Please ensure Javascript is enabled for purposes of website accessibility

Diet Coke Slurpee Will Conquer 7-Eleven, Then the World

By Daniel B. Kline – Mar 4, 2014 at 8:26AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

For the first time ever Diet Coke will be released as a frozen beverage. Might this heat up sales of the flagging brand?

For the first time in the 31-year history of the brand, Diet Coke is being sold in a frozen version, a move that might reignite consumer interest in the low-calorie cola.

The move comes at time when sales of the second-highest selling beverage in the country have slipped, dragging down Coca-Cola's (KO 1.64%) overall carbonated beverage sales.

"Sparkling beverage volume fell 2%, largely due to softer Diet Coke volume," CNBC reported Coca-Cola CEO Muhtar Kent said on a conference call after it released its 2013 Q4 earnings.

Soda faces increased competition

Traditional sodas have lost popularity in general as the beverage market has been crowded by alternatives including energy drinks, teas, waters and flavored waters, coconut waters, and more. Diet Coke -- which was once perceived as a healthy alternative to full-calorie sodas -- has lost that perception as an array of drinks that are actually good for you (or at least sound like they are) now battle for shelf space and consumer attention.

When Diet Coke was introduced in 1982 it was the new kid on the block getting all the attention. Simply being the first new drink carrying the Coca-Cola brand name since the 1800s made it a big deal and being the first mainstream diet soda made it a huge deal from day one.

Yes there were diet sodas before Coca-Cola entered the market but anyone who has suffered through a can of Tab or Diet Rite knows that Diet Coke essentially created a market for low-calorie sodas that taste good. In its day Diet Coke was Jennifer Lawrence -- the fresh-face ingenue -- now it's Judi Dench -- still interesting and popular but no longer exciting and new.

The Diet Coke Slurpee might be able to turn the aging brand back into something fresh.

A Diet Coke Slurpee?

While the product will officially be called "Diet Coke FROST" it will be offered exclusively by 7-Eleven through the end of May (where it will be dispensed out of Slurpee machines). After May, the frozen beverage will be sold at other stores that offer Slurpee-like beverages. Both Coca-Cola and 7-Eleven are celebrating the move by having executives with excessively long titles comment on it through a press release.

"Diet Coke FROST is a great-tasting, refreshing uplift for any time of day," said Stuart Kronauge, General Manager, Sparkling Beverages, Coca-Cola North America. 

"Customers turn to 7-Eleven for our iconic Slurpee beverages, which is how America can first experience Diet Coke FROST," said Nancy Smith, 7-Eleven's Senior Vice President of Fresh Foods and Proprietary Beverages.

Diet Coke, soda sales are slipping

According to the industry tracker Beverage Digest, per capita soda consumption in the U.S. has been slipping steadily since 1998 amid concerns that sugary drinks fuel weight gain, the Associated Press reported in July 2013. 

The trend "won't change and will probably get worse without a major breakthrough in new sweeteners," John Sicher, editor and publisher of trade publication Beverage Digest told the AP.

Is Diet Coke a healthy choice?

When it was launched Diet Coke was marketed as a healthy alternative to its full-calorie soda sibling. That perception of Diet Coke being a smart, healthy choice is one of the reasons the beverage has been so successful. 

"Healthy means different things to different people. For a dieter trying to reduce caloric intake, substituting a Diet Coke Slurpee for a regular one is likely to have an impact ... to the tune of several hundred calories, depending on the size," Fordham School of Business Professor Beth Vallen told the Fool. "Sugary beverages are a known source of extra pounds, so eliminating them is potentially a good start to weight loss."

But Vallen added, while substituting a high-calorie product for a low-calorie one is a better choice, that does not make either option healthy. "Even though it's low in calories the Diet Slurpee isn't providing any essential nutrients. So it may be more accurate to classify it as a "healthier" option," she said.

Vallen does believe that if the product tastes good the Diet Coke Slurpee could lead to new business for 7-Eleven. "Price promotions and sampling might drive those who might otherwise not drink a Slurpee because of its sugar and/or calorie content to try the product. It also might be seen as a diet-friendly treat," she said. "I can't imagine that anyone would swap this beverage for a serving of fruit or vegetables and believe that they made an even swap."

Will Diet Coke be it?

The ship has sailed on Diet Coke being a revolutionary product or even being widely perceived as healthy. But as the second most popular beverage sold in the United States, Diet Coke still has a tremendous fan base. The Diet Coke Slurpee won't win market share from customers who were actually going to make a healthy choice (which generally does not put you in a 7-Eleven). Instead the product will win over people who were going to drink or eat something much worse for them than a frozen Diet Coke.

Diet Coke Slurpees will appeal to people who want to feel good about their snack choice compared to the full-calorie Slurpee, candy bar, or snack cake they might otherwise have consumed. That will be good news for Coca-Cola and should be a nice reminder to an audience used to reaching for Red Bull Total Zero, a coconut water, or some other diet/low-cal choice that Diet Coke is not just a soda for your overweight mom.

Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. The Motley Fool owns shares of Coca-Cola. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.