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Coca-Cola Is Sweet on Aspartame

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If you have to run ads defending your ingredients to stave off declining sales, maybe it's time to rethink your production.

Coca-Cola (NYSE: KO  )  launched its first ads today defending the use of the artificial sweetener aspartame, arguing that not only is it safe to consume, but it can be healthier for you, too. With sales of soft drinks losing their pop, the beverage giant wants you to know you don't have to fear drinking its soda.

Aspartame, known more commonly by the brand name NutraSweet, is a controversial ingredient that's witnessing a large and growing resistance to its presence in the food chain despite the FDA's having signed off on its safety. Monsanto  (NYSE: MON  ) owned the brand at one time but sold it to J.W. Childs in 2000. Even so, the sweetener is made with genetically modified bacteria -- E. coli, to be exact -- from the chemicals giant, and today the sweetener is found in more than 5,000 consumer foods and beverages worldwide. Sucralose, another widely used artificial sweetener, goes by its brand name Splenda.

Whether the drop in sales is a result of the presence of aspartame remains cloudy, but Beverage Digest says diet-soda makers -- where the sweetener is prevalent -- are seeing sales in the U.S. fall at a faster clip than regular sodas. Even though classic Coke and Diet Coke remain the two top-selling sodas in the country, Coca-Cola witnessed a 4% drop in North American sales volumes for its fizzy drinks last quarter. Rival PepsiCo (NYSE: PEP  ) reported that beverage volumes in its Americas division fell 3.5% despite the contribution of a 3% price increase.

It's not just carbonated drinks weighing the toll aspartame exacts. The dairy industry is also soured by the prospect of having to label aspartame-flavored milk products such as labeling chocolate milk as "artificially sweetened" because of the negative connotations it has. With per-capita milk consumption down 23% since 1975 and whole milk sales off 58%, anything that might cause a more health-conscious consumer to avoid drinking their beverage is a cause for concern.

And it's pitting dairy producers against soda makers. The industry's biggest dairy company, Dean Foods (NYSE: DF  ) , says that even though about half the sugar in flavored milk is from naturally occurring lactose, all the sugar in soda is added sugar.

Which is probably part of the reason Coke feels the need to defend aspartame from attacks. Not that it's not working behind the scenes to try natural flavors as well. A new stevia-flavored drink is being tested in Argentina to see if it performs well enough to expand into other markets, while SodaStream (NASDAQ: SODA  ) introduced a line of stevia-flavored drinks for its make-it-yourself soda machine last year.

Even in the face of a growing obesity problem, consumers are more health-conscious these days and are reading labels more frequently. Thus, spending money to defend your production process isn't such a sweet deal for Coke investors, and it represents money that could be better spent on developing natural flavorings that aren't lab-made and genetically modified.

For more wholesome fare, check this out. It's hard to believe that a grocery store could book investors more than 30 times their initial investment, but that's just what Whole Foods has done for those who saw the organic trend coming some 20 years ago. However, it may not be too late to participate in the long-term growth of this organic-foods powerhouse. In this premium report on the company, we walk through the key must-know items for every Whole Foods investor, including the main opportunities and threats facing the company. So make sure to claim your copy today by clicking here.

Read/Post Comments (3) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 16, 2013, at 6:15 AM, Clint35 wrote:

    You know it's not healthy if Monsanto made it. These companies are so stupid. Instead of lying and trying to convince people that crap like aspartame isn't bad for us they should just stop using it.

  • Report this Comment On August 16, 2013, at 2:30 PM, AmusedSpaceman wrote:

    Aspartame has been proven to put little holes in your brain and to contribute to MS, cancer and heart disease. The author writes as if FDA approval means anything but collusion with corporations. FDA is owned by the corporations. Sales are falling because people are waking up to the poison that companies like Coke and Monsanto are pushing. As investors you would be be smart to stay out of the way of this backlash, because it's going to be a big one.

  • Report this Comment On August 17, 2013, at 10:50 AM, DukeMontrose wrote:

    I tried Aspartame/NutraSweet 'enhanced' drinks 2x

    but am not giving it a third chance = as it made me

    POSITIVELY SICK = it poisoned my insides!

    Coke is expensive dangerous sugared water = proof is in Coca-Cola + Pepsi desperately trying to diversify away from its flagship brands.

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