Peng, that's true,
But only part of the picture.
Investors Business Daily ran a full page article this week on the carbonated & soft beverage industry in the US:
It was titled; "Thirsting For More Variety" that alone makes the point.
"Thirsty for a Coke? Take your pick.
There's Coca-Cola Zero, Coca-Cola Blak, Black Cherry Vanilla Coca-Cola and Diet Coke Sweetened with Splenda. And those are just a few of the newer carbonated drinks offered by Coca-Cola Co."
"But many of these new soft drinks aren't what they used to be — carbonated. Fizzy soft drink volumes in the U.S. dropped last year for the first time since 1985, according to Beverage Digest.
Health trends had a lot to do with it. "Most people associate carbonated soft drinks with sugar sodas, and they've been out of favor with consumers," said Lynn Dornblaser, analyst with Mintel International Group.
That's a big reason bottled water, sports drinks, juices and ready-to-drink teas have been gaining favor.
Even so, some consumers crave new products, even if they aren't so healthy. "New" is key.
Take energy drinks, which are generally packed with sugar and caffeine and are popular with young men. Last year's 0.2% industry decline in carbonated beverages as tracked by Beverage Digest would have been down even more — 0.7% — had it not been for strong growth in energy drinks such as Red Bull, Rockstar and Hansen Natural's (HANS) Monster.
"Twenty years ago, there wasn't Red Bull," Dornblaser said. "Now dozens of energy drinks are on the market from every company you could imagine, including Coca-Cola."
And with prices of $1.99 per can, margins on energy drinks are two to three times those of soft drinks, says analyst Alton Stump of Longbow Securities. Hansen's earnings have tripled over the last couple of years."
The Bottler Debate:
"The drink companies sell the syrup, or concentrate, to bottlers, who produce and distribute the finished products.
"Bottlers do all the legwork," said analyst Lauren Torres of HSBC Global Research.
That leaves the drink firms free to come up with new products and marketing campaigns.
The more bottlers sell, the more money drink companies make."
Conclusion:
" Name Of The Game: "If the key in real estate is location, location, location, in beverages it's distribution, distribution, distribution," said Sicher."
