Soft drinks maker seeks natural fizz, for friendship and more

By staff reporter

- Last updated on GMT

Related tags Soft drinks Coca-cola Soft drink

Product development gurus are increasingly attempting to use
consumer trends for natural ingredients and more nutritious
beverages to drive growth in the carbonated soft drinks category.

Asked to picture a fizzy drink, and most people would probably still conjure up a big brand like Coca-Cola, Pepsi or 7UP.

Cue images of obese children with rotting teeth sat before an array of indulgent junk food.

Spoonfuls of sugar have helped soft drinks sales to struggle in most mature markets.

But there are signs of a fight back, as soft drinks makers look to harness health and indulgence trends in order to put carbonated beverages back on the tracks.

Some in the industry are concerned that consumers have come to see carbonated soft drinks (CSDs) as inherently unhealthy, arguing this is not the case.

"The problem people have with CSDs really comes down to the sugar they contain," Paul Moody, chief executive of UK soft drinks firm Britvic, told last week.

Cutting down on sugar has already shown some positive results.

Coca-Cola says its sugar-free Coke Zero drink has grown strongly in the UK since its launch last year.

And diet drinks generally have helped to stave off the dramatic collapse some were predicting in the CSD sector.

But now, there appears to be a growing consensus in the industry that rising consumer demand for natural ingredients is something CSDs could profit from too.

Cadbury Schweppes has jumped the gun with using only natural flavours to make 7UP in the US.

The firm said recently that 7UP sales had fallen for 2006 as a whole, but, fittingly, were seven per cent up in the second half after 7UP Natural had been launched.

Britvic's Paul Moody said natural would likely play a greater part in soft drinks formulation over the next few years.

This, coupled with general innovation in technology, aroma and flavour would help to drive the sector, including CSDs, he said at the launch of the firm's annual UK Soft Drinks Industry Report last week.

A re-branding of the CSD category may also yield a change in attitude.

Coca-Cola, for example, has started referring to 'sparkling beverages', which could also include products like fizzy mineral water or energy drinks.

The firm has just launched Enviga, a 'sparkling' green tea energy drink that also claims to burn calories, under its joint venture deal with Nestle.

Aligning CSDs with functional product trends may be another way of preventing fizzy drinks sales from falling flat.

A report from Beverage Digest said in December that Coca-Cola was planning to launch a new Diet Coke enriched with vitamins, to be called Diet Coke Plus. Rival firm Cadbury Schweppes has already tried a similar idea by launching 7UP Plus, although this has failed to grab headlines so far.

The lack of immediate success for 7UP Plus, and continuous rises for juice and water drinks, means soft drinks firms may have a hard time convincing market analysts their innovations will make a difference to CSDs, however.

Mintel forecast recently that CSD market value would slip one per cent in the UK over the next five years, in real terms.

Volume is expected to drop 13 per cent.

Non-carbonates will continue to eat into CSD sales, the group said, although it added that CSD market value had been "remarkably robust" over the last couple of years, considering the rise of public health campaigns.

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