Earns Coca-Cola

In this Monday, Oct. 14, 2019 photo a truck with the Coca-Cola logo, behind left, maneuvers in a parking lot at a bottling plant in Needham, Mass. (AP Photo/Steven Senne)

The Coca-Cola Company announced Thursday that it will launch a new flavored seltzer brand it is calling Aha in March 2020. Taking aim at weakening brand LaCroix and Pepsi's successful Bubly line, Aha will come in eight flavors, two of which - Citrus Green Tea and Black Cherry + Coffee - will contain 30 mg of caffeine, riding another trend and aiming at contenders like Hi-Ball sparkling energy drink from Anheuser-Busch.

Aha, the brand's biggest new release in a decade, will replace Coke's Dasani sparkling water, which according to Shane Grant, president of Stills Business Unit for Coca-Cola North America, has underperformed.

Nielsen all-channel sales data in August put sparkling flavored water retail sales in the past 12 months at $2.45 billion. The segment is still tiny compared to carbonated soft drinks - $26.74 billion in sales in the same time period - but it represents a huge growth area. Against the backdrop of declining sales for soda, brands like Massachusetts-based Spindrift reported triple-digit spikes in the past year.

Coca-Cola is not new to the space, having purchased Southwest regional player Topo Chico and debuted flavored sparkling lines for Dasani and Smartwater.

"We've been in this category for a long time," Grant said in a phone interview. "We know the category, have watched it carefully and seen it grow and fragment. This is one of the most dynamic segments in beverages, generating as much retail dollar growth as all other beverage segments combined."

Half of the sales growth, he said, is in sparkling beverages, and he doesn't anticipate that slowing down. Grant said consumers are looking to carbonated water for singular flavors, but also to serve different functions from simple refreshment to relaxation or energy enhancement. Consumers are looking for waters that are alkaline or that contain antioxidants or caffeine, and brands are exploring different functional claims as a way to stand out.

What Aha won't have, said Grant, is CBD, or cannabidiol, the second most prevalent active ingredient of cannabis and a cultish beverage ingredient right now hung up by lack of FDA regulatory decisions. "We've been absolutely clear on our thoughts about CBD," Grant said. "We have absolutely no plans to launch."

Plastics are driving this Aha moment and why Coca-Cola decided against doubling down on existing products. A recent audit by the Break Free From Plastic coalition named Coca-Cola as the world's largest plastic polluter. Millennials and Generation Z, for whom reusable water bottles are a notable fashion accessory, have spoken with their wallets. Cans, recycled more often than plastic bottles, are in, and single-use plastic bottles are out. Although Dasani sparkling waters are in cans, the iconic Dasani and Smartwater packaging is clear plastic bottles. The preferred packaging for bubbly water, Grant said, is cans.

He said the company is working on an initiative to recycle every single-use package by 2030 and recently announced it has committed $100 million to accelerating recycling. Aha will debut in an eight-pack of 12-ounce cans and in 16-ounce single cans, with pricing in line with mainstream sparkling waters.

According to marketing materials, Coca-Cola's launch taps into the "huge consumer wellness trend," but some of this trend pulls against purchased beverages overall. The market research NPD Group estimates that beverage consumption overall in the U.S. has fallen from 1,127 beverages per capita in 2014 to 1,104 beverages in 2019. This doesn't mean that Americans are learning to live parched. The fastest growing beverage category is tap or filtered water (the biggest losing category: cow's milk and alternative milks).

This shift to plain water coincides with a growing body of evidence that sweetened beverages are linked to a number of lifestyle-related diseases. An October Rudd Center for Food Policy and Obesity study showed that sugary drinks contribute almost half of added sugars consumed by children, and fruit-flavored drinks are the most common type of sugary drink for young children. Health and nutrition experts recommend that children avoid drinks with added sugars or low-calorie sweeteners, and that caregivers limit children's consumption of 100 percent juice.

A study published in the Journal of the American Medical Association last week by researchers at the University of California at San Francisco found that a workplace ban on the sale of sugar-sweetened beverages led to a 48.5 percent average reduction in consumption and significantly less belly fat. Almost 70 percent of the 202 participants saw a decrease in waist size, as well as an improvement in insulin resistance and lowered total cholesterol, over the 10-month period of the study.

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