On the Offensive in the Soda Wars
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Soda has gotten a lot of bad press recently. Between talk of soda taxes and proposed bans on larger bottle sizes, soda bottlers are looking for ways to paint their products in a positive light. That's not necessarily an easy task, either; sodas are filled with sugar and empty calories, often contain various food colorings, are often linked with childhood obesity and may contain ingredients that have been found to cause cancer in one study or another. Even diet sodas aren't free of stigma: not only are some artificial sweeteners included on lists of possible carcinogens, but a few studies have shown that individuals who drink diet soda are actually more likely to gain weight than those who don't.
Now, don't get me wrong... I rather enjoy soda, though I usually prefer clear sodas with no caffeine (which makes a few of my caffeine-loving friends look at me kind of funny.) I know that it's not necessarily good for me, but I'm sure that it's not the only thing in my diet that isn't. I try to drink it in moderation, choosing water instead throughout the day and limiting my portion size when I do indulge. Moderation is important with so many things, and now some of the soda makers are getting together to try and stress that point a little more.
Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) are rolling out new "Calories Count" vending machines next year in Chicago and San Antonio, cities where municipal workers are taking part in a wellness competition. The vending machines inform patrons of the number of calories in a bottle of soda, offering recommendations of lower-calorie options in case the person making a selection wants to avoid drinking something with as many calories as their original choice. If the machines are successful in these cities, they plan on expanding the program and introducing them across the nation.
While the machines are good in theory, it remains to be seen how effective they will be in practice. If I go up to a vending machine for a can of Coke or a bottle of Pepsi, I'm not sure that I'd make a calorie-smart decision based on the machine's recommendation... I'd likely just go ahead and get my Coke or Pepsi. On the flip side, the sheer sticker shock of realizing how many calories some of these sodas have could very well cause some people to at least try lower-calorie alternatives if given a chance to compare the two beverages. I'm hoping that the machines do become popular enough to roll out nationwide because even if only a small percentage of people change their habits as a result of seeing how many calories they're taking in that's still an improvement.
As for the companies that make the soda, it doesn't take a huge leap in logic to realize that they are more concerned about the health of their bottom lines than the health of the nation at large. Soda sales dropped by 1% in 2011 and stock prices have started slipping after hitting 2-year highs this summer. PepsiCo stock had dropped 4.4% since Aug. 20 and Coca-Cola stock has dropped by 5.7% since July 30. Pressure is on the beverage industry to make changes, and by listing calorie counts on the front of vending machines and suggesting alternative beverages these companies are trying to be proactive in the battle against a soda stigma. Keep in mind that Coca-Cola and PepsiCo will be making and selling the lower-calorie options as well, so they'll still be making sales either way.
In the longer term, the emphasis that companies like Coca-Cola and PepsiCo are putting on reduced-calorie drink options could result in increased sales for those beverages though I imagine that a decent portion of the Coke and Pepsi and Sierra Mist drinkers will stick with their preferred beverages. It may also spur further development to try and bridge the gap between low-calorie and full-flavored beverages, though I imagine that there's only so far that you can push either of those options toward each other. Both of the companies currently involved in this project will recover from their temporary slumps and may see significant gains as a result of a growing emphasis on low-calorie drinks, and if we're lucky they may help at least some consumers to become a bit more calorie conscious as well.
Croaxleigh has no positions in the stocks mentioned above. The Motley Fool owns shares of PepsiCo. Motley Fool newsletter services recommend PepsiCo and The Coca-Cola Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.