• by Thom Forbes  @tforbes, March 27, 2015

After five years in the No. 2 spot for soda volume, Diet Coke slipped back to third behind regular Pepsi-Cola in Beverage Digest’s annual reckoning of beverage sales, reflecting consumers' growing concerns about artificial sweeteners, among other factors. 

“Coca-Cola's full-calorie Coke remained the most popular soda in the country last year, with a market share of 17.6% following a volume increase of 0.1%, according to RTTNews’ account. The full-calorie Pepsi-Cola had a market share of 8.8%, though its volume declined 1.8 %, and Diet Coke took an 8.5% slice of the pie with a decline of 6.6%. Diet Pepsi volume dropped 5.2%, Diet Mountain Dew 3.0% and Coke Zero 2.0%.

Earlier this week, Roberto A. Ferdman pointed out in the Washington Post that Euromonitor says sales of low-calorie soft drinks have dropped nearly 20% over the past five years and it projects that they will have “fallen off by roughly a third since their peak in 2009” by the end of the decade.

He reminds us, however, that the imminent demise of diet sodas has been the stuff of journalistic musing since at least early 1997, when the New York Times’ Stuart Elliott wrote that “sales of diet soft drinks remain as sluggish as overeaters after Thanksgiving dinner” in reporting that Diet Coke was “tinkering again” with its advertising message.

“In the decade that followed, diet sodas grew by more than 30%. In 2009, sales pushed above $8.5 billion for the first time,” Ferdman writes. But they’ve been fighting two countervailing trends since reaching that pinnacle: the growing disenchantment with soda in general and the burgeoning distrust of artificial sweeteners in particular.

“More consumers are concerned about the health impact of artificial, zero-calorie sweeteners such as aspartame even though the Food and Drug Administration says such sweeteners are safe,” Mike Esterl reports in The Wall Street Journal, as have “government agencies around the world.”

On the plus side of the ledger, Esterl points out that the American Diabetes Association says diet soda “can be an effective weight-loss tool.” On the negative side, other studies “suggest they contribute to weight gain. A study published last year in the journal Nature indicated that zero-calorie sweeteners such as saccharin, sucralose and aspartame can alter the population of bacteria in the gut and trigger changes such as higher blood glucose levels, a risk factor for diabetes.”

Last week, Bloomberg’s Duane Stanford covered the “race” among food scientists worldwide — “in biotech labs from California and New Jersey to Denmark” — to formulate a diet soft drink that “tastes like the real thing, but doesn’t contain sweeteners that spook consumers,” as the subhed put it.

A 12-ounce serving of regular soda, sweetened with sugar or high-fructose corn syrup, “has 140 calories or more, as much as three Oreo cookies. But soda makers must tread softly when changing sweeteners, because they also help provide what food chemists call mouth-feel — the liquid’s sensation on the tongue and in the back of the throat,” Stanford wrote.

Stevia, a plant native to South America, has been a favorite contender in recent years — it accounted for 11.4% of the global sweetener market last year — but too much of it can leave a licorice-like aftertaste. The labs all have a slightly different take on cost-effective, sustainable and — most of all — palatable solutions, according to Stanford’s reporting. 

Ad Age’s E.J. Schultz reminds us that “some analysts” saw Pepsi’s yielding of the No. 2 spot to Diet Coke in 2010 as an indictment of Pepsi's marketing — particularly the Refresh Project that “rolled out in early 2010 and was marked by investments in community-building projects” and even saw Pepsi shunning the Super Bowl.

But, Schultz reports, “Pepsi has since returned to its glitzy marketing ways, including recent sponsorships of Super Bowl halftime shows,”  while allowing that the new results “might have less to do with marketing and more to do with taste preferences and a gravitation by consumers to ingredients that carry a natural image.”

When it’s all added up, “sales of carbonated soft drinks slid for the tenth straight year,” reports John Kell in Fortune, and “volume has now settled to levels last seen in the mid-1990s … as consumers increasingly turn to juices, flavored waters, and other beverage options they deem healthier.”

Water and other non-carbonated beverages, in fact, had a 1.7% increase in volume after a 1.6% drop in 2013, according to a graph on Statista. Private label water brands lead the non-carbonated water market, with about $1.9 billion in sales last year, compared to $.92 billion for No. 2 Dasani, which is owned by Coca-Cola.

Figures were not available for tap water, but indications are that it is mounting a stealthy comeback of its own, with and without filters.