Nutritionally Savvy Consumers contributing to Growth in Natural Sweetener Market

Nutritionally Savvy Consumers contributing to Growth in Natural Sweetener Market

- in New Alternatives

by Fountain Asset Corp.

The natural sweeteners market has continued to grow as health concerns such as obesity and diabetes are driving many consumers to low-calorie alternatives to satisfy their appetites for sweet-tasting food and drinks.

In a recent Business Insider article, we learned that PepsiCo announced that by 2025, two thirds of its drinks will have 100 calories or fewer from added sugar, per 12 oz. serving. Currently, these types of sugary beverages make up 40% of PepsiCo's drinks.

With sales of soda consumption declining, this change is part of a wider trend in the beverage industry.

According to Beverage Digest’s annual report, there was a drop in total volume of soda consumed in the US in 2015 by 1.2% compared to a drop in 2014 of 0.9%.

The amount of Coca-Cola consumed by Americans dropped by 1% by volume, while Pepsi Cola dropped 3.2%.

Scientific evidence highlighting the harmful impacts of excess sugar consumption is a big reason for the decline of soda. According to the Obesity Society, even though Americans consume 30% more sugar daily now than three decades ago, nutritional trends are increasingly focusing on the dangers of eating too much sugar.

This is forcing Pepsi and Coke to diversify their offerings and grow sales of drinks such as tea, coffee, and bottled water.

In an announcement earlier this year by PepsiCo CEO Indra Nooyi , less than 25% of the company’s global sales are from soda — the same proportion of sales Pepsi brings in from its "naturally nutritious" category, which includes bottled water and unsweetened drinks.

Nooyi calls the emphasis on products aimed at nutritionally-savvy customers “future-proofing" Pepsi's portfolio, " reshaping it to capitalize on consumers' increasing interest in health and wellness."

According to their COO James Quincey, Coca-Cola is attempting a similar make-over. "Since 2000, we've increased our business from about 10% of our volume coming from still beverages to almost 30% today.”

Instead, the company is investing in juice, tea, coffee, and bottled water.

Even when it comes to selling soda, Pepsi and Coca-Cola are finding ways to cut sugar and calories.

Soda companies are shrinking the size of cans and bottles as a way to combat the decline in consumption. As an example, smaller cans contain fewer total calories than large bottles, which may make them more appealing to the consumer. They also generally cost more per ounce.

In 2015, for example, an 8.5-ounce aluminum bottle of Coke generated $1.60 in revenue per purchase, while a two-liter gallon only generates $0.18. That’s nearly nine times the revenue.

Although Coca-Cola and PepsiCo will never completely ditch the sodas that serve as their namesakes, the sugary two-liter bottles are no longer the backbone of the chains' business. The soda giants need to cut sugar from beverages to survive due to consumer demand — not just out of concern for shoppers' health.

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Although the information in this commentary has been obtained from sources believed to be reliable, Fountain Asset Corp. does not guarantee its accuracy and such information may be incomplete or condensed.  The opinions expressed are subject to change without notice. Fountain Asset Corp. will not be liable for any errors or omissions in this information nor for the availability of this information.  All content provided in this article is for informational purposes only and should not be used to make buy or sell decisions for any type of investment.