NEW YORK (Trefis) -- In a recent article, we talked about the growing competition in the mid-calorie soda market in the U.S. PepsiCo (PEP) had launched Pepsi Next in March this year and so far the response has exceeded the company's expectations.
Similarly, Dr Pepper Snapple (DPS) launched Dr Pepper TEN in the last quarter of 2011, which helped the company post 2% volume growth in the soft drinks in Q1 2012. And now its Coca-Cola's (KO) turn to test its mid-calorie versions of soft drinks Sprite and Fanta. The drinks are being tested in select stores in Atlanta, Detroit, Louisville and Memphis.
We estimate a $76 price for Coca-Cola, in line with the market price.
Natural SweetenersCoca-Cola had rolled out the mid-calorie version of its flagship drink named C2 in 2004 but took it off due to poor sales. Hence, the company has decided to give it a shot with Sprite and Fanta this time. A regular 12-ounce can of Sprite has 140 calories (and Fanta contains 160 calories). However, their mid-calorie versions will both have 70 calories a can. Coca-Cola's new drinks are made up of natural sweeteners. On the other hand, Pepsi Next uses a mix of high-fructose corn syrup and three artificial sweeteners. Mid-calorie sodas appeal to consumers who avoid regular colas to reduce calories but shy away from diet versions that do not taste the same. If the results of the tests meet the company's expectations, the drinks will be rolled out on a national basis and even internationally. This is a crucial time for soft drinks as they (along with fast-food companies) face the heat for rising obesity rates. Recently, the Canadian Beverage Association made it mandatory for the soft drinks to clearly spell out how many calories are present in the beverage on the front of the packaging (following the U.S.'s "Clear on Calories" guidelines). Total soft drink consumption has been declining in the U.S. for the last seven years as consumers chuck traditional soft drinks for healthier alternatives. However, it remains to be seen if the success of the mid-calorie beverages is temporary in nature or here to stay for the long run. Click here to find out how a company's products impact its stock price at Trefis. Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV