Last week, Coca-Cola (NYSE: KO) launched its Coca-Cola C2 soda nationwide, revving up the low-carb soda wars. It seems like C2 might be beating PepsiCo's (NYSE: PEP) Edge to the punch, as Coca-Cola C2 is being tested in McDonald's chains in several major cities.
It's not a huge test, as the drink will be offered in just 27 McDonald's restaurants. However, they are located in major cities -- Atlanta, New York, Chicago, Los Angeles, and Orlando, according to CNN.
Last week, Fool contributor Nathan Parmelee gave us a sneak peek at this phenomenon as it was occurring in Japan -- the move to distribute through U.S. McDonald's mirrors the promotional environment there. (Incidentally, Nathan's taste test also resulted in a "thumbs down.")
There are a lot of reasons you could argue that the climate's right for such a move. The low-carb diet movement is still strong, and a lasting effect may be people's urge to watch carbohydrate intake.
Further, McDonald's healthy menu additions have been working wonders, judging by the restaurant chain's same-store sales and customer traffic. The promotional aspect of this test is hard to deny either. CNN reported that last Friday through Sunday, customers in participating McDonald's were offered either a free C2 with any purchase or a free can of the soda with an extra-value meal. Some of the test restaurants began offering Coca-Cola C2 as a fountain choice on June 11.
The testing phase will be used to determine whether there's enough consumer interest in Coca-Cola C2 to permanently carry it as an option, which of course could give it an advantage over Pepsi Edge. And Coke's extensive distribution deals with restaurants and fast-food chains could really give C2 a competitive advantage in locking in its low-carb beverages with potential users.
Maybe low-carb sodas will bomb and be seen as nothing more than another variation of a "diet drink," though there might be some credence to a middle-of-the-road option. One important point was highlighted on our Pepsi discussion board -- true Atkins or South Beach stalwarts avoid all sweeteners except sucralose (Splenda). Neither C2 nor Pepsi Edge fit the bill, leaving Diet Rite as the only soda on the market for die-hard Atkins or South Beach fans. We'll have to see what Cadbury Schweppes (NYSE: CSG) comes up with.
The possibility of McDonald's-sized distribution is a good reminder of Coke's strengths. Coke has a major corner on the market in restaurants and fast-food chains, which gives it strong partnerships and marketing muscle. The rest, of course, will be left up to consumer taste.
Coke or Pepsi? Will C2 suffer the same fate as New Coke? Talk about the low-carb sodas and other beverage trends on the Coke or Pepsi discussion boards, or if you're a low-carb dieter, chat with others on the Low Carb Way of Life board.
Alyce Lomax does not own shares of any of the companies mentioned.
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