Although health experts and organizations like World Health Organization (WHO) have recommended a reduction in the intake of such sugar-sweetened beverages, the worldwide demand for soft drinks is on the rise. Cola manufacturing companies like Coca-Cola Co and PepsiCo Inc are marketing their products aggressively, especially in low and middle-income countries like India, Kuwait, Ghana and Peru, and adversely affecting the health of not only children but adults as well.
On the flip side of this entire controversy related to sugary drinks, the the sole beneficiaries seem to be the Cola companies and the ultimate losers, undoubtedly the consumers, who are spending their hard earned cash for buying sugar-sweetened drinks that are spoiling their health.
What's even more intriguing is that the whole idea of reducing the amount of sugar in soft drinks, which was being perceived as a threat to the beverage industry has turned out to be a profitable business for Coca-Cola Co.
In a new marketing strategy, Coca-Cola Co has started offering its sugary drinks in smaller bottles and cans to customers who are showing an aversion to sugar. What does that mean for Coca-Cola Co? It means that the company charges more for lesser product, translating into higher margins and profits. The company has also started reformulating its drinks and also developing new products to reduce the amount of sweetener, so that the demand of its products does not decrease.
Coca-Cola Co is confident that this move of reducing sugar in drinks will lead to increased sales, and to further back its claim, the company received a shot in the arm after third-quarter results were declared on Wednesday.
In an interview with Bloomberg Television, Chief Operating Officer James Quincey said, "We can grow the revenue of this business and reduce the amount of sugar and help those people who need to bring it under control, bring it under control."
The company is currently reformulating 200 products to reduce the sugar content in them. Fanta and Sprite with 30 per cent less sugar are already on shelves in the United Kingdom along with the introduction of Coca-Cola Zero (a Coke variant with zero sugar) in several markets.
The results of this smart strategy adopted by Coca-Cola Co are already visible. The company posted sales of $10.6 billion, a bit above than $10.5 billion that analysts had projected. While the increase in sales of sparkling drinks was negligible, the sales of non-soda drinks which Coca-Cola calls still beverages rose by 3 per cent in the last quarter.
The company made profit of 49 cents a share, barring on a few items. The Atlanta-based cola manufacturer has also reaffirmed its sales targets for the next year.
Following Coca-Cola's lead, PepsiCo Inc which has suffered a decline in sales due to consumers giving up on sugary drinks has pledged last week that the company's at least two-thirds beverage volume will have no more than 100 calories from added sugar per 12-ounce serving by 2025.
With incursion on its core business of soda, Coca-Cola has been making a conscious effort of diversifying into bottled water, juices, coffee and tea. But sparkling drinks still remain a substantial part of its sales, approximately accounting for nearly 70 per cent by volume. However, the volumes have been seeing a gradual decline of about 1 per cent per year since the year 2000, and the decline could soon become more rapid, says Quincey.
Surprisingly, in North America – considered as Coca-Cola's largest market, where the opposition against sugar in drinks is also the strongest, sales of Coca-Cola beverages rose by 2 per cent. Combined with the small-package strategy and increased prices, the overall sales in North America rose by 3.3 per cent to $2.66 billion.
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