3. Soda production, or the manufacture of carbonated soft drinks, now a $17 billion industry, is seen shrinking by 2% per year over the next five years as consumers switch to other, and in most cases, healthier types of beverages. A core of Coca-Cola ( KO) and Pepsi-Cola ( PEP) drinkers is expected to remain loyal to their brand, but demand for carbonated soft drinks is seen slowing due to increased competition from energy and sports drinks and ready-to-drink teas and coffees, not to mention bottled water. Also hurting their prospects is that some state and local governments have proposed or enacted taxes on soft drinks and eliminated them from schools, in order to fight obesity and diabetes. For example, Washington state has imposed a 2-cents-per-12-ounce tax on carbonated beverages since 2007. Alternative beverage categories have also stepped up their marketing campaigns and gained market share. In 2011, Coca-Cola dominated the carbonated soft drink market in the U.S., with a 16.7% share, followed by Pepsi-Cola at 9.2% and Diet Coke with 9.1%. These companies have diversified their beverage product offerings to offset declines in carbonated soft drinks but are also seeing steady growth in foreign markets for their carbonated products. Dr Pepper Snapple Group ( DPS) is the third-largest flavored carbonated soft drink maker in the U.S.