Analysis

Analysis - CSD firms should forget innovation, focus on pricing

Most popular

What are Diageo's priorities for the years ahead?

Diageo Performance Trends 2014-2018 - results data

What can the spirits industry learn from Diageo?

Why targeting by gender failed in 2018

MORE

US soft drinks firms should tackle the “perennial decline” in the CSD category by growing profits through raising prices, instead of focussing on product innovation, an analyst has argued.

//i2.aroq.com/1/10975844-1134x1694.jpg

In a note today (24 October), Bernstein Research said it expects CSD volumes in North America to remain “weak”, going forward. This will be due to the “tepid macroeconomic environment, a weak consumer base with less discretionary income, increased awareness about health and wellness, and enhanced anti-obesity regulation”, the note said. 

The note came after Dr Pepper Snapple Group (DPSG) yesterday announced flat nine-month sales and a slide in volumes. However, profits edged up 2% in the period.

In particular, soft drinks companies, including DPSG, have expressed alarm at the drop in sales for diet soda recently, due to consumers' fears around the artificial sweetener aspartame. DPSG has invested heavily this year in its low-calorie TEN range and is still confident it will bring “lapsed” consumers back to the category. 

But, Bernstein said that DPSG and it competitors – Coca-Cola Co and PepsiCo - could be forced to rethink their strategies due to a “fundamental shift in diet CSD demand dynamics”. The note said: “Is product innovation a worthwhile effort ... in the context of perennial demand decline? Or, should the companies simply focus on growing profits through pricing inceases, as we have always argued?”

Looking ahead, Bernstein also said DPSG may have to consider “cost-savings” to offset weak top line growth, “simply to meet earnings expectations”.


Related Content

Heineken faces tough battle in China's growing super-premium tier - analysis

Heineken faces tough battle in China's growing super-premium tier - analysis...

"Coke Zero's the hero" for Coca-Cola European Partners in 2016 - Analysis ...

Will Keurig Green Mountain, Dr Pepper Snapple Group merger spark M&A boom? - Analysis

Will Keurig Green Mountain, Dr Pepper Snapple Group merger spark M&A boom? - Analysis...

What innovations are on the cards for Monster Beverage Corp in 2017? - Analysis

What innovations are on the cards for Monster Beverage Corp in 2017? - Analysis...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?