AN ANALYSIS OF SOFT DRINK

ENH
3142
CONSUMPTION TRENDS, ITS HEALTH
IMPLICATIONS AND FUTURE PROSPECTS
AN ANALYSIS OF SOFT DRINK
CONSUMPTION TRENDS, ITS
HEALTH IMPLICATIONS AND
FUTURE PROSPECTS

NAME: SHAKTHI DE SILVA

2014/BA/19523
ENH 3142: CONSUMER STUDIES AND
MARKETING
UNIVERSITY OF COLOMBO

1
DEDICATION

This report is dedicated to my parents who always supported me in my academic

activities despite all the hardships they went through.

ACKNOWLEDGEMENT

I wish to acknowledge Rev. Prof. (Dr.) W. Wimalaratana (Head/Department of

Economics – University of Colombo) for the advice and support given to me in the
compilation of this report. His sage advice, insightful criticisms, and patient
encouragement aided the writing of this report in innumerable ways.

ABSTRACT

This report examines the soft drink consumption patterns around the world. It takes
into account the global trends in soft drink consumption patterns and also pays special
attention to Sri Lanka‘s soft drink consumption trends in recent years. The report also
pays detailed attention to the main social impact from soft drink consumption – its
related health implications. The latter portion of the report pays special attention to soft
drinks and sustainability trends in recent years as well as on the marketing tactics of the
most popular brands in the world – Coca Cola. The report concludes by briefly
focusing on the core reasons for soft drink consumption and the future prospects of the
industry as well as on areas that soft drink producers must take into consideration in
assessing consumer demand in the future.

2
CONTENT PAGE

Introduction - pg. 4

Justification for topic and intentions of the report - pg. 4

Methodology - pg. 5

History of soft drink consumption - pg. 6

Examining soft drink consumption trends: a cursory survey - pg. 7

Resultant health implications from soft drink consumption - pg.14

Soft drinks and sustainability - pg. 18

Identifying the role of marketing for soft drink

manufacturers: a case of coca cola - pg. 20

Consumption patterns and predicting possible

future trends for the industry - pg. 24

Conclusion - pg. 26

LIST OF TABLES/GRAPHS/CHARTS AND IMAGES

Chart 1 - pg. 7

Graph: 1 - pg. 9

Graph: 2. - pg. 10

Table: 1 - pg. 12

Graph 3 - pg. 14

Table: 2 - pg. 17

Table 3: - pg. 20

Image 1: - pg. 20

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INTRODUCTION
This report examines the soft drink consumption trends in the world. It studies the
spatial distribution of soft drinks around the world (including developed, developing
and less developed countries) and specifically examines how consumption patterns
have varied from region to region. It takes into account the global trends in soft drink
consumption patterns and also pays special attention to Sri Lanka‘s soft drink
consumption trends in recent years.

The report also pays detailed attention to the main social impact from soft drink
consumption – its related health implications. By first observing the soft drink
consumption trends globally and locally; followed by the negativities of soft drink
consumption on human health, the report strives to underscore the health implications
of the rise of soft drink consumption. The latter portion of the report pays special
attention to soft drinks and sustainability trends in recent years as well as on one of the
most popular brands in the world – Coca Cola which has the dominant position in
terms of market share. The second part of this report briefly describes the evolution of
the brand coca cola and how it was able to capture the market share through effective
advertising and marketing strategies.

One of the main research questions of this report is to understand the global
consumption patterns of Soft drinks and its related negative health implications. The
report utilizes institutional databases such as World Bank database and other
authoritative secondary sources to compile the necessary statistics. The latter portion of
the report details the marketing strategies and consumption patterns of the soft drink
market leader to analyze the advertising strategies that have been employed by the
organization.

JUSTIFICATION FOR TOPIC AND INTENTIONS OF THE

REPORT
This topic was chosen as a partial requirement for Enhancement Course 3142:
Consumer Studies and Marketing. The Primary reason behind this choice was the
literature gap that existed regarding soft drink consumption trends in the global market.
Additionally scant detailed research has been conducted on Sri Lanka‘s soft drink
consumption pattern as well as on health implications of such consumption in the

4
island. Furthermore inadequate research of marketing strategies by the soft drink
market leader –presently held by Coca Cola – is another reason for this research.
Therefore this study is important because it analyses the soft drink consumption trends
in the world with special reference to Sri Lanka as well as for its scrutiny of the
marketing strategies employed by the market leader of soft drinks to attract potential
customers and the relationship between soft drinks and sustainability.

The topic received prior approval from Rev. Prof. (Dr.) W. Wimalaratana
(Head/Department of Economics – University of Colombo). The expected objectives of
this report is to comprehensively analyze soft drink consumption trends in the world as
well as to examine the role of the dominant soft drink distributor – Coca Cola and its
marketing strategies that has enabled it to position itself as the market leader.

The major limitations of the report include the fact that it does not tabulate the many
and varied contributory factors for soft drink consumption on a regional or national
level. The reason why attention is not given in this regard is because there are
numerous reasons behind soft drink consumption even within a given country and
attempting to list all of the possible reasons for soft drink consumption would naturally
lead to generalizations. While emphasis is given on marketing tactics and other
basic/core reasons for soft drink consumption in the latter portion of the report, I do not
explain every contributory factor for soft drink consumption and instead focus more on
the historical evolution of soft drink consumption, its present trends, the present drift
towards sustainability and soft drink production and the social implications of soft
drink consumption in terms of health concerns. The findings made with regard to

1. Health implications and

2. The impact that this growing understanding of health implications (among

consumers) has impacted soft drink producers would be useful in national level policy
making as well as in the case of other smaller scale soft drink producers.

METHODOLOGY
This study mainly utilizes secondary data which have been scientifically attained. The
report employs institutional databases such as World Bank database and other
authoritative secondary sources such as academic journal articles to compile the
necessary statistics and measurements.

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HISTORY OF SOFT DRINK CONSUMPTION
The category of soft drinks falls under consumer goods. Soft drinks tend to be non
durable and do not last for over 3 years. As non durables‘ it has relative price stability
in comparison to durable goods.

This history of soft drink has not been traced by scholarly research at present. However
preliminary inquiry and investigation of soft drink consumption patterns in human
history has revealed that ―Soft drinks (may have) first appeared in seventeenth-century
Europe as a mixture of water and lemon juice sweetened with honey. In 1676, the
Paris-based Compagnie de Limonadiers was founded and granted a monopoly by the
French monarchy. Company vendors dispensed cups of lemonade from tank packs on
their backs. The first carbonated beverages, which also debuted in Europe, were
inspired by the popularity of effervescent water from natural springs, which were
widely thought to have medicinal value.‖1

Many believe that Joseph Priestley was the founder of soft drink manufacturing. He
was among the first who experimented with carbon dioxide gas from brewery
fermenting vats. In 1772, he invented a small carbonating apparatus in London that
pumped carbon dioxide into water. Mineral salts and flavors were later added as the
appeal of soft drinks spread.

Today the soft drink industry is among the most dominant industries in the world.
Valuation of the industry differs according to organizations/firms but it is undoubted
that the Mineral Waters, Soft Drinks, Fruit and Vegetable Juices industry has a
substantial demand around the world. For example the Soft Drink Concentrates Market
was estimated to be $25,500.00 million in 2013, and is projected to reach $34,761.36
million by 2019.2

However this does not mean that soft drink consumption has remained uniform or
static throughout the world. Soft drink consumption varies widely by region and by

1
Soft Drinks and Bottled Water. (2011). In Encyclopedia of Global Industries (5th ed., pp. 450-464).
Detroit: Gale. Retrieved from
http://elibraryusa.state.gov/primo?url=http://go.galegroup.com.vlib.interchange.at/ps/i.do?p=GVRL&sw
=w&u=wash89460&v=2.1&it=r&id=GALE%7CCX1930300065&asid=a7843ddf03c1a9ba138c9ea1f2e
8c6a1
2
Markets and Markets. (2013). Soft Drinks concentrate Markets. Retrieved from
http://www.marketsandmarkets.com/PressReleases/soft-drink-concentrates.asp

6
culture. As a result, consumption does not necessarily coincide closely with population
or economic development.

Chart 1.

ANALYSIS
Examining soft drink consumption trends: A cursory survey

Many scholars and economists argue that soft drink consumption emerged with the rise
of the mass consumption society discussed by Walt Whitman Rostow. Rostow
considered the high mass consumption society to have emerged in the 1950s and 1960s
worldwide. Previously designated luxury products became standard common consumer
products e.g. cars, television, washing machines and other domestic goods. Rising
productivity, continuous economic growth (resulting in the increase of household
income), reducing average prices of goods, consumer credit facilities, urbanization and
population growth, social competition and a rapidly changing lifestyle pattern
supported the emergence of this high mass consumption society. The Soft drink
Industry was naturally one of the main beneficiaries of this high mass consumption
trend.

―The market for beverages is broadly divided in many countries into those products
that are bought to quench thirst, and those that are consumed on special occasions
including festivals. The former group is mostly nonalcoholic and includes tea, coffee,

7
and soft drinks. In some countries these products are also used on social occasions,
whereas in other areas alcoholic beverages are preferred (although soft drinks are also
usually available). In most countries, the market for alcoholic and non-alcoholic drinks
is specific with regard to religious and cultural taboos.

Competition from medium/large-scale producers is most acute for small-scale

producers in beverage manufacturing. Many large-scale producers promote their
products by implying status in their consumption and spend considerable amounts on
advertising and packaging. They may also have established sophisticated distribution
systems and specific agreements with wholesalers and retailers. Thus beverage
manufacture is one of the most difficult for small-scale producers to establish and
succeed in.‖3

Although Mineral Waters, Soft Drinks, Fruit and Vegetable Juices consumption
patterns differ from country to country, studies have revealed that a significant portion
of household income is spent on Mineral Waters, Soft Drinks, Fruit and Vegetable
Juices. In 2010 close to 38.6% of total household consumption expenses were spent on
soft drinks and such beverages. In this study attention will be focused on soft drink
consumption i.e. nonalcoholic carbonated beverage consumption.

Barner notes that in 1959, the people of the United States consumed a volume of soft
drinks equal to almost 200 bottles per person.4 By 2010 Sugar drinks accounted for 47
percent of all added sugars in the American diet.5 The graph denoted below
demonstrates how global consumption has continued to increase from the early 2000s
to 2010 with the simultaneous growth in population. Following the new millennium
and the rise of mass consumption, the rate of growth of soft drink consumption has
risen over and above the rate of population growth.

3
Food and Agricultural Organization. (n.d) Beverages. Retrieved from
http://www.fao.org/Wairdocs/X5434E/x5434e0b.htm

4
Barner, H. E. (1960). Outlook for the Soft Drink Industry. Financial Analysts Journal. Vol. 16, No.5,
23-28
5
Center for science in public interest. (2013). Facts on Sugar Drink Consumption. Retrieved from
https://cspinet.org/sites/default/files/attachment/CSPI%202017%20Facts%20on%20Sugar%20Drink%2
0Consumption_0.pdf

8
Graph: 1.

The European Union consumed 49807.26 million litres of soft drinks in 2010. This
value remained stable at 49205.03 million litres of soft drinks in 2015. In terms of the
percentage change from 2014 to 2015 in the EU's soft drink consumption pattern, this
amounts to a 1.23% change.6 Thus soft drink consumption, while robust tends to
fluctuate due to consumers altering preferences. The case of Australia and U.K
explained below are similar cases in point. Following a survey in Australia it was
found that In 2011-12, just under half (42%) of 9 million Australians aged 2 years and
over, consumed Sweetened beverages on any given day.7 The graph given below
substantiates this fact by denoting the age categories of soft drink consumption in
Australia.

Graph 2.

6 UNESDA. (n.d) Soft Drinks Consumption. Retrieved from http://www.unesda.eu/products-

ingredients/consumption/

7 Australian Health Survey. (n.d) consumption of sweetened beverages. Retrieved from

http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4364.0.55.007main+features7102011-12

9
In 2010, approximately 210.6 litres of soft drink was consumed per person in the UK.
This decreased to 203.6 liters per person by 2015. Such a decrease was mainly due to
increasing health consciousness among consumers as well as due to the incoming sugar
tax levy (due to come in 2018). However despite this marginal drop, statistics reveal
that soft drink consumption in UK also continues to remain robust and relatively
inelastic.8

Per household, Sri Lanka (a developing country) spent approximately 2841.54 rupees
on soft drinks in the year 2010.9 That amounts to an aggregate of roughly 1,081,992.50

8 UNESDA. (n.d) Soft Drinks Consumption. Retrieved from http://www.unesda.eu/products-

ingredients/consumption/ and

The statistics Portal. (2015). Average consumption of soft drinks in the United Kingdom from 2010 to
2015, per person (in litres). Retrieved from https://www.statista.com/statistics/283484/soft-drink-
consumption-per-person-in-the-united-kingdom-uk/
9
World Bank. (2010). Global consumption database: product. Retrieved from
http://datatopics.worldbank.org/consumption/product/Mineral-Waters,-Soft-Drinks,-Fruit-and-
Vegetable-Juices

10
rupees spent on beverages throughout the island.10 During that year aggregate
consumption of all goods and services was 81.3% of GDP while private consumption
reached 65.8%. This trend was despite the fact that ―The major contribution to inflation
came from the Food and non-alcoholic beverages sub-index, which had the highest
weight of 46.7 per cent in the Colombo Consumers‘ Price Index (CCPI)‖. 11 What was
most surprising in terms of soft drink consumption trends in Sri Lanka was that the
rural population constituted the majority of spending on soft drinks amounting to 2168
rupees while the urban population consumed rupees 673 worth of soft drinks in 2010.

The table given below adapted from the Department of Census and statistics Sri Lanka
showcase the average monthly (per person) Food items consumption and expenditure
in the years 2012/13. According to the data that has been compiled by the department a
total of 487.11 rupees were spent for non-alcoholic beverages per person in that time
frame with monthly expenditure per household for soft drinks only amounting to Rs.
26.21/-. While soft drink consumption per household in a given month is less than tea
consumption (which is ranked at Rs. 281.92/-) it is higher than milk coffee, coffee and
bottled water consumption combined. Additionally, soft drink consumption in Sri
Lanka on a national basis is also higher than the national consumption of fruit drinks
and cordials. Fruit drink and cordial expenditure per household per month was Rs.
10.53/- which is still considerably lower than the soft drink consumption expenditure
of Rs. 26.21/- during the same period. These trends in Sri Lanka demonstrate the high
demand or strong consumption pattern of soft drinks within the country.

Table 1.

10
World Bank. (2010). Global Consumption database: Food and beverages. Retrieved from
http://datatopics.worldbank.org/consumption/sector/Food-and-Beverages
11
Central Bank of Sri Lanka. (2010). prices, wages, employment and productivity. Retrieved from
http://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2010/English/8_Chapter_04.pdf
b

11
12

Halfway across the world, Brazil spent 13, 394.07 Real per household on soft drinks
and beverages in 2010; 11, 821 Real of which was consumed by the urban sector
households. To put this into context, Brazilians spent 11,310.81 Real on Rice during
the same year. Expenditure on bread was only 16,713.67 Real. This clearly showcases
the strong demand for soft drinks in developing countries in Latin America. Even
countries in Africa such as Djibouti spent 1569 Djiboutian franc on soft drink
consumption in 2010.13 This in contrast to 5,282.11 franc spent on bread reveals that -
although heavily behind in comparison to other regions - the consumption demand for
soft drinks in Africa is on the rise. All of these indications demonstrate the near
universal spatial distribution of soft drinks and its wide-reaching consumption; whether
one resides in South Asia, Latin America or East Africa.

12
Department of Census and statistics. (2013). Annual Report. Pg. 52. Retrieved from
http://www.statistics.gov.lk/HIES/HIES2012_13FinalReport.pdf
13
World Bank. (2010). Global consumption database: product. Retrieved from
http://datatopics.worldbank.org/consumption/product/Mineral-Waters,-Soft-Drinks,-Fruit-and-
Vegetable-Juices

12
Some argue that ―The global soft drinks industry is almost exclusively a marketing
phenomenon. The actual product is a comparatively simple blend of water, sweeteners,
flavors, and other additives. The industry‘s genius lies in convincing billions of
consumers to drink soft drinks instead of plain water or other beverages. Through its
vast annual investments in advertising and marketing, the industry has enjoyed some of
the highest brand recognition in the world along with spectacular sales.‖14

Regardless of whether one agrees with the notion that marketing is solely behind this
growth or not; it cannot be argued that the industry is highly lucrative.

Evidence indicates that the consumption of soft drinks is increasing worldwide over the
last 50 years. Compared with 2009, the global consumption of soft drinks ―increased
by 4% in 2010 with a per capita consumption of 81 litres. The highest growth in the
soft drinks market in the year 2010 was observed in Asia, with India and China
reporting growth rates of 16% and 14% respectively.‖15

This trend is expected to grow as the economic powerhouse of the world shifts from
the western world to the eastern world. China and India have a rapidly expanding
growth rate, a rising population in the youth demographic category and with the
resultant increase in consumer income and wages; the demand for non-essential luxury
consumer products including soft drink and beverages will only rise. Mass
consumption has also played a significant role in the altering consumption patterns
over the years, allowing for the consumption of products that were formerly out of the
price range of ordinary middle to lower income citizens.

The graph denoted below16 provides a simplified account of the rise of soft drink
consumption and its relationship with the overall trend of mass consumption.

14
Soft Drinks and Bottled Water. (2011). In Encyclopedia of Global Industries (5th ed., pp. 450-464).
Detroit: Gale. Retrieved from
http://elibraryusa.state.gov/primo?url=http://go.galegroup.com.vlib.interchange.at/ps/i.do?p=GVRL&sw
=w&u=wash89460&v=2.1&it=r&id=GALE%7CCX1930300065&asid=a7843ddf03c1a9ba138c9ea1f2e
8c6a1
15
News systems. (2011). Global Soft Drink Consumption increases in 2010. Retrieved from
http://www.ceepackaging.com/2011/08/09/globalsoft-drinks-consumption

16
Soda Per capita Consumption (n.d) Retrieved form
http://www.bottlebooks.com/ACL%201937/Soda%20in%201937.htm

13
Graph 3

Although this graph ends in 1945 the trend of mass consumption only increased further
during the cold war. By the 21st century soft drink consumption has risen
exponentially. ―Soft drink manufacturing is a $47.2 billion industry in the United
States based on revenue. It was forecast to generate a profit of $1·7 billion in 2010.
The industry‘s annual growth was 1·8% from 2005 to 2010‖17 and continues to grow
today. While this has created significant benefits and advantages it also has some
negativity. The next section briefly evaluates the impacts from the consumption of soft
drinks to human health.

Resultant health implications from soft drink consumption

Consumption tends to lead non communicable diseases especially in the 21st century.
Among the four major non communicable diseases are cardio vascular disease, cancer,
respiratory diseases and diabetics. Among the main reasons for these chronic diseases
are tobacco and alcohol consumption, physical inactivity, unhealthy diets and drinks

17
Change Lab solutions. (2012). Breaking Down the Chain: A Guide to the Soft drink Industry.
Retrieved from http://www.changelabsolutions.org/sites/default/files/ChangeLab-
Beverage_Industry_Report-FINAL_(CLS-20120530)_201109.pdf

14
and living environment conditions. Soft drink consumption has a direct relationship to
cardio vascular diseases and diabetics due to its added flavors and sugar content.
Additionally soft drinks have other negative impacts which include gum and teeth
related diseases and obesity. The economic costs of such consumption vary from
country to country. Loss of income is one of the main impacts to household level. This
loss of income may be from expenditure for such products as well as medical bills and
costs once the consumer suffers from long term implications of soft drink consumption.
Additionally there is an unmeasured psychological cost and emotional cost once a
consumer contracts such chronic diseases. There is also an inter generational cost as
cases like diabetics may be passed on from one generation to another.

Research into the health implications from soft drink consumption is relatively rich.
The predominant view among medical personnel is that the negative impact from soft
drink consumption far outweighs the benefits from soft drink consumption. Janagam,
Jeyamani and Mahalakshmi argue that ―Soft drinks are divided into three classes
namely the carbonated, fruit flavoured and sparkling (soda water). These carbonated
beverages are divided into 2 groups, those with artificial flavour and those with natural.
Soft drinks contain distilled water, carbone dioxide, sugar, preservatives, artificial
flavouring and artificial colourings. In addition they contain sodium, phosphoric acid
and caffeine.‖18 Their study of a state in Tamil Nadu revealed that ―students who are
consuming soft drinks (tend to have) low calcium level, low phosphorous level and
high blood sugar level‖.

Presently, Soft drinks are viewed by many as a major contributor to health problems
and have consequently been accused for the rising prevalence of obesity, particularly
among children. Bassiouny and Yang have suggested that drinking acidic drinks over a
long period of time and continuous sipping (of soft drinks) can erode the tooth
enamel.19 They listed some of the main health hazards from soft drinks as pertaining to
obesity, dental caries and calcium depletion from the bone.

In their research on Sugar Intake, Obesity, and Diabetes in India Seema Gulati and
Anoop Misra argued that ―There is a strong relationship between calorie intake
(especially from soft drinks) and obesity. In India, the prevalence of obesity is

18
Janagam, D., Jeyamani, M., Mahalaakshmi K. (2011). Consumption Pattern and Health Impact of
Soft Drinks Among Adolescents. Journal of human development, vol. 3: no.1 Pg.: 1-8
19
Bassionary, M. A., and Yang (2005). Influence of Drinking Pattern of carbonated beverages. General
Dentistry, Vol. 53, No. 3.

15
increasing at a rapid pace due to an increase in energy intake owing to increased
purchasing power and availability of high fat, energy-dense foods, along with reduction
in the energy expenditure consequent to urbanization and mechanization. Parallel to the
rise in overweight and obesity, the prevalence of metabolic syndrome and type 2
diabetes mellitus (T2DM) is also increasing in India, and has reached epidemic
proportions. India has more than 65 million diabetics, second only to China
worldwide‖.20

Studies conducted by the American Society for Clinical Nutrition demonstrated that
―many adult diseases have their origin during childhood, and excessive weight gain is a
precursor to a wide variety of physiologic aberrations that ultimately predispose to
morbidity and mortality. Overweight and obesity in children is of particular concern
because of the associated developmental abnormalities and the long exposure to
enlarged adipose tissue stores incurred by inordinate early-onset weight gain.‖21 More
than half of the adults in advanced economies are overweight or obese and the numbers
are growing.22 This epidemic of obesity causes 2.8 million deaths a year (according to
the World Health Organization) and cost $147 billion in the United States alone in
2008.23

Additionally a chemical test conducted by Tang found significantly high levels of

reactive carbon in soft drinks and beverages. Such molecules could have extremely
negative impacts on human tissue structure and DNA.24
25
Surveys conducted by the department of census and statistics for the year 2014 reveal
that cases of diabetes are ominously prevalent in the Sri Lankan society, and are

20
Gulati S., and Mishra, A. (2014). Sugar Intake, obesity and diabetes. Nutrients. Vol.6
21
Heymsfield, S.B., Keller, K. L., St-Onge. M. P. (2003). Health implications of soft drinks. American
Journal of Clinical Nutrition. Vol. 78 pg. 1068
22
Organisation for Economic Co-operation and Development (OECD). (2014). Obesity Update.
Retrieved from http://www.oecd.org/health/health-systems/Obesity-Update-2017.pdf
23
Finkelstein, Eric A, Trogdon. J.G., Cohen. J. W., and Dietz. W., (2009). Annual Medical Spending
Attributable to Obesity: Payer- and Service-Specific Estimates. Health Affairs, Vol. 28, No. 5, pp. 822–
31.
24
Janagam, D., Jeyamani, M., Mahalaakshmi K. (2011). Consumption Pattern and Health Impact of Soft
Drinks Among Adolescents. Journal of human development, vol. 3: no.1 Pg.: 1-8

16
 especially observable in the case of youth populations. The table denoted above from
the department of census and statistics 2014 report showcases this trend.
Table 2

Detailed studies conducted by Nilantha Ratnayake and Lilani Ekanayake in the

Government, private and international schools in the Colombo district of Sri Lanka,
revealed ―that the majority of adolescents in this sample consumed sugar-sweetened
beverages once a week or more often.‖26 Thus the implication to adolescent health is
grave if this trend continues in the coming years.

Scholars, who oppose the view that soft drinks contain ingredients which may be
harmful to human health, reiterate that tests and suppositions in this regard have not
been sufficiently proven. They counter nutrition concerns with several key points:

 the science linking soft drink consumption to negative health outcomes is

flawed or insufficient,
 soft drinks are a good source of hydration,

25
Department of Census and Statistics. (2014). National Survey on Self-reported Health in Sri Lanka
26
Ratnayake. N. and Ekanayake. L., (2012). Soft Drink Consumption in Sri Lankan Adolescents. Public
Health Nutrition. Vol. 15 No.8. 1333-1337

17
  physical activity is more important than food intake, and
 it is unfair to ―pick on‖ soft drinks because there are many causes of obesity
and there are no ―good‖ or ―bad‖ foods.

However medical studies conducted by scholars in the recent past ―suggest that it
would be prudent to recommend population decreases in soft drink consumption. The
fact that soft drinks offer energy with little accompanying nutrition, displaces other
nutrient sources, and are linked to several key health conditions such as diabetes is
further impetus to recommend a reduction in soft drink consumption.‖27 Moreover the
research mentioned above which details the harmful effects of soft drinks in various
parts of the world and among various age categories testifies to the detrimental nature
of soft drinks if consumed habitually.

Soft drinks and sustainability

Sustainability refers to the idea that goods and services should be produced in ways
that do not use resources that cannot be replaced and that do not damage the
environment.

In 2013 a Soft Drinks Sustainability Roadmap was signed in the United Kingdom. It is
a supply chain study that aims to reduce the environment footprint of the industry‘s
products. ―The roadmap, which is based on analysis by consultancy firm Best Foot
Forward, found the UK soft drink industry supply chain emits 4.5 million metric tons
of carbon dioxide equivalent a year. The study highlights the five key impacts the soft
drinks industry has on the environment, including growing and processing fruit and
sugar, packaging materials, refrigeration of goods, supply chain waste production and
water scarcity. The roadmap recommends reducing the amount of water used in
manufacturing to help limit consumption and save money, improve refrigeration to
boost energy efficiency and use low carbon fertilizer to reduce the footprint of fruit-
based soft drinks by as much as 20 percent. The study also recommends increasing

27
Vartanian. L. R., Schwartz. M. B., Brownell. K. D. (2007). Effects of Soft Drink Consumption on
Nutrition and Health: A Systematic Review and Meta-Analysis. American Journal of Public Health.
Vol. 97, No. 4

18
cooperation between manufacturers, suppliers, retailers and waste management
companies to improve recyclability and recycling of packaging by consumers.‖28

In order to tackle carbon emissions the roadmap hopes to reduce the environmental
impacts created from soft drink vending machines and coolers. The roadmap hopes to
deal with refrigeration emissions and other forms of emissions related to soft drink
storage. It estimates that total refrigeration emissions of greenhouse gases from the UK
soft drink supply chain are 1.5 million tonnes CO2 per year. The carbon footprint is
dominated by emissions from retail and food service, representing 92% of the total
emissions. Manufacturing sites represent 4% of emissions and cooling in domestic
refrigerators a further 3%. Safeguarding of water sources and the sustainable usage of
water resources are other areas where the plan hopes to develop further. Another main
objective of the roadmap is to proactively address the issue of littering of all items and
look at how the soft drinks sector can work with other organizations to prevent and
reduce it. Signatories of the roadmap are also actively seeking to reduce and ultimately
avoid sending manufacturing waste to landfills around the world.

While all of the steps mentioned above are undoubtedly positive, they are still
blueprints of what soft drink producers must do. While problems and issues have been
understood, specific plans on how to address each issue is yet to be formulated.
Moreover, few firms have agreed to this roadmap and some clauses have only two to
three producers involved. Additionally this roadmap is centered in the U.K and has not
been implemented in other parts of the world. For example Sri Lanka which has
significant concerns regarding solid waste disposal and garbage disposal in urban and
suburban areas have not yet implemented such a program. Recycling initiatives are still
in its infancy and households have not yet fully embraced the notion of sustainability
or sustainable consumption methods.

28
Korosec, K. (2013, July 01). Coca-Cola, Britvic Join Soft Drink Sustainability Roadmap. Retrieved
from https://www.environmentalleader.com/2013/07/coca-cola-britvic-join-soft-drink-sustainability-
roadmap/

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THE CONSUMPTION – MARKETING NEXUS
Identifying the role of marketing for soft drink manufacturers: a case of Coca
Cola

The table illustrated on the right reveals the top 15

soft drinks of the world based on valuations made by
Brandz and Bloomberg Press.

The table reveals that Coca Cola still remains the most
valued brand as at 2014 and continues to grow at
present.

This section examines the market leader in the soft

drink industry – Coca Cola - and identifies both the
marketing strategies that enabled the brand to reach
the top position as well as the impact of altering
perceptions in consumers of the adverse health
impacts of soft drink consumption.

TABLE: 3

The section first highlights some of the marketing strategies that were employed by the
brand and then investigates how the public perception of adverse impacts on human
health by soft drink consumption (which has been explained in the section above) is
affecting the strategies of the
brand.

The Coca-Cola Company is one

of the largest manufacturers,
distributors and marketers of
nonalcoholic beverage
concentrates and syrups in the
world. The company owns or
licenses more than 500
nonalcoholic beverage brands,
including sparkling beverages,
and a variety of waters, enhanced
waters, juices and juice drinks,

Image 1

20
ready-to-drink teas and coffees and energy and sports drinks. The Coca-Cola Co. sells
its products in more than 200 countries.29 Presently, Coca-Cola sports $42bn in
revenue and is available "within an arm's reach of desire", as the firm puts it, in every
country but Cuba and North Korea. Its distribution is so broad, its marketing so expert
that the Gates Foundation has urged vaccine campaigns to mimic its strategy. 30 Coca-
Cola is the world's best known brand and the most quintessential product of the USA.
This beverage, with no nutritional value but sold variously as a remedy, a tonic and for
refreshment, has also become a symbol of the globalisation movement.31

―In 1886, John Pemberton, an Atlanta, Georgia, pharmacist, invented Coca-Cola, the
first cola drink. In the nineteenth century, soft drinks were only sold in outlets that
could provide fountain service, but when bottling machinery was invented in the 1890s
in the United States, soft drinks could be distributed to other retail outlets. By the
beginning of the twentieth century, sales of Coca-Cola were booming throughout the
United States as a network of bottlers developed.‖32 In 1996 the operating revenue of
Coca Cola was $18,673,000,000 and by 2016 it reached $41,863,000,000.

In 1970 alone ―the company distributed a million calendars, three million desk blotters,
17 million paper napkins, 100,000 streetcar signs, 50,000 serving trays, 75,000 "Ice
Cold" signs, and countless other items all bearing the distinctive white "Coca-Cola"
script on the red field‖.33 Coca-Cola Beverages is the world's largest soft drink

29
Business Insights: Global. (n.d). The Coca-Cola Co. Retrieved from
http://bi.galegroup.com.vlib.interchange.at/global/company/301815?u=wash89460
30
Is Coke it? Consumer products. (2017, May 20). The Economist, 423(9041), 54(US). Retrieved from
http://elibraryusa.state.gov/primo?url=http://link.galegroup.com/apps/doc/A491932069/SUIC?u=wash89
460&xid=f8c96fac
31
POP: Truth and Power at the Coca-Cola Company. (2004, April). African Business, (297), 64+.
Retrieved from
http://elibraryusa.state.gov/primo?url=http://link.galegroup.com/apps/doc/A115499784/GIC?u=wash894
60&xid=6138bf7.
32
Soft Drinks and Bottled Water. (2011). Encyclopedia of Global Industries (5th ed., pp. 450-464).
Detroit: Gale. Retrieved from
http://elibraryusa.state.gov/primo?url=http://go.galegroup.com.vlib.interchange.at/ps/i.do?p=GVRL&sw
=w&u=wash89460&v=2.1&it=r&id=GALE%7CCX1930300065&asid=a7843ddf03c1a9ba138c9ea1f2e
8c6a1
33
Brands, H. W. W. (1999). Coca Cola goes to war: to American soldiers on the battlefields of World
War II, the way of life they were fighting to preserve was made up of little things - like soft drinks.
American History, 34(3), 30+. Retrieved from

21
producer and distributor, holding 47 percent of the global market. The company
produces several beverages other than Coke and owns a line of food products. About
90 percent of the company's revenues come from beverage sales, while the balance
comes from food sales. Despite its popularity and presence in the United States, 68
percent of Coca-Cola's soft drink products are sold outside North America.34

The Coca Cola Company creates value by executing a comprehensive business strategy
guided by six key beliefs which are adapted below:

1. Consumer demand drives everything they do

2. Brand Coca Cola is the core of their business.
3. They will serve consumers a broad selection of the nonalcoholic ready-to–drink
beverages which consumers would want to drink throughout the day.
4. They will be the best marketers in the world.
5. They will think and act locally.
6. They will lead as a model corporate citizen.

―Since the soft drink satisfied no essential need, the Coca- Cola Company used
extensive advertising: signs, special delivery trucks, articles like calendars and lamps
that carried the distinctive trademark, radio commercials, and slogans such as "The
Pause that refreshes." The company carefully cultivated an image for its product: Coke
was wholesome and pleasant‖.35

The Coca Cola Company also takes notice of the important health concerns outlined in
the above section. The following excerpt from its official website gives an upright
narrative, in terms of its concern for the health issues of its consumers. ―As consumer
tastes change and people become more health conscious, The Coca-Cola Company is
offering the widest variety of beverages in our history, including more beverages with
natural attributes, fewer calories and functional benefits (emphasis added). Our

http://elibraryusa.state.gov/primo?url=http://go.galegroup.com.vlib.interchange.at/ps/i.do?p=AONE&sw
=w&u=wash89460&v=2.1&it=r&id=GALE%7CA54956311&asid=5297a9be657a13c6e4025463ec7128
89
34
Coca-Cola Beverages. (1999). T. Carson & M. Bonk (Eds.), Gale Encyclopedia of U.S. Economic
History. Detroit: Gale. Retrieved from
http://elibraryusa.state.gov/primo?url=http://link.galegroup.com/apps/doc/EJ1667500129/SUIC?u=wash
89460&xid=9e38cf15
35
Kuisel R. F. (1991). Coca-Cola and the Cold War: The French Face Americanization, 1948-1953.
French Historical Studies. Vol. 17, No. 1. Retrieved from http://www.jstor.org/stable/286280

22
portfolio includes organic tea, coconut water, value-added dairy, coffee, juices, purified
water and more. In 2016, we continued our journey to make such beverages more
widely available. For example, we expanded smartwater to more countries, with plans
to reach 20 markets in 2017. And we also helped people consume less sugar with more
small bottles and cans as well as product reformulations.‖36

Thus it can be clearly perceived that understanding the consumers altered preferences
has been a core concern of Coca Cola. Appealing to this health consciousness among
the public has become one of the core focus areas of the brand of late. Thus the brand
reinvigorated its marketing tactics by highlighting its value as a health conscious brand
name.

Health is not the only area where soft drink firms (such as Coca Cola) had come under
fire and had to alter its previous position. Lately, the proliferation of Coca Cola has led
to fears of ‘Cocacolonisation’. The impact of the cultural hegemony of USA through
Coca Cola has often led to political pressure and animosity directed against the brand.
The soft power37 that the brand exerts on foreign countries as well as its role in
changing patterns of life have been routinely critiqued. This is despite the scant
research that has been conducted on its overall impact on societies and communities.
Cultural Relativists in the domain of human rights have often cited the coca-
colanization of rural communities as causing the destruction of local cultural as well as
resulting in the cultural homogenization of the world.

Additionally soft drink brands face issues related to competition, increased raw
material costs, natural disasters impacting distribution as well as environmental impact
of its processing and manufacturing plants. For example Gr nig and K hn‘s 2011
research demonstrated how the changing climate is currently causing water shortages
which are the major raw material in the Coca-Cola Company.38 These concerns cannot
be discussed at length in this report but it cannot be overlooked in the general overview
of the concerns of soft drink manufacturers such as Coca Cola.

36
Coca Cola Company. (n.d) Our Brand. http://www.coca-colacompany.com/stories/our-consumers
37
Joseph Nye describes soft power as the ability to influence another actor to ‗want what you want‘
through attraction and cooption instead of coercion or payment.
38
Gr nig, R., K hn, R. (2011). Process-based strategic planning. Heidelberg: Springer

23
CONSUMPTION PATTERNS AND PREDICTING POSSIBLE
FUTURE TRENDS FOR THE INDUSTRY
The global soft drink market is led by carbonated soft drinks (or CSDs), which had a
market size of $337.8 billion in 2013.39 This demand is chiefly driven by marketing
strategies that have been effective in capturing potential consumers across the world.
This is proven by the demand for soft drinks despite its obvious non-essential nature in
our daily lives. For example in 2013, Coca-Cola and PepsiCo spent $3.3 billion and
$3.9 billion, respectively, on advertising and marketing activities. However recent
studies have shown how beverage sales have become slower and at times stagnant in
the developed countries. This tendency has forced such companies to come up with
various strategies to increase sales volume or sales value. To add value, successful
beverage companies in these markets are focusing on ‗premiumisation‘ of products,
which positions beverage products to create ‗experiences‘ for consumers40 .

Beverage giants are also working with farming communities across the globe to
increase fruit production, providing them necessary tools and techniques to enhance
their production output.

―A number of factors determine demand for soft drinks. The first determinant is price,
as the demand for soft drinks is relatively price-elastic. This means that as the price of
soft drinks increases, the demand decreases to a greater degree, relative to the price
change. Demand for soft drinks is also relatively income-elastic, meaning that as
consumers‘ incomes decrease, the demand for soft drinks decreases to a greater degree,
relative to the income change, and vice versa.

Consumer lifestyles and tastes also affect demand for soft drink as people become
busier, they look for soft drinks to provide energy and rejuvenation, thereby spurring
growth in the functional beverage categories. Health issues are a hot topic with many
consumers and, as a result, are driving demand in both directions. ―Soft drinks

39
Bailey, S. (2014) Analysis of PepsiCo’s stock performance and valuation, Retrieved from
http://marketrealist.com/2014/12/analysis-pepsicos-stock-performance-valuation/
40
Lewis.R & Morales.R, (2010). beverages in Asia. Responsible Research. Retrieved from
http://www.sustainalytics.com/sites/default/files/beverages_in_asia.pdf

24
developed to be low-calorie, low-sugar, and preservative-free are in line with
consumers‘ health consciousness, and demand for these products is increasing.‖41

Looking more closely at the statistics reveal striking socioeconomic forces at work. In
her new book Soda Politics: Taking on Big Soda (and Winning), Marion Nestle, chair
of New York University‘s Department of Nutrition, Food Studies and Public Health,
points out that soda drinking is split across race and class lines, with African and
Hispanic Americans drinking more soda than their white counterparts, adding that their
soda drinking habits ―are strongly influenced by television advertising, especially when
commercials feature celebrities of their own race and ethnicity.‖ She also notes that
―this diversity — in income, social status, and outlook — complicates efforts to reduce
soda intake in minority communities.‖42

Thus the task of predicting the future is difficult. While Multi National soft drink
brands have been facing difficulties some brands have experienced steady growth. For
example in Jaffna, while demand for brands such as Coca Cola is decreasing, demand
of Necto has risen exponentially.43

While soft drink firms face significant challenges, especially in altering its ingredients
and sugar content to fit the new demands of a health conscious society; its ability to
harness mass media and advertising to attract consumers to its products have not
diminished significantly. As this study emphasized, health concerns have increasingly
been cited as a potential decline for consumer demand in developed countries and soft
drink companies such as Coca Cola have begun to address these issues by diversifying
its product base.

41
Change Lab solutions. (2012). Breaking Down the Chain: A Guide to the Soft drink Industry.
Retrieved from http://www.changelabsolutions.org/sites/default/files/ChangeLab-
Beverage_Industry_Report-FINAL_(CLS-20120530)_201109.pdf
42
Loki. R. (2015). Soda Wars: How Big Beverage Targets Poor People and Compromises Their Health.
Colombo Herald. Retrieved from http://www.colomboherald.com/news/soda-wars-how-big-beverage-
targets-poor-people-and-compromises-their-health
43
Anojan. V. and Subaskaran. T. (2015). Consumer‘s Preference and Consumer‘s Buying Behavior on
Soft Drinks: A Case Study in Northern Province of Sri Lanka. Global Journal of Management and
Business Research. Vol. 15 No. 2

25
In a world of mass consumption and varied wants; diversifying a product base could be
construed as equally if not more important to marketing. Staying ahead of the rest
requires such a two pronged approach.

CONCLUSION
This research into soft drink consumption has shed light into soft drink consumption
trends, the main negative implication of habitual soft drink consumption (this being
health concerns), the growing ties between soft drink production and sustainability and
the steps that have been taken by soft drink firms (such as Coca Cola) to - on the one
hand, mitigate the slowing demand in developed countries by diversifying product base
to resonate with a more health conscious public while on the other hand expanding its
demand in developing countries by effective use of advertising and marketing
strategies. By basing the case study on the market leader it can be assumed that soft
drink consumption demand - for most if not all brands - would continue to increase if
both strategies which have been outlined above are continued with vigor and efficacy.

Ultimately this report hopes to expand on the existing literature on soft drink
consumption and open new areas to explore in relation to soft drink consumption. This
research paid special attention to Sri Lanka, especially in the sections of consumption
trends and health implications. However the report can be considered to be holistic in
nature due to the world wide examination it undertakes in terms of soft drink
consumption patterns as well as in terms of the analysis of health implications from
soft drink consumption. The section on sustainability and soft drinks hopes to open a
new vista into soft drink production examinations. While predictions of the industry
have not been specifically cited in the report it does highlight some steps that soft drink
producers could do to increase demand among consumers.

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