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Declining Soda Sales Could Be Here to Stay

NEW YORK -- Carbonated soft drinks (CSDs) have faced declining consumption as bottled waters, juices and sports drinks crowd the cooler. However, a recent news report said that CSD companies are could now be facing another problem: declining soda revenue.

As U.S. consumption declined over the past eight years, beverage giants such as The Coca-Cola Co., PepsiCo and Dr Pepper Snapple Group typically were able to raise prices enough to keep soda revenues growing. But soda sales at U.S. stores declined in the second half of last year -- including during the holidays, according to the Wall Street Journal.

"The question from here is if that is the new norm,'' Steve Powers, a beverage analyst at Sanford C. Bernstein, said of the latest store sales numbers.

Rising commodity prices pushed CSD companies to increase prices in 2011. Prices were also increased lightly in late 2012, but volumes fell even more sharply, the newspaper reported.

Soda sales declined 0.6 percent last year through Dec. 30 to $28.7 billion at U.S. stores tracked by SymphonyIRI Group. In volume terms, sales dropped 1.8 percent.

The pace of decline worsened later in the year. Sales, in dollar terms, dropped 2.5 percent in the 12 weeks ended Dec. 30 from a year earlier, and were down 2.8 percent when counting just December, according to the market-research firm, after soda makers raised prices, further damping demand. By volume, sales fell 3.55 percent in the 12-week period and 4.9 percent for December, according to the WSJ.

Sales of soda in restaurants, vending machines, and some other venues are not included in the numbers. Industry insiders say taking those outlets into account, overall soda sales revenue likely rose slightly last year.


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