Soft drinks losing fizz as bottled water sales brim

Soft drinks continue to lose their fizz among consumers, as bottled water and other noncarbonated drinks gain popularity.

Growth in the U.S. carbonated soft drink industry was relatively flat during 2001 and per-capita consumption of the bubbly beverages fell for the third year in a row, according to reports released Thursday by market research companies.

Traditional cola drinks continue to dominate the soft-drink aisle, but shelf space is under assault by noncarbonated beverages, including the fast-growing bottled water sector. Market leader Coca-Cola Co.'s soft-drink volume fell by 0.2 percent during 2001, while archrival Pepsico Inc. earned a 1.3 percent volume increase, according to Beverage Digest, a Bedford Hills, N.Y.-based newsletter.

By contrast, Red Bull, an energy drink popular with younger people, registered a 118.8 percent increase in volume.

While Pepsi's existing diet drinks registered gains, the company also drove additional sales with its new Mountain Dew Code Red and Pepsi Twist beverages, according to Gary A. Hemphill, vice president of Beverage Marketing Corp., a New York-based research company.

Though best known for their carbonated brands, the nation's two leading beverage companies got a huge boost from noncarbonated beverages. Pepsi's noncarbonated sales, including juices and the fast-growing water sector, grew by 35 percent, while Coke's noncarbonated sales rose by 23 percent, according to Beverage Marketing Corp.

Water brands provided most of that lift.

"Not to use a bad pun, but water clearly is draining volume from some of the other carbonated categories," said John Sicher, editor and publisher of Beverage Digest. "The carbonated soft-drink market grew by 0.6 percent in 2001 but we estimate growth in bottled water at 30 percent."

The flagship cola brands -- Coke Classic and Pepsi -- still account for a third of all carbonated drink sales.