1 May 2008 - Hoping to pump up soda sales, several U.S. soft-drink bottlers are testing alternatives to a convenience-store icon: the 20-ounce bottle.
Sold in corner groceries, vending machines and other outlets since the early 1990s, soft drinks in 20-ounce plastic bottles revitalized U.S. sales for Coca-Cola Co. and PepsiCo Inc. by getting Americans to drink larger servings. Because they are often sold at prices similar to a two-liter bottle, they have also been highly profitable for the companies' bottlers.
Now, health concerns, aging baby boomers' waning thirst for giant-size sodas and the softening economy are taking the fizz out of the 20-ounce bottle. While U.S. soda sales in major retail channels overall declined 3.5% in the first quarter, convenience-store sales dropped 4.2%, according to Beverage Digest, an industry publication. The 20-ounce bottle accounts for most convenience-store soda sales.
To win back sales, several Coca-Cola and Pepsi bottlers are conducting pilot tests on a variety of bottle sizes they hope will appeal to consumers put off by the 20-ounce bottle or looking for a cheaper option to cushion the blow of high food and energy prices.
Coca-Cola Bottling Co. Consolidated, Coke's second-largest bottler, this week launched a test in 1,700 convenience stores in Virginia in which it has replaced 20-ounce bottles of Coca-Cola, Diet Coke, and other brands with 16-ounce and 24-ounce bottles.
The Charlotte, N.C., company said it began planning the test about a year ago, when it noticed soda sales softening because of growing consumer interest in drinks perceived to be healthier. The idea was to offer consumers more packaging choices in convenience stores, as in grocery stores, where they can buy 12-ounce cans, two-liter bottles and other package sizes, said Mel Landis, the bottler's chief marketing and customer officer.
The initiative is part of a broader effort by Atlanta-based Coca-Cola to juice soda sales by improving packaging, a Coke spokesman said.
In a test the bottler conducted in 64 stores in the Carolinas last fall, unit volume -- a measure of sales -- rose "significantly," Mr. Landis said.
The 16-ounce bottles are generally priced at 99 cents, less expensive than the 20-ounce bottles. The 24-ounce size, aimed at big soda drinkers, is priced at as much as $1.49, as much as 20 cents more than the 20-ounce bottles they replaced, he says.
Coca-Cola Enterprises Inc., Coke's largest bottler, is launching a similar test of the same range of bottle sizes in Virginia and plans further tests in other parts of the country. Pepsi Bottling Group Inc., Pepsi's largest bottler, is testing 12-ounce and 16-ounce bottles in some markets alongside 20-ounce bottles, according to Beverage Digest, which first reported some of the tests. A PBG spokesman said the tests will start this month.
A Pepsi spokesman said the move "is about giving consumers more choices, and if that leads to more frequent transactions and greater volume, it's also a win for our customers, our bottlers and us."
Coke bottling executives said it is too early to determine whether they will permanently introduce the new bottles.