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Why Are Diet Colas Doing So Well in Western Europe?

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While diet cola carbonates have seen sharp sales declines in key markets like the US, diet colas are continuing to grow in much of Western Europe. Negative publicity surrounding the safety of artificial sweeteners contributed to an 18% decline in total volume sales of low-calorie cola carbonates in the US over 2009-2014. Regular cola carbonates outperformed the low-calorie variant with a smaller 14% decline during the same period. In contrast, total volume sales of low-calorie cola carbonates are outpacing those of regular cola carbonates in Western Europe. Low-calorie cola carbonates grew by 11% in 2009-2014, while regular cola carbonates declined by 3% in Western Europe. There are a few reasons why diet colas are doing well in Western Europe: historically lower carbonates consumption patterns, comfort with alternative sweeteners, product innovation and product marketing.

Western Europeans have historically consumed less low-calorie carbonates

While US consumers are turning away from low-calorie cola carbonates after decades of high consumption volumes, Western Europeans are consuming more of them. Americans have historically consumed large quantities of diet carbonates on a daily basis. Very low prices for carbonates in the US, in the form of 2-litre bottles of Diet Coke for US$1.99 in supermarkets (frequently discounted to US$0.99 and under) and 885ml cups of Diet Coke for under US$2.00 at fast food restaurants, encouraged US consumers to drink them regularly inside and outside the home. Per capita consumption of low-calorie cola carbonates in the US was 28.9 litres in 2014, down from 36.8 litres in 2009. In contrast, higher prices for carbonates in Western Europe, where Coca-Cola Zero’s price is more than double that in the US, have led them to view carbonates as less of an everyday option than Americans do. 2014 per capita consumption of low-calorie carbonates in Western Europe was 12.8 litres in 2014, up from 11.9 litres in 2009.

Consumption of low-calorie cola carbonates has declined significantly among Americans due to health concerns about the safety and efficacy of artificial sweeteners, a desire for more flavour variety and an overall move away from diet foods and beverages. Though many US consumers want to lose weight, they are turning away from overtly diet products like Diet Coke, Kellogg’s Special K breakfast cereal and SlimFast slimming meal replacement bars. Instead, Americans now prefer to consume products they view as more natural and less processed, such as bottled water, Greek yoghurt and gluten-free ready meals. There is less of a low-calorie cola carbonates backlash in Western Europe because diet carbonates were simply never as widely consumed. With lower consumption of diet foods and drinks to begin with, Western Europeans do not have a reason to turn away from these products.

Western Europeans are more comfortable with alternative sweeteners

Continued volume growth in low-calorie cola carbonates signals Western Europeans’ comfort with alternative sweeteners. Norway saw its total volume sales of low-calorie cola carbonates grow by 10% from 2009-2014, while sales of regular colas declined by 8%. Similarly, total volume sales of low-calorie cola carbonates grew by 19% in Germany in the same time period, while that of regular cola carbonates declined by 2%. Public health campaigns about the obesity crisis have been successful in many parts of Western Europe in driving consumers to cut back on regular carbonates use. While cutting back on full-calorie carbonates, many western Europeans have turned to low-calorie cola carbonates as well as drinking more tap and still bottled water. The continued growth of zero-calorie diet colas in Europe (in contrast to sinking sales in the US) suggests that the European consumer may so far take a different, less negative view of alternative sweeteners. European consumer perception in the area of sweeteners was bolstered by the European Food Safety Authority (EFSA)’s release of a report on aspartame in December 2013, concluding that present, moderate levels of consumption are safe.

Product innovation

Product innovation in the area of low-calorie carbonates has been strong in Western Europe. Industry players in Europe have also been quicker to adopt low-calorie strategies than US counterparts. Western European brand owners were among the first with the mass-market adoption of new, alternative sweeteners. European brands took the first major step in mass-market implementation of stevia-sweetened carbonates prior to the US. A reformulation of Sprite sweetened with the natural sweetener stevia was launched by Coca-Cola in France in 2012 and in the UK in 2013. The reformulation replaces traditional full-calorie Sprite instead of being offered as a distinct “diet” alternative product. So far, the reformulation has not been a success, with off-trade volume sales of Sprite declining by 10% and 5%, respectively, in France and the UK in 2014. PepsiCo launched stevia-sweetened cola Pepsi Next in France in March 2013.

Product marketing

Coca-Cola Zero and Pepsi Max, two high-growth brands, are excellent examples of product innovation and marketing in Western Europe. The two brands have aligned with the wellness concerns of Europeans by successfully communicating a low-calorie formulation that better replicates the taste of regular cola. The Coca-Cola Zero and Pepsi Max brands were marketed to appeal to young men who have traditionally not consumed low-calorie colas. Frequent in-store samplings were conducted by both companies to convince consumers that these colas offer a taste similar to full-flavour cola. Coca-Cola Zero, the low-calorie Coca-Cola cola, launched across Europe in 2009 and 2010, and has been a major success story for The Coca-Cola Co. Over 2009-2014, off-trade volume sales of Coca-Cola Zero increased by 41% in Western Europe. This contrasts with growth of just 2% for category leader Diet Coke in Western Europe. The Coca-Cola Zero brand has benefited from high-profile advertising support across the region. In 2014, Coca-Cola offered every Norwegian household a free Coca-Cola Zero to create excitement around the brand. Rival PepsiCo launched a blind tasting test campaign in the country to prove that Pepsi Max is the most liked carbonate in Norway. Pepsi Max, according to its Facebook page, stated that over 100,000 Norwegians participated in the blind tasting test, with 53.7% preferring Pepsi Max over the original Coca-Cola. Over 2009-2014, off-trade volume sales of Pepsi Max increased by 17% in Western Europe, compared to 6% growth for its flagship Diet Pepsi brand. With fewer people regularly drinking or even having tasted low-calorie cola carbonates in Western Europe, it appears that Coca-Cola and PepsiCo were able to recruit new users to low-calorie cola carbonates. In contrast, these soft drinks companies are having difficulty retaining diet cola users in the US because many have moved on to other drink options.

Future outlook

In the medium term, these factors are expected to lead to a better performance from low-calorie cola carbonates than from regular cola carbonates in Western Europe. While total volume sales of regular cola carbonates are expected to decline by 3% in 2014-2019, sales of low-calorie cola carbonates are projected to grow by 3% in the same time period. EFSA’s 2013 statement that aspartame consumption is safe in moderate amounts should reassure European consumers about the safety of low-calorie sweeteners. At the same time, carbonates producers are likely to introduce more low-calorie carbonates, whether they are sweetened with stevia, erythritol or other high-intensity sweeteners, after fine-tuning the flavours so they closely resemble the full-calorie equivalent. Brand owners are likely to continue focusing their marketing efforts on low-calorie cola carbonates as they seek to address governmental and advocacy groups calls for calorie and sugar reduction.

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