Interested in investing in beverage companies Coca-Cola (NYSE:KO), SodaStream (NASDAQ:SODA), and Dr Pepper Snapple Group (NYSE:KDP)? Exploring this week's news in the beverage industry may help you decide.
Partnerships and innovation
Coca-Cola's Honest Tea subsidiary recently took its zero-calories Unsweet Lemon Tea national. Feeling good about the success of its Just Green Tea drink, Honest Tea thinks it can capitalize on the robust tea market. On the innovation front, Drinks Business Review nominated Coca-Cola for the 2013 DBR Drink Innovation Award. Last month in Japan, Coca-Cola introduced a Canada Dry Hot Ginger Ale drink in a can designed to maintain the carbonation when the drink gets heated from a "chemical concoction" within the container.
SodaStream increased the convenience of making soda at home in the United States by introducing SodaStream caps. You essentially take the pre-measured one-use capsule and pour it in the bottle to make a drink. This will certainly add to its appeal for the environmentally conscious consumer. Moreover, it may appeal to the convenience-oriented consumer who doesn't want to measure the amount of syrup to make a drink.
In an effort to expand their presence as well as combat waning sales in the perceived "unhealthy drinks" arena, beverage companies -- via partnerships or their own research team -- are bringing new products to market to entice consumers. Dr Pepper Snapple Group intends on using excess distribution capacity to expand the range of products it sells. Last month, the company partnered with Sunny Delight Beverages to sell the Sparkling Fruit2O flavored water. More recently, Dr Pepper Snapple teamed up with Bai Brands, makers of Bai 5-Calorie Antioxidant Infusions to bring its natural beverages to major markets.
Packaging and advertising
According to a Beverage World article, Dr Pepper Snapple has engaged brand agency CBX to revamp its Sunkist logo and bring back its iconic sun ball graphic. D. Pepper Snapple felt that its current packaging lacked differentiation and lost connection with its "California beach story." The company wants the brand revitalized for the younger demographic. With that said, it can use all the help it can get, considering that its carbonated soda volume fell flat in its most recent quarter.
Coca-Cola invested in its first dairy cooperative, Fair Life, which owns Core Power, a high-protein shake. With the resources of Coca-Cola, Core Power executives want to sell the public on the "sex appeal of vitality" that comes from drinking the protein shake, according to Beverage Daily. Core Power executives utilized Coca-Cola's distributions system to take its brand national.
In a recent article, Beverage World cited statistics that offer reassurance to the long-term shareholders of eco-friendly companies such as SodaStream. According to the article, over 75% of the 4,000 people polled increasingly consider environmental factors such as recyclability and environmental friendliness of packaging in their purchasing decisions. In an interesting contrast, another Beverage World article talks about the falling rate of recycling during the 10-year period from 2000 to 2010. The article cited a "national wasting rate for 2010 at 63 percent" versus 59% in 2000. The article suggests that if recycling became more convenient via the increased availability of recycling bins, then the rate of recycling might follow. If more consumers can incorporate an eco-friendly mentality, then companies like SodaStream may thrive even more.
These headlines point to the understanding on the part of the beverage industry that consumers increasingly want healthier drinks and eco-friendly packaging. As a result, companies are stepping up with new products either internally generated or through partnerships and acquisitions.