Soda Sales Drop Dramatically As Healthier Choices Continue To Grow

In reality, soda sales have been falling for about seven years, but they really dropped off in 2011 as consumers made other choices about what sort of refreshments to put in their bodies.

The beverage market actually grew last year by about 0.9 percent, but according to sales data, consumers chose more coffee and teas, sports and energy drinks and bottled water over soda and fruit juices.

Beverage Marketing, a research, consulting and financial-services firm that tracks the beverage industry, said 2011 was the second year of growth for the beverage industry after two consecutive declines in 2008 and 2009.

Costs are up, sure, but choices are healthier

One of the reasons why sales were down, according to Beverage Digest, an industry newsletter, is cost: Prices for carbonated soft drinks climbed about 3 percent last year, making them harder to afford. Drink makers passed on higher prices for the cost of sweeteners, such as corn syrup and other raw materials, to consumers.

According to an analysis of sales data by Beverage Digest, all three big soda-makers — Coca-Cola, PepsiCo and Dr. Pepper Snapple — showed slower sales of popular brands like Coke, Diet Coke, Pepsi-Cola, and Mountain Dew.

Coke and Pepsi market shares shrank while Dr. Pepper's share was mostly flat. And though sales of some soda brands rose, sales of Dasani — a bottled water sold by Coca-Cola — was the fastest-growing beverage brand, rising 11 percent, according to Beverage Digest. It was followed by Arizona iced tea (9.3 percent) and Pepsi's Gatorade (8 percent).

Carbonated drinks, by comparison, grew about 3 percent a year through the 1990s, but sales have been declining steadily since 2005, as more health-conscious consumers increasingly turn to better choices of drink.

Sales of Gatorade, meanwhile, are ballooning as well, topping the one billon-gallon mark last year for the first time. In fact, Beverage Marketing says Gatorade, coupled with G2 and other brand variations, is the fifth-largest beverage trademark.

Niche drinks and water sales increasing

According to Beverage Marketing, other niche drinks are making headway.

"As the proliferation of 'beverages with benefits' continues with the introduction of a variety of drinks marketed as delivering specific functional results," Beverage Marketing has begun to focus "on a niche within a niche: relaxation beverages," says the summary of a new report by the analytical firm, which calls such beverages an "emerging sub-segment of the wellness and functional beverage marketplace."

But clearly growth in sales of bottled water continues unabated, according to industry figures. In 2008 and 2009, the poor economy led to a decline in sales but they rebounded again in 2010, as growth really accelerated last year. Bottled water sales volume was up 4.1 percent in 2011, faster than the 3.5 percent growth in 2010.

"The strong showing by high-end and functional products shows that consumers — at least the more affluent ones — are not concerned exclusively with economic consideration when making their beverage selections," Michael C. Bellas, chairman and CEO of Beverage Marketing, said.

The ill-health effects of drinking sugar-laden soda are well-known. Soda consumption is a major cause of obesity, which can lead to a range of health problems including heart disease, stroke and, of course, diabetes.

In fact, recent research has found that just drinking one soda per day increases heart risk in men, even if it is not contributing to overall weight gain.

"Continually subjecting our bodies to high amounts of glucose, to high blood sugar levels that trigger large secretions of insulin results in stresses that in the long run show up as high risk of heart disease and diabetes," the study's co-author, Dr. Walter Willett, told CBS News.