The Coca-Cola Company (KO) Faces Lawsuit Over Vitaminwater Claims

Dr. Pepper Snapple’s declining soda sales offset by other drinks

Part of the decline in soft drink sales is also related to the variety of new drinks available in the market such as energy drinks, bottled waters, juices, and teas. These new options have turned consumer attention away from soda. For example, Dr Pepper Snapple Group Inc. (NYSE:DPS)’s second quarter results showed a decline of 3% in soda sales with decreases in volume across most of its brands – Dr. Pepper, 7UP, Crush, Sun Drop, and Squirt. The decline was offset by mid-single digit increases in Canada Dry and Penafiel, a fruit-flavored mineral water. The company’s non-carbonated drink sales dropped 2%, affected by a 7% volume decline in Hawaiian Punch and offset by increases in Snapple (4%) and Mott’s (2%).

My foolish conclusion

If Coke is required to make changes to the health claims surrounding Vitaminwater, the product may end up being perceived as no healthier than a soft drink with a higher price tag. This could put additional scrutiny on claims regarding any future products by The Coca-Cola Company (NYSE:KO) and its rivals, even as they work on giving consumers other beverage options besides soda.

While the three soda makers have projected five-year growth rates ranging between 7% and 8%, it’s reasonable to expect soda sales to continue to fall over the long-term. Its uncertain whether the creation of a new sweetener, and the health implications surrounding it, could bring consumers back to soft drinks. PepsiCo, Inc. (NYSE:PEP) has a better opportunity of maintaining revenues with its snack food business over the long term, something that The Coca-Cola Company (NYSE:KO) and Dr Pepper Snapple Group Inc. (NYSE:DPS) Snapple lack.

The article Coke Faces Lawsuit Over Vitaminwater Claims originally appeared on Fool.com and is written by Eileen Rojas.

Eileen Rojas has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo. Eileen is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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