Drink the Brand

Although the big three soda companies all sell bottled water, they are not that excited about the trend. Bottled water is a less reliable line of business for them. Single-serving bottles of water, like Aquafina from PepsiCo and Dasani from Coca-Cola, earn margins similar to those of soda, but customers appear to have less brand loyalty to water brands than to Coke or Pepsi. It’s harder for the companies to compete in the grocery store, where low-margin companies that specialize in water are able to price large multipacks much lower than the soda bottlers want to sell them.

Generally, these companies worry about holding on to customers. The companies are expanding sales overseas, which has helped buoy their stock performance over the period. But in the United States, they all worry about losing even nontraditional drink sales to a competitor. Someone might be a die-hard Coke fan, but prefer Snapple iced tea to Honest Tea, which is a Coca-Cola brand.

It’s almost as if the Soda Brands are anxious about the power of their less established brands to compel consumption of a commodity product in this, the Year of Our Brand 2015. Not unlike some other industry right now! Hmm.

Photo by Daniel Orth