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Carbonated beverages no longer dominate soft drink sector.

The days of carbonated soft drinks dominating the beverage category may be drawing to a close, according to a leading industry analyst, who claims that the next generation of adults is turning its back on calorie-laden, fizzy drinks. Morgan Stanley analyst Bill Pecoriello predicts that carbonated soft drinks sales in the U.S. will fall 1.5% a year in the next five years, twice the rate of decline in 2005.

More alarmingly for carbonated soft drinks producers, however, is the statistic that 13-17 year olds are drinking fewer fizzy drinks than the overall population. Teenagers, says Pecoriello, are increasingly purchasing non-carbonated beverages such as sports drinks, bottled teas and energy drinks due to health concerns and parental restrictions. "The image of regular colas and diet colas continues to deteriorate at a rapid pace, which we've been tracking for several years," Pecoriello said in his report.

According to Pecoriello, PepsiCo is best placed to benefit from the shift towards healthy soft drinks. The company has developed a strong portfolio of noncarbonated offerings including best selling energy drink Gatorade and Aquafina water. Coca-Cola Co., on the other hand, has ground to make up, Pecoriello argues, given the relative weakness of its noncarbonated portfolio, which currently includes Powerade and Dasani mineral water. The report coincided with a speech by Neville Isdell in which the Coca-Cola chairman and CEO stressed that carbonated soft drinks remain the company's priority.
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Comment:Carbonated beverages no longer dominate soft drink sector.
Publication:Food & Drink Weekly
Geographic Code:1USA
Date:Jul 10, 2006
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Next Article:HFCS--a sweetener with a bad rap.

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