The soda market is trying to develop toward a more health conscious public. While the traditional brands are having regular drinks with over 130 calories and 35 grams of sugar in a can, a new type of drinks that use clean, natural ingredients is emerging, writes eToro analyst for Romania, Bogdan Maioreanu.
These are starting to put a dent in the market of the beverage giants, but are also becoming a target for acquisition.
Coca-Cola was created in 1886. Pepsi was invented in the 1890s, but got its name in 1898. But before the two giants, it was Dr Pepper that was founded in 1885 in Waco, Texas. This was the first wave of 19th-century upstart soda companies. Initially their beverages were sold as tonics or even medicine. But now studies suggest that some of these products might not be quite good for your health, especially the ones rich in sugar. And this is taking the battle for supremacy in the market in a completely new direction: healthy drinks.
Latest news is mentioning that Poppi, a company that advertised its healthy soda at the latest Super Bowl, is targeted for acquisition by Coca-Cola. Poppi is a soda that is aimed at the health conscious population and a best seller on amazon. It combines agave inulin, apple cider vinegar (ACV), and fruit juice resulting in a drink that has low calories and sugar, and prebiotics. The company was founded by husband-and-wife duo Stephen and Allison Ellsworth in 2015 and was prominently featured on TV show Shark Tank – the US Arena Leilor. The prebiotics soda category is still relatively small, with the health benefits still being debated.
While all companies refused to comment about this potential deal, the pursuit of healthy beverages was also revealed by last year, reports that indicated both Coca-Cola (KO) and PepsiCo (PEP) interest in prebiotic soda brand Olipop, which is found in over 25K stores in the U.S. and generated more than $100M in revenue for the first half of 2023, according to Bloomberg.
But the pursuit for healthier drinks might also come from a surprising direction. There are new wonder drugs that promise to solve the huge problem of obesity. Ozempic, Wegovy of Novo Nordisk and Zepbound of Eli Lilly are showing promising ways to lose weight. But using these drugs does not allow you to eat what you want in any quantities, especially when it comes to fatty or sugar rich foods and beverages. Therefore all these drugs could undercut consumer appetite for snacks and soft drinks and put a dent in these companies’ sales, forcing them to develop their portfolio of healthier choices for consumers.
Inflation and high interest rates are also impacting the companies’ sales. Coca-Cola earnings report met investors’ expectations thanks to higher prices despite lower volume in North America down by 1%. For comparison, rival PepsiCo saw volume for its North American beverage unit fall 6% in the fourth quarter due to price increases that the clients were not ready to pay. PepsiCo executives said high borrowing costs and lower personal savings squeezed consumers’ budgets, leading shoppers to seek out private-label options or smaller pack sizes. But Coca-Cola has successfully passed on most of its rising costs to consumers without losing much business. For the last three months of 2023, the beverage giant posted adjusted earnings of 49 cents a share, matching analysts’ forecasts. Net revenue of $10.8 billion beat estimates of $10.7 billion and jumped 7% from the same quarter last year.
Coca-Cola is the only beverage company in the top 20 most held stocks by investors on the social trading and investing platform eToro, occupying 14th place globally after a 5% increase and 18th place in Romania with a 2% increase in number of investors in the last quarter of 2023.
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