Economic Importance of Soft Drinks

Soft drink companies sell water and health drinks.

The United States has the highest consumption of soft drinks per person in the world. In recent years, because of declining soft drink sales, manufacturers have expanded into new markets to entice consumers with energy and other low-calorie drinks.

Brands

The three biggest soft drink companies, Coca-Cola, Dr. Pepper Snapple Group and Pepsi, control 89 percent of the U.S. soft drink industry. However, the statistic is not immediately apparent, because the companies use different brand names to sell their drinks. According to Litman Live, out of 987 varieties of drinks sold by 102 soft drink makers, 411 are owned by the big three.

Sales

Approximately 9.92 billion cases of soft drinks were sold in the U.S. in 2007, representing a 0.6 percent drop from 2006. Beverage Digest publisher John Sicher writes that this is because consumers are turning to healthier options such as teas and flavored water. In spite of poor sales, high soft drink prices have caused company values to rise by 2.7 percent to a total of $72 billion.

Considerations

Lesser known companies tend to offer new categories of drinks, such as flavored water and energy drinks, however such companies are often bought out by the bigger companies. Glaceau Vitamin Water, for example, was purchased by Coca-Cola in 2007 for $4.1 billion. The major soft drink producers are currently locked in a battle to develop low-calorie, carbonated drinks that taste as sweet as regular drinks.

References

• Reuters: U.S. Soft Drink Sales Volume Falls More in '07
• Money Control: Drink Makers Pump Up for Sweetener Battle
• McSpotlight: The Soft Drinks Industry
• Litmanlive.co.uk: The Illusion of Diversity -- The Soft Drink Industry