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Soft-Drink Giants Have Weighty Plans for Diet Market

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Sometimes the big soft-drink companies try to create their own trends.

This time, they're trying to catch up with what consumers want.

For the past three years, sales of diet sodas have crept upward, creating one of the few bright spots in the otherwise lagging U.S. soft-drink business.

This year, sales are up even more, prompting the major soft-drink makers to sit up and take notice. They are going after the growing market with a fervor that will reach even greater levels in 2004.

At Coca-Cola, for example, the North American unit is working on ``Project Light,'' a plan aimed at getting more store space in stores to display the company's diet drinks.

At Pepsi, they're planning to spend more money on ads to promote the company's Diet Pepsi brand.

With relatively little promotion from soft-drink sellers, diet sodas still enjoyed a renewed rise.

Diet drinks peaked in popularity in 1990 and 1991, when they made up 29.7 percent of the U.S. soft-drink market. The percentage started to slide as the 1990s went on, partly because of growth in sales of bottled water and noncarbonated drinks.

In 2000, the trend finally reversed, and diet sales ticked up. A year ago, sales volume increased 3.8 percent for diets, compared with 0.8 percent for soft drinks as a whole, according to Beverage Digest.

This year, sales are up an estimated 4 percent in the diet category, according to Coca-Cola.

``Diets have been where about the only real carbonated growth has been, and they will be where a lot more of the marketing and focus is next year,'' said John Sicher, editor and publisher of Beverage Digest.

The growth is due to a number of factors.

America's aging population is certainly one of them. People tend to gravitate to diet drinks as they get into their 30s, and they remain consumers beyond that.

And across all ages, health and fitness has become a mainstream trend, putting sugared drinks on the outs.

The evidence even shows up in schools. Lauren Steele, spokesman for Coca-Cola Bottling Company Consolidated in Charlotte, said diet sales are increasing with students, while regular soft drinks are down.

Pepsi's research turns up the same result. ``Young people today are drinking diet beverages at significantly higher levels than they did even two years ago,'' said Larry Jabbonsky, a spokesman for Pepsi-Cola North America.

And they're seeing more options, which is another factor in the renaissance of diet drinks.

In the 2000s, diet soft drinks proliferated, with the introduction of Diet Vanilla Coke, Diet Coke with Lemon, Diet Pepsi Vanilla, Diet Pepsi Twist, Diet Sierra Mist and Diet Mountain Dew Code Red.

At least one more is coming: Diet Coke with Lime, early next year.

In other cases, old drinks have been reformulated with different sweeteners to improve the product. A year ago, Dr Pepper/Seven Up altered a handful of brands - including Diet Rite and Diet Sunkist - with a combination of two sweeteners, sucralose and Acesulfame-K, or Ace-K.

Down the road, the big soft-drink makers could bring out more kinds of diets, or even midcalorie soft drinks.

As diet drinks have evolved, artificial sweeteners have played a key role in shaping the market.

Until the early 1980s, saccharin was the artificial sweetener of choice, and diet drink options were fairly limited.

Then along came aspartame, known commonly by the brand name NutraSweet. It was better tasting than saccharin and soon became an ingredient in Diet Coke and Diet Pepsi. Consumers liked it, and the brands caught on.

Today, after two decades on the market, Diet Coke is the nation's third-biggest soda brand, after Coke Classic and Pepsi.

Some consumers, however, still worry about the health effects from artificial sweeteners. Saccharin, for example, has long been feared as a possible carcinogen, even though it was found to be safe years ago.

Consumer trends, however, point toward more growth in diets. And that has caught the attention of industry leaders like Jeff Herbert, senior vice president for Coca-Cola trademark brands in North America.

Herbert said Coke is working on plans to put a big emphasis on diet drinks next year, with ``Project Light'' as the cornerstone.

Herbert said the goal is to create new kinds of store displays that will focus solely on Coke's diet drinks, from big ones like Diet Coke to obscure brands such as Fresca.

``It's going to be very attention-grabbing,'' he said. Store displays, Herbert said, are a key way of boosting sales.

Pepsi has tried a few diet displays this year, dubbed ``Diet Zone.'' And Dr Pepper/Seven Up plans to encourage its bottlers to allocate more space to diet drinks, too.

``If you go into a grocery store today, you'll probably find maybe two diet products on display,'' said Jim Trebilcock, senior vice president for consumer marketing at Dr Pepper/Seven Up.

That needs to change. ``We're merchandising our products like we were three years ago, four years ago,'' he said, even though the market has changed.

When it comes to ads, Coke is pondering whether to keep its current campaign for Diet Coke - ``Do what feels good'' - or to retool. But at least one thing is likely: Coke will spend more to promote Diet Coke.

One risk is that this new focus on diets will simply shift sales away from regular soft drinks. Herbert, for one, believes that won't be the case, because he thinks extra sales are coming from more purchases, not shifts from other products.

Even if the growth continues, the industry still needs to bear in mind that diet drinks probably won't be a cure-all.

The growing diet brands are smaller than the declining regular brands, so they're helping,'' Sicher said.But they alone won't return the carbonated category to strong, sustainable growth any time soon.''


(The Cox web site is at )

c.2003 Cox News Service

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