Coca-Cola has extended its lead of the US soft drinks market and over its main rival, PepsiCo, helped by the launch of Vanilla Coke and strong growth from its Diet Coke brand, according to the latest ranking from Beverage Digest.
The annual survey of the US carbonated soft drink (CSD) market shows that total volume sales grew by just 0.8 per cent in 2002 to 10.1 billion cases, a slight increase compared to the previous year but still well below the 2-4 per cent average of the 1990s. In value terms, the market was worth around $62.9 billion, up 2 per cent.
The top three companies (Coca-Cola, PepsiCo and Dr Pepper/Seven Up) accounted for around 90 per cent of total volume sales, and of these, Coca-Cola was the best performer, with a 2.1 per cent rise in total CSD sales lifting its market share by 0.6 per cent, the first increase since 1999. The company now accounts for 44.3 per cent of the total US CSD market.
PepsiCo also managed to increase its total CSD volumes in the US, but not by as much as in 2001, when sales were boosted by the launch of Mountain Dew Code Red and Sierra Mist, as well as strong growth from the lemon-flavoured Pepsi Twist.
Dr Pepper/Seven Up, the US unit of London-based Cadbury Schweppes, was the big loser during the year, with both volume and market share falling during 2002. The core 7UP brand saw a sharp decline in volumes (7.8 per cent) as production of the brand was transferred from the Pepsi bottling system to DPSU's own independent bottlers. There was also a decline for Dr Pepper (3.3 per cent), although the Diet variant did show good growth (3.9 per cent) and has now become one of the top 10 US brands, ousting Coke's Barq's Root Beer.
But brands were not the only good performers during the year. Cott, the Canadian company which is the leading producer of own label CSDs in the US, also had a good year, lifting volume sales and market share as a result of both organic growth and acquisitions. It is the fourth-largest player in the US CSD market.
The US market has for so long been dominated by a handful of players that the arrival of any new company into the leading rankings is of note. The new arrival is North Carolina-based Carolina Beverage Company, maker of the Cheerwine brand, which joined the top 10 ranking for the first time as a result mainly of the acquisition of Seagram's soft drink business in the US by Coke, which meant that Seagram was not listed as a separate company any longer. However, Carolina Beverage nonetheless sold 5 million cases of CSDs last year in the US - not bad for a company which has only limited distribution in the south east of the country.
The other companies making up the top 10 are National Beverage Corp, producer of Shasta and Faygo, in fifth place, energy drink producers Big Red and Red Bull in sixth and seventh, and Monarch in ninth. Various private label and other manufacturers together take tenth place.
In terms of brands, the top 10 are all owned by the three leading players, with Coke and Pepsi-Cola topping the list, though both lost volume, falling 2.1 per cent and 0.2 per cent respectively.
In terms of growth during 2002, however, it was the diet brands which performed the best, with Diet Dr Pepper (number 10) and the two leading diet colas, Diet Pepsi (the seventh-placed brand) and Diet Coke (third), all posting strong increases. Diet Pepsi posted the strongest growth of any cola in the top 10 list, up 3.5 per cent, while Diet Coke also performed well with volume up 3 per cent.
All the other top 10 brands lost volume: fourth-placed Mountain Dew from Pepsi dropped 4.2 per cent, while fifth-placed Sprite fell 2.5 per cent and ninth-placed Caffeine Free Diet Coke slid 2 per cent.
The innovation in the US soft drinks market is likely to continue in the future, given the success of the various new products launched over the last two years, according to the analysis. Line extensions such as Coke's Vanilla Coke, Pepsi's Mountain Dew Code Red and Cadbury's Red Fusion from Dr Pepper have all helped drive growth, and Mountain Dew Code Red and Vanilla Coke each posted volume of about 90 million cases in 2002, making them significant brands in their own right.