The Slow Death of Soda Continues

It all starts with a holiday story…

Me to my pre-teen cousins: Surprise!!! I’ve brought home Coca Cola and Sprite!

Them: Ew. No, thanks.

Me: Oh. I guess I also have a small bottle of Bubly Water I can share.

Them: Yayyyy!!!

I was blown away that my cousins were more excited to have sparkling water with their pizza, rather than soda. When I was growing up, my parents had to drag the soda out of my hands. Now, kids weren’t even interested.

Fast forward a few weeks to North Carolina, visiting another side of my family. My nieces (age 4.5 and 9) were guzzling LaCroix and Bubly like it was real water. This was in the North Carolina, not in some fancy NY or SF restaurant.

The death of soda is real.

Soda is no longer good. It’s not even “bad for you” good (i.e. a sugary treat). There’s no chance, in my opinion, that sugary sodas are going to make it as a product/business/industry. This thought is not new, but I believe that the decline is going to accelerate, not decelerate.

Big brands are noticing and trying everything (i.e. new flavors from Diet Coke or Coke with Fiber). And, the next soda wars are almost certainly going to play out in sparkling water with Pepsi launching Bubly Water and CocaCola launching Aha Water (I think Coke should just buy LaCroix).

Americans are searching for new beverage brands.

The environmentalist in me thinks, “just drink tap water”. So, I’m glad to see more offices, hotels, airports install water refilling stations (shoutout to San Francisco Airport for banning single-use plastic water bottles). And, I’m happy that more offices are installing things like Bevi.

At the same time, big brands are being built in bottled beverage. Every single new ready-to-drink (RTD) company that’s growing today can attribute some success to the decline in soda consumption.

So, the investor in me must take notice.

What’s next?

For me, it goes back to soda replacement (which is where this story started). Brands that are directly replacing soda are the most exciting for me. Coffee has done a good job — it has the caffeine (and often the sugar) of soda in a more natural, functional way — but it doesn’t quite give the same satisfaction of a soda. So, here are five things that I’d like to see in a ready-to-drink (RTD) soda replacement:

1) Functional: a beverage is no longer just a beverage. Even water is touted as a functional beverage (see NYTimes article on hydration). Some examples of function include high pH, sparkling, flavor, caffeine, energy, fiber). I’m very excited about Olipop’s focus on the microbiome and addition of fiber.

2) Low-sugar: arguably, low-sugar is a function, but to me it’s important enough to stand on its own. This attribute is the easiest to understand and one of the main drivers behind the shift away from traditional soda. Wave Soda, with only 15–25 calories per can and no added sugars or artificial sweeteners are sweet enough to be more than water, but not too sweet.

3) Cheap: nobody wants a $5 soda. Someone might try it once but there is no way that anyone is going to spend $5 repeatedly on a drink. I don’t believe it, and I haven’t seen it. A true soda replacement beverage must be $1.99 max for single-serve to be successful. Spindrift is a premium brand at an approachable price point.

4) Environmentally-friendly: there is so much greenwashing going on today about what is actually good for our planet that I’m not 100% sure what is the best. All I know is that aluminum is recycled decently well in the US, it breaks way less than glass, and that it is better for beverage quality. For now, I believe that aluminum is a good option for our planet, but there’s a chance that news comes out tomorrow saying that utilizing aluminum is killing every important species.

5) Joy: someone’s gotta go “YAYYYY” for it!!! I don’t care if it’s pre-teens or grandmothers or truck drivers, but a soda replacement must have some enjoyment associated with it (maybe that come from the flavor, the bubbles or the brand). A soda is a treat, and a soda replacement must maintain some association with the joy that comes from having a crisp, refreshing treat in an otherwise dull day. I love Ugly Water and like Tickle Water because it’s just so fun!

Note: This post is an expansion of an earlier tweet (https://twitter.com/aditi_sf/status/1213334335043952641)

Consumer investor @ CircleUp. Product obsessed. People focused. Easily intrigued. Rarely impressed.

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