Consumers Kick Away Fast-Food Sodas

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Consumers Kick Away Fast-Food Sodas

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It is an unhappy thing for a McDonald ’s... As the nation’s beverage companies grapple with a steady consumer shift away from carbonated soft drinks, so do some of their biggest customers — fast-food chains that are increasingly looking beyond the fizz.

In the struggle to adapt to changing tastes, the two industries are joined at the hip, linked together by complex and often secretive long-term contracts. For soda pop giants like Coca-Cola Co., PepsiCo and Cadbury-Schweppes, national restaurant chains are huge buyers of their highly-profitable syrup. Although beverages make up 10% to 15% of the fast-food chains’ overall sales, their profit margins are second to nothing on the menu.

Nevertheless, the U.S. is slowly but steadily breaking the soda habit, even as its consumption remains the highest in the world. On a per capita basis, Americans guzzled down 814 eight-ounce servings of soft drinks apiece last year, down from 828 servings in 2005, according to Beverage Digest estimates. Total consumption slipped 0.6% in 2006, accelerating from a 0.2% drop the prior year.

About 20 billion servings move through the restaurant channel each year, three-quarters of them via fast-food outlets, according market research firm NPD Group. That number has remained constant for three years but, considering both population growth and unit proliferation, actually represents a decline. Meanwhile, servings of just one non-carbonated product — iced tea — have jumped 12% since 2001 to about 4.5 billion, counting all food-service outlets.

“The bottom line is that there is a continuing migration away from carbonated soft drinks to other kinds of beverages,” said John Sicher, a leading expert on the beverage industry and publisher of trade magazine Beverage Digest. “We have seen tremendous growth in water, sports drinks and bottled teas. But many restaurants serve beverages that are dispensed from fountain spigots, which by definition means a somewhat limited choice. They need to continue to figure out ways to respond to consumer interest in more beverage choice diversity.”

Sicher described one nightmarish scenario where diners are increasingly arriving to buy take-out food that will be washed down with drinks purchased elsewhere: “It is an unhappy thing for a McDonald’s owner to see someone at a drive-thru buying hamburgers and already having beverages they bought down the street at 7-Eleven.”

More: http://tea.info.md/water/consumers-turn-away-from-fountain-sodas/