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Soda is making a comeback
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Soda is making a comeback

Consumers are turning away from more expensive products Starbucks CoffeeMcDonald’s Big Mac meal, Doritos Chips, Monster energy drinks and Heineken beer. But they can’t stop drinking Coke and Dr Pepper.

Coca-Cola and Dr Pepper said in quarterly earnings calls last week that they sold more cases of the soda last quarter. During the third quarter of this year, total soft drink volumes increased 1.3% year-over-year, according to Evercore ISI data.

It’s a comeback for sodas, which have been in decline for two decades due to the health effects of sugary drinks. Frequently drinking sugary drinks like soda is associated with range of chronic health conditionsincluding weight gain, obesity, type 2 diabetes and heart disease, according to the Centers for Disease Control.

“It’s so different from five or 10 years ago,” said Robert Ottenstein, an analyst at Evercore ISI. “There has been a huge change in attitude. These products had for a long time been declining by 4% per year.”

The World Health Organization has also said Last year, for the first time, aspartame, a popular artificial sweetener found in diet soda, was to be classified as “potentially carcinogenic to humans.”

But consumers now seem willing to ignore health concerns. They view sugary Coca-Cola and Dr Pepper, or new sugar-free sodas like Coke Zero, as a more affordable treat than other choices like an energy drink, flavored tea, bag of chips or candy bar .

The average price of 16 ounces of chips in September was $6.46, while a 2-liter soft drink cost $2.00, according to the Bureau of Labor Statistics.

Cans of Dr Pepper soda are on display June 3, 2024 in San Anselmo, California. -Justin Sullivan/Getty ImagesCans of Dr Pepper soda are on display June 3, 2024 in San Anselmo, California. -Justin Sullivan/Getty Images

Cans of Dr Pepper soda are on display June 3, 2024 in San Anselmo, California. -Justin Sullivan/Getty Images

New marketing and renewed interest from younger consumers are also boosting soda brands.

Soda’s growth comes as consumers closely monitor their purchases and overlook anything they don’t perceive as a good deal. Companies have raised prices by up to 40% since the pandemic began in 2020, and consumers are abandoning brands whose prices they believe have gotten out of control. They also eat out less, go to the store more quickly – rather than loading their carts with expensive groceries – and buy cheaper store brands in stores.

“The soda category is exceeding our expectations,” Timothy Cofer, CEO of Dr Pepper parent company Keurig Dr Pepper, said during an earnings conference call. Soft drinks’ low prices position them to appeal to “value-seeking consumers,” he said.

It’s a reversal of years of declining soda sales.

In 2015, Consumption per capita in the United States of soft drinks fell to their lowest level since 1986. Coca-Cola and Pepsi have purchased flavored waters, energy drinks and other beverage lines to fuel growth, giving consumers more beverage choices than ever.

But soda sales increased during the pandemic, as consumers shopped at grocery stores and returned to old favorites with restaurants closed. More recently, soft drink sales have been driven by low- and middle-income consumers looking for inexpensive treats, companies and analysts say.

In some cases, consumers may switch from more expensive energy drinks to a cheaper can of soda to satisfy their caffeine craving. “Middle- and low-income consumers who frequently consume energy drinks are turning to soft drinks,” said Duane Stanford, editor of Beverage Digest, a trade publication.

A view of Coke Zero Sugar at the New York City Wine & Food Festival on October 14, 2021. – Noam Galai/Getty Images for NYCWFFA view of Coke Zero Sugar at the New York City Wine & Food Festival on October 14, 2021. – Noam Galai/Getty Images for NYCWFF

A view of Coke Zero Sugar at the New York City Wine & Food Festival on October 14, 2021. – Noam Galai/Getty Images for NYCWFF

Coke Zero and Dr Pepper Creamy Coconut

The return of soda has also been supported by the rapid growth of sugar-free sodas like Coke Zero Sugar. Coke Zero’s volume increased 11% last quarter, the company said. Regular Coca-Cola volumes remained stable, while Diet Coca-Cola volumes increased.

Sugar-free sodas are the industry’s biggest growth area, Stanford said. Coke started the trend in 2005, and gave a Coke Zero makeover in 2021 to make it taste and look like a regular Coke.

Although companies market sugar-free or diet sodas as better alternatives to fully sweetened versions, they should not be considered healthier because they contain artificial sweeteners. Artificial sweeteners have been shown to have harmful effects on the gut and, counterproductively, can increase weight gain, said Laura Schmidt, a professor of health policy at the University’s School of Medicine. from California to San Francisco, which studies the impact of sugar and the soda industry. .

“Switching from one harmful ingredient to another harmful ingredient is not a solution,” she said.

The new marketing also helps soda brands. Dr Pepper’s limited-time “Creamy Coconut” release boosted sales, and its new Canada Dry “Fruit Splash” flavor was its “biggest launch in years,” CEO Cofer said. The company also redesigned 7Up cans for the first time in a decade.

Dr Pepper last year surpassed Pepsi as the second largest soda brand in America behind Coke. Dr Pepper invested heavily in marketing during college football games and developed new flavors like strawberries and cream to attract soda drinkers.

As consumers drink more Coca-Cola, Coke Zero, Dr Pepper and Canada Dry, sales of Pepsi sodas are struggling.

PepsiCo Inc.'s FritoLay brand products at a supermarket in Latham, New York, on Friday, February 2, 2024. – Angus Mordant/Bloomberg/Getty ImagesPepsiCo Inc.'s FritoLay brand products at a supermarket in Latham, New York, on Friday, February 2, 2024. – Angus Mordant/Bloomberg/Getty Images

PepsiCo Inc.’s FritoLay brand products at a supermarket in Latham, New York, on Friday, February 2, 2024. – Angus Mordant/Bloomberg/Getty Images

PepsiCo has focused on marketing and investing in snack brands in the United States at the expense of sugary soda brands, analysts say. Food has grown to represent 59% of PepsiCo’s sales.

Unlike Coca-Cola and Keurig Dr Pepper, Pepsi has a huge food business – its sprawling portfolio includes Quaker, Frito-Lay and more. When it comes to drinks, it appears to be focused on investing in its sugar-free lines of Gatorade and other brands rather than regular Pepsi, analysts say.

“Diet Coke break”

“Dirty soda” a popular TikTok trend that combines soda with syrup and cream, has also sparked interest in soda brands among younger consumers interested in creating their own soda concoctions.

“Dirty soda” has become popular in Mormon culture, where the faith prohibits the consumption of coffee and alcohol. But thanks to Mormon influencers on TikTok and the Netflix show »The Secret Lives of Mormon Wivessugary drinks are becoming more and more common. Dr Pepper launched its “Creamy Coconut” drink over the summer to capitalize on the dirty soda trend.

TikTok has also recently filled up with “Dirty Diet Coke,” “Crispy Diet Coke,” and “DietCokeBreak.” recipe videos where people leave cans of Diet Coke in the fridge for weeks, then pour them into a glass, sometimes with citrus powder, to get the most fizz.

Singer Dua Lipa gave Coke its latest viral hit this month when she posted a video sharing it Diet Coke Recipewhich combines Diet Coke, pickle juice and jalapeño sauce. It has been viewed 10 million times on TikTok and sparked reactions from celebrities like Gordon Ramsay, who spat out the drink and warned the recipe would “ruin your vocal cords”.

“I don’t want to say I started the Diet Coke break, but I think I kind of did,” Kristen Hollingshaus, a social media influencer known as “Diet Coke Girl” told CNN.

In 2021, she began posting videos of herself on TikTok taking a break during the day to drink Diet Coke. But it wasn’t just any can of Diet Coke. She “made it special” by pouring Diet Coke into a glass, adding ice and True Lime powder. His posts have gained traction online, with some racking up more than two million viewsand she began a paid partnership with Diet Coke over the summer.

“It was mindfulness for me,” she said of her Diet Coke breaks. “It took me five minutes of my day to enjoy something.”

She usually drinks one Diet Coke a day and doesn’t worry about the impact on her health.

“I think there are vices much worse than a Diet Coke,” she said.

CNN’s Ramishah Maruf contributed to this article.

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