With their soda sales continuing to lose fizz, PepsiCo ( PEP) and Coca-Cola ( KO) are going after each other in the red-hot sparkling water market.
PepsiCo fired the latest shot this week by debuting a new line of low-calorie, flavored sparkling waters under its Aquafina line. The three flavors are black cherry dragonfruit, lemon lime and orange grapefruit; they are lightly sweetened with cane sugar. Calorie count: 10.
Aquafina's latest sparkling beverages join others in the PepsiCo portfolio. In June last year, PepsiCo released Izze Sparkling Water nationwide. The product also has 10 calories and is the only USDA organic-certified sparkling water product on the market.
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PepsiCo also bottles sparkling water from Dr. Pepper Snapple's ( DPS) Schweppes brand.
Meantime, in mid-March Coca-Cola began shipping Minute Maid Sparkling, which are plastic bottles of flavored fizz that boast 30 to 40 calories, depending on the flavor. The four initial flavors include: mixed berry, fizzy lemonade, fruit punch and tropical citrus.
In additions to Minute Maid Sparkling, Coke's portfolio of low-calorie sparkling waters include various flavors under the Dasani brand that launched nationally back in 2014.
The sparkling water market has become increasingly important to beverage manufacturers as consumers seek out healthier alternatives to regular and diet sodas.
Coca-Cola's latest sparkling water beverages.
According to Beverage Digest, sparkling water volumes surged 28.6% in 2015, led by demand for new flavored options from Schweppes, Perrier, Poland Spring and Coca-Cola's Dasani. In the latest data available, market research firm Euromonitor pegs the size of the sparkling water market in the U.S. at more than $4 billion, with volumes surging 56.4% from 2009 to 2014.
Both soda makers could use the exposure to the fast-growing sparkling water market.
Sales of carbonated soft drinks fell in 2015 for the 11th straight year in the U.S., according to Beverage Digest. Total volume declined 1.2% last year, worse than 2014's 0.9% fall. Demand for soda didn't appear to get any better for PepsiCo or Coca-Cola in the first quarter, either.
PepsiCo shares are owned by Action Alerts PLUS.
"From a high level, we remain confident in PepsiCo's underlying trends and continue to view the company as "best in class" within the consumer packaged-goods space," said Jim Cramer and Jack Mohr in an April 18 note. They added, "While we recognize the macroeconomic backdrop is unfavorable, we expect PepsiCo's operational excellence, powerful brand equity and strength in its North American operations will help offset macroeconomic headwinds related to its emerging market exposure (most prominently Venezuela and Brazil)."