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    Carbonated Soft Drinks Finding Their Fizz Again

    Clever marketing campaigns, smaller serving sizes provide a boost.

    By Renee M. Covino, Convenience Store News

    NATIONAL REPORT — Who says carbonated soft drinks (CSDs) are suffering? Here are three telltale signs that the largest packaged beverages segment has found its way back to stable:

    1. Smaller sizes are adding a CSD pop

    Soda is experiencing its best overall sales performance (flat to slightly positive) since 2012, according to Nielsen data, and some category analysts are attributing this to the smaller size/larger price trend that appeals to the widening group of consumers who reach for soda as a special treat — meaning they don’t want it in “Big Gulp” abundance anymore.

    Leading beverage companies The Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group are steering these consumers to 7.5-ounce cans and 8-ounce bottles that cost more per ounce than their larger, more traditional (until very recently) counterparts.

    Coca-Cola has been most aggressive in pushing the more petite product, sales of which rose 15 percent in the first nine months of last year, according to a recent Wall Street Journal report.

    Meanwhile, PepsiCo reported sales of its shrunken sodas have increased nearly 2 percent annually since 2011. And this year, Dr Pepper is rolling out 7.5-ounce cans nationally; these will replace its 8-ounce cans.

    “Moms want to treat their kids, but they don’t want them to have too much,” remarked Sandy Douglas, North American president of The Coca-Cola Co.

    Similarly, Dr Pepper Chief Financial Officer Marty Ellen noted that today’s soda consumers “want to consume less, but they still enjoy their favorite brands.”

    2. Clever campaigns and retro marketing abound

    Last year’s wildly successful “Share a Coke” campaign — in which the company replaced three of its iconic logos on 20-ounce bottles with the 250 most popular first names among American teens and millennials, while putting colloquial nicknames such as BFF, Star, Bestie, Legend and Wingman on 12-ounce cans — is being followed this year with a new incarnation: “Share a Coke and a Song.”

    All summer long, while supplies last, 8-ounce glass bottles, 7.5-ounce mini cans, 20-ounce bottles, 1.25- and 2-liter bottles, and 12-ounce cans of Coca-Cola, Diet Coke, Coke Zero and Coca-Cola Life will feature an array of song lyrics from recent chart-toppers, classic hits and traditional favorites.

    Convenience store retailers that supported last year’s initial “Share a Coke” launch with branded share bins, secondary displays and point-of-sale materials experienced total category results nearly double the market trend, according to the Atlanta-based beverage giant.

    The Diet Coke brand also recently got another packaging pop via the “IT’S MINE” program, which included a first for the brand: the introduction of the Diet Coke 12-ounce glass contour bottle, available for a limited time. Millions of one-of-a-kind vibrant designs are featured on the bottles and no two are the same — just like Diet Coke’s fans, the company said.

    In addition to packaging pizazz, Coca-Cola announced the relaunch of two craft soda brands: Hansen’s and Blue Sky, both with updated branding and packaging. The company acquired these brands from Monster Beverage Corp. last year. They fall under Coca-Cola’s Venturing & Emerging Brands (VEB) segment.

    “These brands have incredible potential to thrive and build on their already great histories, and VEB is excited to help steward a new era of innovation, excitement and sustained growth for Hansen’s and Blue Sky,” stated Jeremy Faa, VEB’s senior vice president and general manager, craft beverages.

    VEB research indicates that the overall craft and specialty soda segment accounts for less than 2 percent of total U.S. soft drink sales, but sales are growing.

    PepsiCo is also getting in on the playful packaging innovation. The Purchase, N.Y.-based company is bringing emojis offline and expanding its global PepsiMoji campaign, inviting fans across the United States to #SayItWithPepsi this summer.

    Available now in the U.S., Pepsi, Diet Pepsi and Pepsi MAX features a variety of PepsiMoji designs on 20-ounce bottles, select bottle multipacks, and fountain cups. With hundreds of proprietary PepsiMoji characters created by the PepsiCo Design & Innovation Center, fans can pick from a variety of themes, including food, sports, travel, music and more. The PepsiMoji catalogue is available for consumers to download for free on the Apple App and Google Play stores.

    Convenience store retailers recently surveyed by Wells Fargo Securities LLC said they believe the Emoji 20-ounce bottles are “going to be huge” in popularity and sales this summer. 

    3. Progressive category management is in practice

    Packaged beverages have exploded with a proliferation of choices for c-store shoppers today, according to Brian DeLong, senior vice president with marketing agency Catapult. He told Convenience Store News that more retailers are wisely making it easier to navigate the set, “allowing shoppers to find their desired beverage faster, which can translate to time spent shopping other categories.”

    Looking to capitalize on research showing that variety in CSD flavors is a significant driver of the business, and that 57.3 percent of total CSD sales is made up of non-cola sodas, Dr Pepper Snapple Group recently debuted the Flavor Zone, which separates non-colas and colas, placing non-colas in the Strike Zone position. It doesn’t require the reallocation of space or the addition or deletion of any SKUs.

    Despite some initial reluctance to adoption because of the longstanding reliance among manufacturer contracts in the allocation and positioning of CSDs, “a handful of progressive retailers prioritized their shoppers over contracts or the status quo and implemented the recommendation,” according to the company. Results were favorable for these retailers: They grew their 20-ounce CSD dollar sales by 6 percent more than accounts without a Flavor Zone. Equally important, the growth has not been limited to non-cola CSDs — cola CSDs have grown at a 5.7-percent greater pace.

    These results confirmed the company’s hypothesis that moving colas — a much more heavily planned purchase — out of the Strike Zone would not negatively impact sales, and would be offset by the increased traffic to the CSD cold doors due to the perception there was greater variety.

    By Renee M. Covino, Convenience Store News
    • About Renee M. Covino Contributing Editor Renée M. Covino is a veteran researcher, editor and writer with more than 30 years of experience in the mass retail sector. Her articles and columns have appeared online and in print for dozens of industry trade magazines, newsletters, metro newspapers, Fortune 500 company reports and college textbooks. Covino is a self-named “store connoisseur” who not only writes about retail, but happily supports it.

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