Functional Fizz

KELLY GATES

Soda makers are hoping to boost fizzling sales of carbonated soft drinks by introducing healthier versions of their flagship products.

Incited by competitive pressures from an array of functional drinks, Coke and Pepsi are adding vitamins and minerals to the ingredient lists of their conventional colas, and fortified and flavored sparkling waters and calorie-burning teas to their product portfolios.

“While it is no secret that the sparkling category has slowed, we have seen innovation make significant volume contributions,” said Tom Theriault, group director of large formats for Coca-Cola Enterprises, Coca-Cola's largest distributor, marketer and producer.

Earlier this month, Coke launched Diet Coke Plus, a sparkling, zero-calorie beverage enhanced with vitamins B3, B6, B12, zinc and magnesium.

Pepsi has also introduced a no-calorie cola called Pepsi Jazz, in Strawberries & Cream and Black Cherry French Vanilla flavors. This fall, Pepsi will also begin marketing Tava, a zero-calorie, caffeine-free sparkling beverage infused with vitamins B6, E and niacin.

“The consumer is the one in charge, and it's up to beverage companies like ours to develop the products they want, with or without the bubbles,” said Michelle Naughton, spokeswoman for Pepsi-Cola North America.

While soft drink giants like Coke and Pepsi are still considered the big fish in the beverage category, today's drink aisles are swimming with products from a broad array of manufacturers.

Over time, Highland Park Market, Glastonbury, Conn., has accumulated a small fleet of coolers by its checkouts to accommodate them all. Frequent requests from the big-name drink companies for additional placement have also prompted the retailer to install extra freestanding displays, Tim Cummiskey, grocery manager for the upscale three-store supermarket, told SN.

The retailer relies on routine sales reviews to help determine which products make the cut. Red Bull and Monster, for example, usually get top billing in the energy category, as they are proven profit-earners. “Coke is always trying to promote their drinks, asking for coolers up front, display racks next to the checkouts for its newer products and endcaps throughout the store,” said Cummiskey. “It's tough to decide what to make space for. We want to have everything on hand, but there are so many new products that we can't stock them all.”

Mainstays like conventional Pepsi and Diet Pepsi are always popular at Highland Park, but consumers are really interested in new sugar-free, no-calorie items like Coca-Cola Zero and Cherry Coke Zero. The retailer just started selling Diet Coke Plus as well, but it's too early to say how it will fare, Cummiskey noted.

“Personally, I think a soft drink should be a soft drink, and adding vitamins and other things is a little unusual,” he said. “We'll see what the consumers think, though.”

Tom Winter, vice president of marketing at Dorothy Lane Market, Springboro, Ohio, is also juggling a vast selection of drinks. “Some products that were once seen as health items, like Glaceau water, are moving into the mainstream, and we've seen Coke and Pepsi introducing new non-cola products in an attempt to keep up,” he said. “Pepsi even bought SoBe a while back to get more of the market share.”

In January, Pepsi unveiled Aquafina Alive Wellness Water, a lightly flavored vitamin water with 10 calories per serving. “We have had consumers tell us they are interested in beverages with added health and wellness benefits to help with weight management,” Naughton said.

In 2006, Coca-Cola introduced Dasani Sensations, a line of fruit-flavored carbonated waters, as an extension of its Dasani brand, which is currently the third-largest trademark for the company behind Coke and Diet Coke. This year the company will launch Dasani Plus, a non-carbonated water fortified with vitamins and minerals.

At Dahl's Food Markets, Des Moines, Iowa, flavored and functional waters are driving beverage sales.

“Just when I think I can't imagine the water category getting bigger, it does,” said Mark Brase, director of marketing at the 12-store chain. “Twenty-four-packs of half-liter water bottles are growing astronomically, and Aquafina's Flavor Splash varieties are also big sellers in our stores. We do what we can to promote them regularly. We still have quite a bit of promotional pressure to help sell carbonated drinks [from Coke and Pepsi], but they are certainly promoting their water and New Age drinks more heavily, which is where there is significant growth.”

Pepsi's Lipton brand has stretched its line of ready-to-drink iced teas to include varieties of regular and diet green and white tea. The company also developed six types of Lipton Tea To Go packs.

In 2006, Coke launched a canned sparkling green tea called “Enviga” that is enriched with antioxidants and is said to boost metabolism. “We plan to continue growing our tea portfolio with new varieties from Nestea and Gold Peak, too,” said Theriault.

As top beverage rivals focus on one-upping each other, smaller niche companies like Jones Soda Co., Seattle, are advocating their un-Coke and un-Pepsi characteristics to lure consumers.

“It's not OK anymore to just have a red or a blue can,” said Peter van Stolk, president and chief executive officer of Jones Soda. “Consumers want their own unique flavors.”

Jones Soda makes beverages in flavors like green apple and crushed melon. During the holidays, shoppers can even find bizarre blends like Turkey and Gravy soda.

To van Stolk, seeing companies try to make soda healthy is just plain odd. “Putting vitamins into Coke or Pepsi makes no sense,” he told SN. “Soda is an indulgence, not something people drink for health. We recently took aspartame out of our sodas and replaced it with pure sugar cane, because it tastes better and is what was originally in soda.”

Energy drinks continue to be the best-selling beverages in the drink category, said Jim Hertel, managing partner for Willard Bishop, Barrington, Ill.

Red Bull, Monster, Full Throttle, SoBe No Fear and Rockstar are leading names there, but profit potential is so great, everyone seems to want in on the action.

Pepsi continues to push its Mountain Dew MDX, which has 47 mg of caffeine and other boosters such as guarana and panax ginseng extract. June will see the launch of Pepsi MAX, a zero-calorie carbonated drink with extra caffeine and ginseng.

Coke still has its hybrid citrus Vault and Vault Zero, as well as a new Vault Red Blitz berry-infused version that hit the market in March.

“We plan to expand our energy offerings with brands like Full Throttle Blue Demon and Rockstar Juiced Pomegranate,” said Theriault.

BEVERAGE WATCH

Dollar and unit sales of bottled water dramatically outpaced other categories over the past year.