Apparently the carbonated beverage crowd thinks that when it comes to carbs, some are better than none.
First Pepsi (NYSE:PEP) and Coca-Cola (NYSE:KO) tried to outdo each other with low-carb drinks that at once left a powerful aftertaste and were of higher carb count than their diet iterations. In Coke's case, Diet Coke was the one beverage that was actually gaining market share but is now competing against itself with the company's low-carb C2.
Not to be left behind, Cadbury Schweppes (NYSE:CSG), the maker of 7-Up, is jumping into the fray with its own brand of low-carb "Un-Cola" called 7-Up PLUS, a fruity mix that will include fruit juice, calcium, and vitamin C and will be sweetened with the artificial sweetener Splenda. It will also sport 2 grams of carbs. Apparently rejiggering the Diet 7-Up line with 0 carbs was not considered.
A national advertising campaign will roll out in October geared toward women and will include Regis Philbin and Kelly Ripa from "Live with Regis and Kelly," along with stars from the "Sex in the City" show. The drink is angling to give new meaning to "girlie drinks."
As Fool contributor W.D. Crotty noted, Cadbury has been selling at a price multiple similar to its rivals even as sales growth and margins lagged behind. Yet it was undoubtedly the strong brands the company sports, brands that include 7-Up, Dr. Pepper, Sunkist, Snapple, Hawaiian Punch, and the eponymous Schweppes, that induced Oracle of Omaha Warren Buffett to take a position in the company earlier this year.
7-Up PLUS will stand out from C2 and Pepsi's Edge by having significantly lower carb counts in addition to being fluorescent pink in color. The latter two have 12 and 13 grams of carbs, respectively, and retain their dark caramel hue. Cadbury will also be heavily promoting its old reliable low-carb drink, Diet Rite, which without any reformulations has zero carbs.
Coke, Pepsi, and Cadbury control more than 60% of the nonalcoholic beverage market in the U.S. Sales have been anemic in the U.S., and this has caused the companies to push sales harder overseas and to come up with marketing gimmicks at home. Whether it's been Vanilla Coke, Pepsi Blue, or 7-Up PLUS, the trick has been to get individual segments to move; the overall standings change at a glacial pace.
Even if it is supposedly healthier, containing "actual nutrients," according to Cadbury, the pink color and the emphasis on women will probably limit the drink's upside potential. 7-Up PLUS might just be a minus.
Fool contributor Rich Duprey enjoys highly caffeinated drinks in all their iterations. He does not own any of the stocks mentioned in this article.
