Dive Brief:
- Soda companies have solved a big problem with a small — and valuable — solution: Mini-cans and mini-bottles enable companies to command higher prices for less product, which brings in larger returns. This higher dollar amount has helped to offset volume losses.
- U.S. store sales of soda declined 2.2%, the 11th straight year of decline for the industry, but on a dollar basis, sales fell only 0.1%, the industry's best performance since reporting flat sales in 2012, according to Nielsen.
- Both Coca-Cola and PepsiCo reported a drop in sales volumes for soda in larger packaging but increases in sales of smaller packages like 7.5-ounce mini-cans and 8-ounce mini-bottles.
Dive Insight:
Besides being more profitable, smaller packaging allows soda companies to better appeal to health-conscious consumers concerned about their sugar intake. The WHO, FDA, and 2015 Dietary Guidelines recently recommended a cap on sugar intake.
This is an example of product innovation at a critical moment for soda companies, as over 60% of American consumers said they try to avoid soda, according to a Gallup poll last July.
In addition to the sugar cap recommendations, soda companies could also struggle with other hurdles: soda taxes. These are meant to reduce soda consumption and combat obesity and have already become a reality in places like Berkeley, CA, Mexico, Hungary, France, Finland, Denmark, and the Navajo Nation. But now the United Nations has officially made its own recommendation that governments consider implementing a soda tax to slow the growth of obesity, particularly of children, worldwide.
Critics of soda taxes, including soda companies and industry players like the American Beverage Association, suggest that though a tax might curb soda consumption, consumers could redirect that money to spend on other junk food, which doesn't solve the world's obesity issues. Health advocates announced in November that soda tax legislation could be debated in more than a dozen U.S. cities this year.