NEW YORK (TheStreet) -- Executives at Coca-Cola (KO) , trying to reverse weak earnings, would do well to emulate rival Pepsico (PEP) , which is churning out successful new snacks and drinks at a healthy clip.
Total U.S. carbonated soft-drink sales volume fell 3% last year to 8.9 billion cases, the ninth-straight year of decline and the lowest number of cases sold since 1995, according to Beverage Digest.
Coca-Cola's North America unit case volume has been unchanged this year, reflecting meager 1% growth in "still" beverages such as tea and water and a 1% drop in sparkling beverages. At Pepsico, North America unit case volume has declined slightly this year, driven by a 1% fall in carbonated soft-drink volumes and a 1% increase in non-carbonated beverage volume.
In addition to cost cutting, Coca-Cola's response has been to focus on new package sizes for soda and develop new lower-calorie products such as Coca-Cola Life, which contains 60% of the calories of classic Coke and is sweetened by Truvia, a branded form of stevia extract.
"Next year is the 100-year anniversary of the contour [bottle shape], and we'll be expanding our immediate consumption focus in the market, which is a really important way to build habit," said Coca-Cola's Chairman and Chief Executive Muhtar Kent during an Oct. 21 earnings call.
The obsession by Coca-Cola on daintier package sizes for plain old soda and what still amounts to diet cola, however, has left it overly exposed to waning carbonated soft-drink sales and competitive pricing in the United States. Furthermore, it may be causing a stalemate in new product introductions elsewhere in the Coca-Cola portfolio.
Pepsi, on the other hand, has been more intent on innovating.
"Expect to see from us an interesting number of mid- to low-calorie sparkling beverage platforms" next year, Simon Lowden, chief marketing officer of Pepsi Beverages North America, said in an interview on Nov. 21.
Pepsico's Tropicana will see news next year around sparkling juices and waters, while protein as an ingredient is expected to be used across more and more beverages, he said.