Think you aren’t getting any respect at work? It could be worse: you could be a Pepsi.
From a strategic point of view, the CSD has become the offensive lineman of the soft drink category, carrying the heavy loads of occupying shelf space and grinding out profits, while superstar wide receivers like energy drinks and enhanced waters catch flashy share gains and great publicity despite much smaller bodies of work. Coke and Pepsi might be icons, among the most recognizable trademarks in the world, but these days, they sure aren’t glamorous.
Not so long ago, being a CSD was a respectable job, at least, but now, they’ve become the pariahs of the soft drink category, derided as much for their lack of nutritional value as their dropping share of stomach. Sodas aren’t even sodas at the Coca-Cola Co. anymore – they’re part of the Sparkling Beverage Group. CSD consumption dropped by 3 percent in the U.S. last year, and to some extend that was a victory: it was nowhere as low as some had expected. So it’s hard to believe, given the amount of flack they take, but the CSD remains the center of the soft drink business, the best selling kind of drink in America, the bulwark of the beverage aisle.
“We haven’t consciously taken shelf space away,” said Mike Elmer, the director of marketing for Coca-Cola of Northern New England. “Sparkling is presently not a growth category, but it’s still a big part of what we sell.”
Major cultural shifts are catching up to CSDs, say analysts, as overriding concerns about health and wellness make them more of a treat than a standard, while increased choices dilute the sheer force of their ubiquity. The worst shift, however, might be generational: in the past five years, full calorie colas lost 15.6 million consumers 18 or over, according to the research group Mintel. While the diet segment added about 7.8 million, the insight is clear: people who aren’t switching to diet, and there are about 8 million of them, aren’t drinking soda.
“The data is overwhelmingly showing us that consumers want to be healthier, and they don’t perceive CSD’s to be healthy,” said Krista Faron, a senior analyst at Mintel. “They have a choice to choose beverages that are better for them and they don’t see CSD’s playing that role.”
It’s gotten especially bad for many line extensions that sit at the margins: according to Pointer Media Network, which measures supermarket scan data at the cash register, 20 of the top 30 CSD brands have experiences case volume declines.
But the big three in the category have all sworn to stop the slide. Last year, PepsiCo launched a massive rebranding campaign trying to tie the brand back to its strong baby-boomer, change-agent roots, and its top brass, from PepsiCo Americas CEO Massimo D’Amore to PepsiCo Inc. CEO Indra Nooyi, have all sworn they can get the company’s CSD brands moving on an upward trajectory. Coca-Cola Co. CEO Muhtar Kent has made it clear his company plans to expand its leadership position in the CSDs – although they now fall under the oh-so-healthy-sounding moniker “sparkling.” Meanwhile, in a down economy, the Dr Pepper Snapple Group has increased its marketing budget.