NONCARB SALES HARD ON SOFT DRINKS, DATA SHOWS

DAN ALAIMO

NEW YORK -- The growth of bottled water and other noncarbonated products resulted in a soft year for soft-drink sales increases, according to preliminary data from Beverage Marketing Corp. here.

U.S. carbonated soft-drink sales increased only 0.5% in 2001 over 2000, or a total of about 54 million cases. Industry volume topped 10 billion cases for the fourth straight year, but per capita consumption fell for the third year in a row after several decades of consistent growth.

"We see a very competitive marketplace," said Gary Hemphill, senior vice president, Beverage Marketing. "People have more choices than ever. You've got competition from bottled water, from teas, from fruit drinks, from sports drinks, from energy drinks. We don't anticipate substantial growth coming from carbonated soft drinks in the future."

"In every category, we are always looking for the new star, and companies are constantly experimenting, trying to find a niche that might appeal to consumers," said Bea James, whole health manager, Lund Food Holdings, Edina, Minn., which operates 20 stores under the Lunds and Byerly's banners. "Everything gets old sooner or later."

In other trends identified by Beverage Marketing, private-label soft drinks achieved significant growth in 2001. Diet drinks also did well and PepsiCo gained slightly on Coca-Cola Co. Pepsi's market share increased from 30.9% in 2000 to 31.1% in 2001, while Coke declined from 44% to 43.7%.

"If you look at innovation, Pepsi was really the more aggressive. They introduced Mountain Dew Code Red. They rolled out Sierra Mist, their new lemon-lime entry. At the end of the year, they introduced Pepsi Twist, which is lemon-flavored Pepsi," Hemphill said.

Meanwhile, Coke successfully introduced a lemon-flavored Diet Coke toward the end of the year.

Both companies increased their noncarbonated drinks sales significantly, with Pepsi's growing 35% and Coke's rising 23%, Beverage Marketing reported.

"This means [supermarkets] not only have to be well-stocked with carbonated soft drinks, but they have to keep an eye on the new products coming into the market and be open to some of the other, newer noncarbonated products, because that's where more of the growth is coming from," Hemphill said.