Pepsi and Coca-Cola Chart New Path

It is well established that the carbonated soft drink market has been facing major headwinds from changing consumer tastes and demands. Sales of carbonated soft drinks slid for the tenth straight year this year with total volume down 0.9%. Part of this decline stems from the increase in governmental regulation and attacks on the industry as a whole as a contributor of obesity.

In response to these trends, many soda companies have started trying to refocus their energies into other channels of growth. Notably, both Coca-Cola and Pepsi have continued trying to acquire brands that would help them diversify into healthier product lines including juices, coconut water, etc. Among the new strategies that the two companies have taken in trying to revitalize interest in their drinks is partnering with such companies as Keurig and SodaStream respectively. Starting this week, caps filled with Pepsi and Sierra Mist will be sold on SodaStream’s website and a few other select locations. The move comes ahead of Keurig’s cold drink machine launch later this year.

However, it is important to note that the success of the partnership largely depends on how well consumers respond to the new product. Among the many things to consider is whether consumers feel that they will be able to recoup their initial investment in the machines through savings on soda bottle consumption and whether the overall concept gains momentum. The risks are definitely high, but the rewards potentially much higher. What remains to be seen is how these companies continue to position themselves in this market and if they are able to sell this new product line effectively.

-Aditya