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New Pepsi, Old Problem: US Soda Sales Have Lost Their Fizz

Published on Jun 28 2016 10:08 AM in Drinks tagged: Coca-Cola / Pepsi / Soft Drinks

New Pepsi, Old Problem: US Soda Sales Have Lost Their Fizz

PepsiCo's moves this week mask a harder truth for the soft-drink industry: Soda sales are down no matter how you sweeten it.

Pepsi said Monday it’s bringing back Diet Pepsi with aspartame. That came after the company replaced the drink with a sucralose version last August. In all, the company will be selling three Pepsi-branded diet drinks - one sweetened with sucralose, two with aspartame.

The U.S. Food and Drug Administration and the European Food Safety Authority say aspartame is safe, and the  American Cancer Society says worries about an increased cancer risk are unfounded. Nonetheless, rumors persist, and the consumer push for natural ingredients doesn’t help.

At the same time, sucralose simply didn’t taste good to many Diet Pepsi drinkers.

The churn was unavoidably reminiscent of Coca Cola Co.’s 1980s flirtation with a new recipe, but with an important difference. It almost didn’t matter what Pepsi did with the formulations of its sugar-free products. Per-person soda consumption in the U.S. fell to a 30-year low last year, according to Beverage Digest. And the 2016 numbers don’t look any better.

“Everybody should’ve learned from the Coke Classic fiasco that if you make a change in your product formulation, you mustn’t tell anybody about it,” said Marion Nestle, a New York University nutrition professor and author of “Soda Politics: Taking on Big Soda (and Winning).”

Diet Pepsi’s sales volume fell 5.8 percent in 2015 and dropped roughly 11 percent at retail during the first quarter of 2016, according to data from Beverage Digest, which first reported the product changes. Sales of Diet Coke, which is sweetened with aspartame, fell 5.6 percent in 2015 and 5.7 percent at retail in the first quarter of 2016.

“The non-aspartame version was essentially a disaster for Diet Pepsi,” said Ali Dibadj, an analyst at Sanford C. Bernstein & Co. “They lost share, lost volume and may have lost some consumers for good. The return of aspartame is an attempt at getting back in the saddle in diets, but that will be tough to do.”

Sucralose-sweetened Diet Pepsi will remain the Purchase, New York-based company’s “primary diet cola offering.” It will be sold alongside aspartame-sweetened Diet Pepsi Classic Sweetener Blend, PepsiCo said Monday. And Pepsi Max - the No. 2 soft-drink maker’s answer to No. 1 Coca-Cola’s Coke Zero - will be called Pepsi Zero Sugar in the US. It also contains aspartame.

Pepsi and Coke are stuck between irreconcilable health concerns. With obesity such a big problem in the US, people are rejecting sugar-laden sodas. But the trend toward health doesn’t include diet drinks because pop consumers want natural products, not artificial sweeteners. And nature’s perfect zero-calorie sugar substitute -- free of any unpleasant aftertaste -- has yet to be invented.

When it comes to health - and particularly weight loss - diet drinks are better than the sugary kinds, said Yoni Freedhoff, a family doctor and obesity specialist.

Given the choice, however, Freedhoff said he would check “none of the above.”

"How much more awesome would it be if we could just avoid sweeteners and be healthy?" Freedhoff said. “That would be terrific.”

News by Bloomberg, edited by Hospitality Ireland

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