Pepsi, Coke Look to Food as Soda Demand Fizzles

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April 17 (Bloomberg) -- Bloomberg’s Ken Shea reports on how soft drink companies are trying to expand their food offerings as demand for soda wanes on Bloomberg Television’s “Market Makers.”

And trying to take soda out of it, what are these companies trying to do?

Right now, the quarter was a tough one for the soft drink companies.

As most expected, the tough winter weather made the traffic to restaurants a little light.

Longer-term, these companies know they have a challenge and what they are trying to do is diversify as best they can to address the waning demand for carbonates.

Some has to do with consumer movement to more healthy alternatives and some could be attributed to what i would think would be aspartame fatigue.

That is the main ingredient for diet sodas.

A lot of the diet cola drinkers are looking for a more flavorful alternative.

They are also looking for something they can eat rather than drink.

The thing that jumps out to me is that pepsi beverages account for about 1/3 of sales and coca-cola is 100%. pepsi sales were up and coca-cola was down.

Is that the difference?

Is food a better business?

It certainly is right now, to be blunt.

From near-term sales, there are other things going on.

These companies had to undergo a big restructuring of their bottling operations.

They brought them back on board and that wade down margins and returns.

They are all planning to release back into the market some way maybe this year.

That will probably give l the return toift.

Even though the top line is tough right now, these companies, because the consolidation is so high, coke and pepsi control 2/3 of the carbonate market in north america, return to capital is still in the double digits because of the consolidation.

They're able to pass on price increases and manage the operations pretty well.

Coke and pepsi side-by-side, not a taste test, from your perspective, who's got the most positive outlook?

Coca-cola is winning the cola wars based on our data.

In the u.s. but pepsico would say that we are more than just a cola company.

We have been investing in juices like tropicana and sports drinks with gatorade and others for many years.

They are much less dependent on the sluggish cola business and they're much more into where the consumer is going which is a non-carbonated flavored low-calorie average.

They both have pretty good outlooks.

I don't have a solid answer but they both have pretty good outlooks in their own right.

Part of being an analyst as you are allowed to analyze and you don't necessarily have to trade.

Let's talk about soda stream.

It was up yesterday on market chatter that someone like coke or pepsi might be interested.

What do you make of that commentary?

I think that came about because of the coke of investment in keurig and coke said some nice things about the opportunity because it gives them another channel to reach the consumer.

Having said that, so the stream offers a similar channel benefit but it also comes at a cost.

If you are a coca-cola or pepsi bottle or result beverages around the corner at a convenience store, i would think this would not be a good event.

You are basically circumventing them since the consumer can make their own drink at home.

It's not a silver bullet answer to stimulate consumer demand for the beverage industry but it could offer some benefits.

Thank you so much for joining us.

What do you drink, coke or

This text has been automatically generated. It may not be 100% accurate.


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