Can Soft Drink Manufacturers Stop Themselves from Fizzing Out?

Beverage manufacturers, particularly carbonated soft drink makers, will have a lot of big decisions to make in the coming year in order to prevent buzz around their businesses from affecting production.

Although the global nonalcoholic beverage industry has enjoyed steady rises in sales – today totaling more than $800 billion, according to analysis from Dun & Bradstreet – sugary sodas have come under heavy fire as of late. Parents, schools, and health experts have made it their mission to educate young students about modern balanced diets, and bubbly beverages with high added sugar don’t make the cut. Municipal and city governments are also cracking down on consumption by enacting tougher taxes on sugary beverages which puts manufacturers in danger of being priced out of consumer favor.

As soda producers work to regain positive consumer sentiment, however, they cannot ignore these three key points concerning internal operations.

Are you developing your competitive agility?

Complaints regarding the health of soda affect the entire industry. No one is impervious – except the manufacturers who reposition the fastest.

Concentration in the U.S. nonalcoholic beverage industry has reached critical heights, with 90 percent of revenues sopped up by just 50 companies. Every fraction of future market share, therefore, will be hard-fought when earned and particularly painful when lost. Who won’t feel the sting? Those beverage manufacturers that infuse agility into their current change management practices. Adaption isn’t a question anymore – it’s a certainty. To remain competitive, facilities will need the speed and flexibility to respond to shifting consumer perceptions not only now but forever after.

Is marketing aligned with production?

Last summer, the Department of Agriculture finalized regulations restricting food and beverages sold in schools to standards set forth by the agency’s Smart Snacks in School guidelines, which limit sugar content to 35 percent by weight or less. That spells trouble for major beverage manufacturers with profitable vending machine operations.

But regardless of whether individual soft drink manufacturers bend to the will of regulators and legislators banning their goods from schools or choose to protest against them, there’s no denying that a great deal of work must be done with marketing. The efficacy of subsequent campaigns means a great deal to production teams as they struggle to forecast demand in an evolving consumer environment. Developing channels of communication between these often disparate departments will help businesses stay ahead of shifting trends and proactively evaluate messaging.

What will change about your portfolio of products?

As reported by the Daily Mail, Coca-Cola has decided to drop Coke Zero after just over a decade of production in favor of a no-sugar alternative. The drink will debut in Australia later this summer.

Other manufacturers will likely follow suit as more consumer clamor for beverages wholly without sugar and other unappealing additives. But a decision like this is just as much about production limitations that come with an over-varied catalog of goods. Perhaps the greatest challenge facing food and beverage manufacturers today is the widespread inability to align consumer demands with production line capabilities. In other words, the appetite of the customer rarely matches what manufacturers’ plants can do, at least not efficiently. No customer retention strategy is worth having too many products and too paltry a plan to mitigate changeover losses.

So Coke Zero got the ax. Any other soft drink maker designing a new offerings that address concerns over sugar may have to make similar hard decisions about their underperforming products for the sake of simplicity and cost-efficiency.

For more insight on how trends in the food and beverage industry impact manufacturers today, download our e-book, Trouble at the Table.