100% Confusion

Soft Drinks May Be Out of Schools, But Are Juice Drinks Any Better?

Six months ago, Jordan Kerner's biggest challenge was getting WaddaJuice, his company's new fruit juice-and-water beverage for kids, into national supermarkets.

Then came the announcement in May that the country's three biggest soda makers, under pressure from anti-obesity groups, agreed to remove their sugary soft drinks from school vending machines. The effect on the juice industry "has been huge," says Kerner, whose company is based in Westport, Conn.

Juice beverage companies -- WaddaJuice included -- have been ramping up their marketing to schools, as well as to parents. WaddaJuice is being carried in stores in Connecticut, New Jersey and New York, but Kerner says his focus these days is on school districts looking to replace soda with healthier drinks that are lower in sugar and calories.

"The timing [of the soda pullout] couldn't have been better," he says.

Despite the publicity over the soda removal, many industry analysts don't think it will have much of a bottom-line impact on beverage giants Coca-Cola and PepsiCo. because both companies also sell a wide range of other drinks including juice, sports drinks and bottled water. The third soda manufacturer in the agreement is Cadbury Schweppes, maker of 7-Up and Hawaiian Punch.

But soda sales have definitely lost their fizz. A new survey by beverage industry analyst Bill Pecoriello with Morgan Stanley shows that carbonated drinks, even diet ones, have lost favor with teenagers.

According to the survey, 13- to 17-year-olds are drinking fewer sodas per capita than the overall population. Instead, teenagers are chugging down sports drinks, bottled teas and energy drinks.

Pecoriello predicts that yearly soft drink sales will decline 1.5 percent, more than twice the rate of decline last year.

U.S. soda sales in supermarkets and retail centers (excluding Wal-Mart) already have slipped 0.9 percent, to $13.3 billion, in the 52-week period ending May 21, according to the market research firm Information Research Inc.

In contrast, sales of refrigerated juices for the same period is up 0.1 percent, to $3.9 billion.

Carol Freysinger, executive director of the Juice Products Association, a juice and beverage company trade group, says there has been "a cumulative effect from the wellness policies that states and school districts are adopting."

The group, which includes both Coca-Cola Co. (which owns Minute Maid) and PepsiCo. Inc. (Tropicana), recently launched a Web site ( http://www.fruitjuicefacts.org/ ) that focuses on the health effects of pure fruit juice.