Diet soda losing the weight of its beverage market share
Diet soda’s history among health-conscious consumers has morphed over the past few decades. At first, zero-calorie diet soda was heralded as a solution to weight loss, the pinnacle of good health, while at the same time, consumers didn’t have to forsake their beloved soft drinks. Trendy and popular, diet soda became a strong category within the carbonated beverage industry.
However, in recent years, sugar and artificial sweeteners like aspartame have been called into question by some scientists and health experts, who argue that aspartame causes harmful health effects. While research has both supported and disproven this theory against aspartame, many consumers are still beginning to fear these effects, real or perceived, and are turning away from diet soda in droves as a result.
In its most recent earnings report, Coca-Cola Co.’s Diet Coke brand saw a 6% decrease in volume for the quarter year over year. This is the eighth year in a row that volume has dropped for Diet Coke, and its market share has fallen to 8.5%, its lowest percentage since 1999. Sandy Douglas, president of Coca-Cola North America, calls Diet Coke “a work in progress,” Fortune reported.
Luckily for Coca-Cola, other brands like Coke, Coke Zero, Sprite, and Fanta picked up the slack, leaving the company with 1% growth in revenue for the quarter, the first time in nine quarters. However, PepsiCo Inc.’s Pepsi Cola recently dethroned Diet Coke from its spot as No. 2 U.S. soda by volume last year.
According to Fortune, Diet Coke’s poor performance could be a significant shortcoming for the entire soda industry if it keeps up. Diet Coke is still the third most popular carbonated beverage in the U.S., so continued weakness by this brand could affect the entire market’s figures.
What diet soda really needs is a way to deal with its huge PR problem.
Diet soda study results run the gamut
Many studies have been conducted regarding the safety of certain artificial sweeteners, particularly aspartame, as well as whether diet sodas actually do help consumers lose weight.
One study published in the Journal of American Geriatrics Society found that, during the study period, daily diet soda drinkers gained four times as many inches in their waists as those who did not drink diet soda. According to another report from a Purdue University professor, diet soda drinkers experience the same health problems as regular soda drinkers, including an “increased risk of excessive weight gain, metabolic syndrome, type 2 diabetes, and cardiovascular disease," the study showed.
On the other side of the debate, a study published in The American Journal of Clinical Nutrition reported that participants who consumed aspartame while on a weight loss regimen lost more weight and regained less weight after the regimen was over as opposed to the no-aspartame group, who lost less weight and gained back more during follow-up. In another study published in the same journal, participants in one group drank soda with aspartame versus the other group, who drank the same amount of soda but with high-fructose corn syrup. The aspartame group saw reduced calorie intake in both females and males as well as weight loss in males. Both males and females in the high-fructose corn syrup group, on the other hand, saw increased calorie intake and gained weight.
How diet soda is fighting back
Most recently, PepsiCo responded to consumers’ complaints by vowing to remove aspartame from Diet Pepsi later this year and replace it with sucralose and acesulfame potassium. In another attempt, soda companies like Coca-Cola and PepsiCo are releasing stevia-sweetened beverages, namely Coca-Cola Life and Pepsi True, respectively.
However, one of the main issues with stevia is for companies to be able to balance stevia’s bitter flavor while trying to produce a great-tasting product akin to their traditional colas. To do that, both Coca-Cola Life and Pepsi True have some sugar mixed in with the stevia. This means that the drinks have about one-third fewer calories than traditional colas but still many more calories than if the drink were made with stevia alone.
Soda companies are also turning to science to create a diet drink that maintains a great flavor with low to zero calories, according to Bloomberg. Scientists and biotech companies are playing around with both natural and artificial sweeteners to see if they can create a sweet solution. This includes experimenting with less bitter-tasting stevia molecules, enhancing sugar’s taste so beverages don’t need as much to offset the stevia, and other flavor enhancers, such as a Himalayan orchid that boosts sugar perception.
Two main problems belie the process of finding the perfect diet sweetener: 1) The science isn’t quite there yet; and 2) Cost. At the moment, Coca-Cola is keeping an eye on one such plant-science company, Chromocell, but the company has only managed to replace up to 33% of the sugar mixed with stevia without compromising taste. The lab’s goal is 90% sugar reduction, but that could take another five years. Also, sweetness enhancers have to be priced right to compete with sugar and artificial sweeteners.
Another option for soda companies like Coca-Cola and PepsiCo is to refocus on other categories to make up for falling diet soda sales if there’s no end in sight to the decreasing volumes. The two soda giants have been competing in the ready-to-drink tea market in particular. RTD tea is a rising star in the beverage industry, where, unlike with traditional sodas, PepsiCo is coming out on top. Coca-Cola also recently released a new functional beverage option, a no-calorie, no-sugar variety of its Glacéau vitamin water, Glacéau Multi-V Zero.
What’s a soda company to do when consumers shun sugar for fears of obesity, diabetes, high blood sugar, and high blood pressure while also turning away from artificial sweeteners due to other presumed health issues? As these companies face a soda market that has seen falling sales for the past decade, soda makers are trying to figure out how to survive as they tweak their formulas and strategies for diet soft drinks. It’s all about hitting the consumer’s sweet spot—both healthy and delicious—the ultimate mystery for the soda industry.