pepsi? These days the carbonated beverage battleground
is diet vs. regular, and it's looking increasingly as though
the lightweight could flatten its full-calorie cousin.
Though the highly competitive
$64 billion soft drink industry still is dominated by
regular soda, sales of diet are surging and some industry
analysts say low-cal eventually could take the lead.
That's because while regular
soda sales have sagged, diet's share of the market has grown
steadily since the mid-1990s. Bottled water, tea, sports and
fruits drinks also are up, further siphoning regular soda
sales.
In an obese nation obsessed
with calories and carbs, it probably shouldn't come as a surprise
that people are switching to diet, and beverage companies
are rushing to give them more choices.
In many ways the soft drink
industry is better prepared than most others to capitalize
on America's perpetual diet.
"There's no such thing as a
no-calorie hamburger. There's no such thing as a no-calorie
doughnut," said John Sicher, editor of Beverage Digest. "But
the soft drink industry already has these huge powerful brands"
of diet drinks.
Last year, regular soda accounted
for nearly 73 percent of sales, but that was down nearly 2
percent from the year before, Sicher said. Meanwhile, diet
was up more than 6 percent from 2002.
Sicher thinks that trend will
continue and even accelerate enough that in a decade diet
could outsell regular. He also thinks diet sales will spur
overall growth in the soda industry, which slumped at less
than 1 percent last year.
In fact, John Craven, editor
of online beverage industry newsletter Bevnet.com, says soft
drink consumption was down nearly 3 percent last year. If
not for the growth in diet soda, that would have been closer
to 10 percent.
Coca-Cola Co. spokesman Scott
Williamson said Sicher makes sense assuming sales trends continue
as they have. And last week Coca-Cola Enterprises Inc., the
world's largest bottler, told analysts that the diet category
is one of the company's best chances for growth.
So what's behind diet's strong
performance?
Calorie consciousness is a
huge and obvious part of it. Prompted by a growing
awareness of their growing waistlines, more people want low-
and no-calorie soft drinks, said Sicher, who has followed
the industry for 10 years.
That awareness also extends
to retailers, who hope to attract dieters' business by giving
more and more prominent space to low-cal beverages,
said Dan Dillon, vice president of marketing for Coke's diet
sodas.
Innovation has helped, too.
Soda companies are churning out a stunning variety of new
diet flavors. PepsiCo Inc. alone offers nearly a dozen low-calorie
sodas, which account for more than a quarter of the company's
business.
New sweeteners also have broadened
the appeal and definition of diet sodas. Coke
and Pepsi now offer soft drinks with a blend of sugar and
no-calorie sweetener, claiming the taste is similar to regular
but with half the calories.
Growth and greater appeal or
not, not everyone is convinced diets will surpass regular.
Harry Balzer of consumer research firm NPD Group says the
numbers simply don't support that sort of abrupt turnaround.
Craven was uncertain, but noted
that, "At the end of the day, the recession (of regular soda)
can only go so far."
But even if the growth of diet
soda doesn't go as far as Sicher predicts, at the moment it's
the only segment of the soda industry that is growing, and
that has forced companies to rethink how they handle it.
At Coke, Dillon says it has
meant treating the diet varieties as separate entities. Gone
is the model of diet beverages as knockoffs of regular flavors.
Care for a Diet Coke with Lime? That's fine, but don't look
for a regular version.
And consumers can expect plenty
of new choices in the coming year, including the arrival of
more reduced-calorie sugar-sweetener blend beverages, such
as Coke's C2 and Pepsi Edge, Craven said.
For nutritionists, who continue
to issue dire warnings about the obesity epidemic, a diet
soda surge is good news. Though the soda industry discounts
the link, a growing body of studies suggests soft drinks promote
weight gain.
Last year, Americans drank
837 servings of soda, up from 645 in 1985, Sicher said. And
those drinks account for 7 percent of their daily calories,
said Barry Popkin, a nutrition professor at the University
of North Carolina at Chapel Hill.
What difference can diet make?
Terrill Bravender, director of adolescent medicine at Duke
University Medical Center, says a person who drinks two regular
sodas a day could lose about a pound of fat in two weeks just
by switching to diet.
The shift to diet is being
felt across the industry, including by the many small regional
soda companies. But even those that don't offer diet varieties
expect to benefit from the segment's growth.
Don Guarino, owner of Meetinghouse
Brewing Co. in Gilmanton, N.H., makes old-fashioned brewed
soda in glass bottles which he sells at farmers' markets and
country stores. And he doesn't think his customers want diet.
And if diet varieties do take
over the national market? He thinks that will drive up demand
for his niche sodas.
"You don't bring an artificially
flavored, artificially colored diet tonic and expect it's
going to go at a farmers' market," he said. "But if you bring
a blueberry or rhubarb, that will go."