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US: Smaller cans counter declining sales for American CSD giants

“It’s kind of a happy medium,” Texas rancher George Krueger told Reuters. “I can have my sweet fix but not feel guilty for having so much.”

US soft drink companies are betting that soda drinkers like Krueger and their willingness to buy smaller cans, even for a higher unit price, will be a potential antidote to weak sales as consumers shift away from sugary soft drinks.

The mini-can is the latest move by food and beverage companies to boost their product offerings of smaller portion sizes that supposedly help consumers limit their caloric intake – even if there are signs that some end up reaching for another package or can.

Mini can sales grew 3 percent in 2013 while the rest of the carbonated soft drink category dropped, according to market research firm Euromonitor International.

Coca-Cola and Pepsi said the cans were one of the few bright spots in US soda sales in their second quarter earnings calls last month.

“Consumers are paying more and more attention to calories now,” said Simon Lowden, chief marketing officer at Pepsi Beverages North America.

While such concerns might have once helped diet drinks, growing health worries about artificial sweeteners have hurt that category, experts say.

Coke, the world’s largest soda maker, said there was double-digit growth in mini cans even while sales volumes of sparkling beverages in North America were flat. Smaller sizes, which include mini cans – ie 7.5oz (221ml) and 16oz (474ml) packs – accounted for more than 60 percent of the volume growth in traditional Coke.

Pepsi’s mini can business in the US has grown 24 percent year-to-date in 2014 and was up 34 percent last year. The company said that this year, it has also seen a significant increase in the number of in-store displays of mini cans.

There’s still a lot of room for growth. In 2013, mini cans comprised just 3 percent of carbonated beverage cans sold in the US, according to Euromonitor International.

Earlier this year, the mini can was featured for the first time in a television ad starring actor Cuba Gooding Jr which ran during the Oscars, the second most visible time frame behind the Super Bowl, Lowden said.

Even beer companies are experimenting in the US with smaller packaging. MillerCoors, a US joint venture between SABMiller and Molson Coors offers 7oz (207ml) bottles of Miller High Life as well as 10oz (296ml) cans of Redd’s Wicked Apple and Coors Light Summer Brew.

Heineken has rolled out a new 8.5oz (251ml) “slim” can, citing “explosive growth” in smaller sized cans in the international market.

The shift toward smaller cans “is almost the industry admitting that volume is not going to be growing very much,” said Ali Dibadj, a beverage analyst at Sanford C Bernstein.

It is one way that companies can drive higher prices and larger margins: Consumers may feel as though they’re buying a cheaper, smaller soda, but they are often paying more per fluid ounce, analysts said…..

Reuters: Read the full article


Additional reading from

Smaller packs to broaden margins and possibly add volumes

Coca-Cola launched its 7.5oz (221ml) mini cans in 2011, and PepsiCo re-introduced mini cans in 2013. Both these companies are planning to increase sales of smaller packages by launching new products and improving availability across US convenience stores.

For example, Coca-Cola Bottling, Coca-Cola’s second-largest bottler, has replaced 20oz (592ml) bottles of Coca-Cola and Diet Coke with 16oz (474ml) and 24oz (710ml) bottles, for the avid customers, in about 1,700 convenience stores in North Carolina and Virginia. As mini cans formed only 3% of the overall CSD can sales in the US in 2013, there is room for further penetration. By targetting occasional customers and growing small-sized can volumes, Coca-Cola and PepsiCo could also improve net pricing.

CSD revenues could grow due to value packs

How smaller packages could create value for the CSD market can be referenced from the confectionery market, which also suffers a negative consumer perception due to high sugar content.

While the US carbonated drinks market declined for the ninth consecutive year in 2013 in terms of volumes, the country’s confectionery market also witnessed a 9% contraction in volumes from 2008 to 2013. However, revenues for the confectionery industry grew 14% between 2008-2013, while value sales for the CSD market declined during the same period.

Revenue-growth for confectioneries has come on the back of higher emphasis on smaller packages that target impulse buyers, and new higher priced premium products. Smaller packages have higher prices per unit, boosting the ratio of revenues to volumes for confectioneries. On the other hand, CSDs have relied on large-scale discounts and have kept pricing competitive to facilitate volumes. But as consumers still continue to shift away from sodas, somewhat unimpressed by lower prices of large packs, beverage companies are now looking to draw growth from their smaller packages, similar to the trend seen in confectioneries….