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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 212849  
Subject: Soda Consumption Date: 1/19/2013 7:45 AM
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From today's WSJ:

Soda Revenue Goes From Flat to Sour

http://online.wsj.com/article/SB1000142412788732378370457824...

Emerging markets could offset these negative trends but lower consumption seems here to stay in the US. Aging demographics and health awareness are firmly in place. The author could have used my consumption as an example. I drank 2-3 cokes a day as a teenager and in college. 1-2 per day in my early-mid 20s, 1 per day until about 35, and now I'm down to one coke per week, and usually it is a Coke zero. And this isn't forced by imminent health/weight issues in my case.

I know people who won't permit their kids to even begin a soda habit. There was no such stigma a decade ago.
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Author: bookie71 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197983 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 12:47 PM
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Both Coke and Pepsi sell water.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197984 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 3:15 PM
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I buy generic bottled water which I take into fast food/fast casual type restaurants (and movies) to avoid drinking unknown tap water or gross water from soda machines (bacteria central) or paying inflated prices for bottled water. I have a cheap filtered water pitcher for home use. I don't see any "moat" in water for Coca Cola or Pepsi. Does anyone have a strong preference for Dasani vs Aquafina?

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Author: robinstarveling Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197985 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 3:42 PM
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Beware, beware, the anecdatum.

CNN: half of Americans drink sugary drinks daily
http://www.cnn.com/2011/08/31/health/soda-drinking-habits/in...

-snip-
A 2003 study published in the Journal of the American Dietetic Association found that soda drinking for youths between the ages of 6 and 17 was at 37% in the 1970s and then 56% in the 1990s. This latest research from the Centers for Disease Control and Prevention suggests that from 2005 to 2008, consumption increased again.

"If you look at male children, 70% consume on a given day," said lead author Cynthia Ogden, a CDC epidemiologist who specializes in obesity.


* note: this doesn't include 100% fruit juices.

----

If this begins to change, either as a result of health-consciousness or the implementation of draconian, Bloombergian policies (cue newsreel footage of Prohibition-style police raids on Giant Gulp speakeasies) I think the decline might follow a pattern familiar from some other businesses we own: gradually decreasing unit-per-capita consumption domestically, with fairly dramatic growth overseas, especially in emerging and frontier markets. Of course it could be interesting (interesting-in-a-bad-way) if domestic consumption drops off abruptly! For that reason I'm pleased to see Coke diversifying into energy drinks and high-end fruit juices.

I know some Europeans have strong preferences for bottled water -- not so much as to brand, as to geographic origin -- though the younger generation seems to feel this is a little silly. Where I live, the tap water is excellent, especially if you filter it and then mix it with a good single malt at the ratio of 3 drops water to 1 dram Scotch.

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Author: robinstarveling Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197986 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 3:47 PM
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This part is interesting :

Indra Nooyi, PepsiCo's chief executive, said her company has made "enormous progress'' the last two years as it experiments with sweeteners and is 90% closer to a breakthrough. "Unfortunately, the last 10% is the toughest part,'' she acknowledged in December at a conference hosted by Beverage Digest, a trade publication.


An artificial sweetener that tastes indistinguishable from sugar would make a remarkable difference in the beverage industry (provided it doesn't make your skin turn blue or give you cancer of the eyeball).

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197987 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 4:05 PM
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An artificial sweetener that tastes indistinguishable from sugar would make a remarkable difference in the beverage industry (provided it doesn't make your skin turn blue or give you cancer of the eyeball).

The sweetener in Coke Zero comes pretty close. I can't stand diet Coke but now only have a mild preference for regular Coke vs Coke Zero.

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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197988 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 4:17 PM
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I know people who won't permit their kids to even begin a soda habit. There was no such stigma a decade ago.


Growing up my parents thought soda was the work of the devil and was banned from the house. When I stayed with my Aunt she would let me have a Coca-Cola as long as I didn't tell my mother! However, this childhood prohibition didn't turn me into a soda addict. I still occasionally enjoy a Coke.

The obvious problem with soda consumption is that soda becomes exponentially cheaper as quantities increase. If 16 ounces cost twice 8 ounces and 32 ounces cost four-times 8 ounces then the problem wouldn't be so severe and I doubt that profits would suffer that much either. Wouldn't it be great to go to the gas pump and the more gas you pumped the cheaper it got? Seems illogical doesn't it. So is how soda is priced.

kelbon

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197989 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 7:13 PM
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The obvious problem with soda consumption is that soda becomes exponentially cheaper as quantities increase. If 16 ounces cost twice 8 ounces and 32 ounces cost four-times 8 ounces then the problem wouldn't be so severe and I doubt that profits would suffer that much either. Wouldn't it be great to go to the gas pump and the more gas you pumped the cheaper it got? Seems illogical doesn't it. So is how soda is priced.

The difference is that you are buying a container for the soda whereas you are not doing so when pumping gas. One of the reasons a two liter container of Coke is cheaper than the equivalent volume in cans is that packaging costs are a significant component of cost. Using the gasoline example, it would be cheaper to purchase a ten gallon plastic gasoline container and fill it with gas than to purchase ten one gallon plastic gasoline containers and fill each of them with gas.

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Author: texirish Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197990 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 8:08 PM
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Where I live, the tap water is excellent, especially if you filter it and then mix it with a good single malt at the ratio of 3 drops water to 1 dram Scotch.

Also works for Pusser's Blue Label Rum - a different taste - and Knob Creek Bourbon.

But I do like the single malts - have tried most of them.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197991 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 9:40 PM
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I don't see any "moat" in water for Coca Cola or Pepsi. Does anyone have a strong preference for Dasani vs Aquafina?

No, but Coke and Pepsi (practically) own the distribution channel to consumers: in supermarkets, vending machines, hotels, movie theaters. If you want to start a "water" company you can do it, but it's gonna be a tough slog. Slotting allowances? Taken. Shelf space? Hard to get. Vending machine? Expensive. Pour rights at the stadium? Please.

Often it's not about the wonderfulness of the product. Sometimes it's the distribution channel (Dasani, Aquafina). Sometimes it's the brand (GAP, Levis). Sometimes it's the cost (Revlon.) Sometimes it's the business model (Tupperware.)

I think Coke has moat, I just think it's different than it was back in 1968, and it didn't happen by accident.
 


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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197992 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 11:04 PM
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No, but Coke and Pepsi (practically) own the distribution channel to consumers: in supermarkets, vending machines, hotels, movie theaters. If you want to start a "water" company you can do it, but it's gonna be a tough slog.

Of course. I was referring to the product itself being undifferentiated. I don't think the Dasani and Aquafina brands sell water. But you're right - the distribution channel sells water. If I'm at a gas station and want to buy a bottle of water (rarely), I'll go for the cheapest sale not the brand. In contrast, if I want a soda I will buy a coca cola product even if the Pepsi is on sale.

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Author: wittgenstein Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197995 of 212849
Subject: Re: Soda Consumption Date: 1/19/2013 11:58 PM
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When it was a nickel in the machine at the lake it was ok....the bar down the road was selling Strohs for a quarter which I couldn't buy anyway. The think that finished Coke was there was a girl at the bar who would buy the beer.

jz

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Author: RaptorD2 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197996 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 12:39 AM
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I would quit drinking Coke completely but nothing else seems to go as well with Bacardi Gold.

< SIGH >

Dan

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Author: knighttof3 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197997 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 2:16 AM
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No, but Coke and Pepsi (practically) own the distribution channel to consumers: in supermarkets, vending machines, hotels, movie theaters.

I don't know about supermarkets. A lot around here (SoCal) have their own private brand (Albertson's, Safeway = Refreshe, CostCo = Kirkland I believe, etc) as well as Nestle and Dannon. Not to mention "high-end water" like backwards Naive. Then there is vitamin water and flavored water (black cherry, strawberry etc).

As of now, looks like Coke and Pepsi are trying to win the fragmented water market but are not yet as successful as they are with soda.

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Author: AdvocatusDiaboli Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 197998 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 4:12 AM
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The sweetener in Coke Zero comes pretty close. I can't stand diet Coke but now only have a mild preference for regular Coke vs Coke Zero.

Smaller German producers have had good results with low-calorie lemonade.
Lemonade that combines 3/4 sweetener with 1/4 of the usual sugar.
The taste is almost as good as lemonade with 4/4 sugar.
It seems to be MUCH easier to achieve a 75% or perhaps 80% sugar reduction than a 100% sugar reduction.
Has this been tried with Coke in the US? If not, why not?

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 198002 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 11:27 AM
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If I'm at a gas station and want to buy a bottle of water (rarely), I'll go for the cheapest sale not the brand.

As will many. But it's pretty likely that a Coke water or Pepsi water will be on the shelves, since either the company or a rackjobber is already servicing that location, and water is just an "add on" to the truck that's already going there. That's obviously more efficient that an independent who has to either service the "water" himself, or running it through yet another distributor before it gets to the rackjobber.

In many ways, this is exactly the model Pepsi uses for the snacks aisle. They're already there, they own 80% of the aisle already, it costs them nothing to keep rolling out "new" products (I say "new" in quotes, because many of them are copycats of locally successful products which Frito-Lay then smothers by distribution before the new company has a chance to get a regional or national foothold.)

if I want a soda I will buy a coca cola product even if the Pepsi is on sale.

I agree with you; for me "brand" is uber-important in the Cola aisle, and unimportant in the "water" aisle (a few chi-chi products like Perrier excepted.) In fact on this board many years ago I opined that I couldn't see how Coke (& Pepsi) were going to make a difference in "water", but I was wrong - they do it by smothering the distribution channel, not with brand. (Aquafina & Dasani are #2 & #3, behind "private label", but far ahead of any other national 'brand'. Private Label is, of course, a grab bag of dozens of different vendors - the "cheap guys", as you would probably call it.
http://www.bevindustry.com/articles/85654-2012-state-of-the-...)

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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 198004 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 11:39 AM
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I don't think the Dasani and Aquafina brands sell water.

To an extent they probably do; that is, given a choice between the two some people will have a preference.

Water isn't just water, there are subtleties and you can taste the difference. The Fuji brand (for instance) doesn't garner a premium just through hype, advertising, and availability, the water tastes great too.

I think the difference of the taste and experience of different brands of bottled water is akin to the difference in the taste and experience of different brands of vodka. That is, if you drink both straight.

kelbon

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Author: lindytoes Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 198006 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 1:48 PM
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I know nothing about production and merchandising, power of companies involved etc. But I'm on an extended stay in Panama and I drink bottled water due to uncertainty about the water. The way they handle their infrastructure here is abysmal and the stinky canals and waterways do not encourage me to drink the tap water anywhere.

My point is that I drink a lot of bottled water here from sources all over the world, including Dasani and sources here in Panama, and so does everyone else. There's a bigger world out there than the US (where the drinkable water is not a problem). Every American should be exposed to something like my experience. They would finally see the benefits of government infrastructure, clean water and air. Just the garbage rotting in the streets and clogging up the Pacific makes you wonder what the heck these rich land owners and those who run the country are thinking. They could be making a mint on cleaning up Panama City, the Pacific Ocean for the people here, and for tourists.

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 198016 of 212849
Subject: Re: Soda Consumption Date: 1/20/2013 11:02 PM
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To an extent they probably do; that is, given a choice between the two some people will have a preference.

Water isn't just water, there are subtleties and you can taste the difference. The Fuji brand (for instance) doesn't garner a premium just through hype, advertising, and availability, the water tastes great too.



That could be, but both Dasania and Aquafina start off life as local tap water that is then filtered and bottled. I highly suspect there is more variation in taste between regions of the country than there is between brands.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 198038 of 212849
Subject: Re: Soda Consumption Date: 1/21/2013 3:59 PM
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The latest issue of Value Line profiles a number of beverage companies. None appear to be particularly cheap but that's nothing new or surprising. In retrospect, I should kick myself for not taking advantage of the buying opportunity in Coca Cola at the 2009 bear market lows.

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Author: robinstarveling Two stars, 250 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 198083 of 212849
Subject: Re: Soda Consumption Date: 1/23/2013 12:23 AM
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Short Atlantic piece on coffee substitution for soda, using industry data from IBIS (paywall):

http://www.theatlantic.com/business/archive/2013/01/graph-ho...

I'll still pass on Starbucks at 30 times earnings, however.

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