The Carbonated Soft Drink Industry: Struggling to Transition its Brands in a Healthy Society

The entire beverage industry has noticed changes in sales and changes in consumers’ wants/needs in the past 2-3 years. However, the non-alcoholic beverage industry, most specifically carbonated soft drinks (CSDs), has been hit the hardest. Mintel’s Carbonated Soft Drinks-June 2009 Report says that, “During 2003-08, carbonated drinks gained 19% in current-price sales, with growth coming entirely from price increases. During 2009-13, Mintel projects carbonated beverage sales in the U.S. to grow at 5% in current terms but decline by 3% in inflation-adjusted prices”. This is an incredible change of events for the carbonated soft drinks and their manufacturers, because CSD’s have enjoyed steady growth and profit for as long as America can remember. Manufacturers are trying their best to generate new beverages, both carbonated and non-carbonated, that will fit with the new healthy consumer’s needs. However, many of these beverages are marketed well, but do not actually provide the consumer with a beverage that is healthier than past options. This type of marketing deception may benefit the manufacturers in the short-run, but may have very damaging effects in the long run. Additionally, manufacturers are trying to pump out new beverage options and stock them on the retail shelves, however; there is limited space on shelves. Manufacturers may have to choose to remove long-lasting and storied beverages (i.e. CSD’s) that have been very profitable for the company in the past, but now are not generating the same returns as healthy beverages. Also, consumers may want healthier beverage options, but definitely do not want to sacrifice taste and flavor. I wonder how well the manufacturers are executing their new beverages and whether these beverages are still satisfying (in terms of taste and flavor to consumers)?

There are many other questions that I will want to explore when researching this topic, including; the success rate of meeting new consumer’s needs by the big 3 manufacturers, consumer satisfaction for the new changes in beverage options, what will be the next consumer trend in the industry, and how will this affect the healthier beverage options, how much of the population has the healthy trend affected and has it reached its maximum point, etc. These types of questions and answers will provide me with a comprehensive understanding of societal trends and the implications that they have had on the CSD manufacturers. This may also provide some insight into future trends and how the manufacturers will need to adjust their strategies to fit these new consumer needs.

I am very interested in this topic because I interned at Dr. Pepper Snapple Group this past summer, and I am going back to work for DPSG full-time after I graduate from McCombs in May. During the summer, I had the opportunity to work with the Innovation team and the Canada Dry brand team on a water project. My project’s objective was to generate a water strategy for DPSG as a whole, and try to take advantage of the new health trends in the marketplace. I had the opportunity to create a survey, conduct focus groups, and do market research to determine important consumer insights that could lead DPSG in the right direction in its water strategy. Throughout the summer, I gained valuable knowledge of the consumer and how he or she views products in the stores and what ingredients may or may not be important to them. For example, I was very interested in determining whether consumers actually care about the level of sodium in their seltzer water. Sodium appears in most food and drink in America, and I wasn’t sure whether consumers ever notice. Through my research, I found that consumers are very aware of the amount of sodium in their diets and definitely prefer to have no sodium in their still or carbonated waters. Consumers viewed water as a haven from all of the other unhealthy beverages, and wanted to make sure that this safe drink remained unadulterated. I never realized how important sodium levels were in beverages, and my research helped me understand this insight, and helped me implement a solution for the company. I hope to take other insights that I gained from the summer’s project and apply them to this research report. I think it will be very interesting to assess the manufacturers’ success rate and predict what changes they must make going forward. I believe that each manufacturer’s success rate of including healthy beverages in their current portfolio, will be a good predictor of how each company will perform in future changes. I look forward to diving into the research and learning more about the CSD industry.