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How Coca-Cola got Americans to drink diet soda again

Coke Zero Sugar hit U.S. shelves in August. (Rodger Macuch/Coca-Cola/AP)

After a summer makeover, sales of Coke Zero — now called Coke Zero Sugar — are on the rise again.

Coca-Cola revamped the popular diet soda in August with sleeker packaging, a new name and an “improved” recipe. And although the ingredient list, which includes aspartame and caramel color, has remained the same, Americans are now buying much more of the diet soda than they did earlier this year. (The company says it “only tweaked the blend of natural flavors” to make the drink taste more like Coca-Cola.)

“The headline is: As Coke Zero Sugar comes into marketplaces, we’re seeing continued acceleration of [the drink] lifting the whole franchise,” James Quincey, president and chief executive of Coca-Cola, said in a Wednesday call with analysts. “We’re pleased with how it’s playing out.”

Overall, U.S. sales of the drink are growing twice as fast as they were earlier this year, according to the company. That increase marked a bright spot in an otherwise gloomy earnings report: Coca-Cola on Wednesday reported a 33 percent drop in third-quarter profits, which fell to $4 billion, or 92 cents per share, from a year earlier. Quarterly revenue decreased 15 percent to $9.1 billion in the same period.

The new Coke Zero Sugar is just one of more than 500 products the Atlanta-based beverage giant plans to reformulate this year as it scrambles to keep up with changing tastes.

Coca-Cola Zero Sugar, Coke’s hot new soda, isn’t actually that new at all

“We recognize that too much sugar isn’t good for anyone, and we are continually evolving our business to reflect this fact,” Quincey said in a Q&A published on Coca-Cola’s website. “While there’s no silver bullet that will end obesity, we believe our combined product, package and marketing efforts can be more effective at reducing the sugar people drink over the long term.”

American soda consumption fell to a 30-year low in 2015, with the steepest declines in sales of Diet Pepsi and Diet Coke, according to data from the trade publication Beverage Digest. Overall, consumption of diet soda fell 31 percent between 2005 and 2016.

As Americans shun sodas in favor of bottled water, juices and teas, Coca-Cola is also making changes to keep up. It bought Bethesda, Md.-based Honest Tea in 2014 and this month took over Topo Chico, a brand of sparkling water from Monterrey, Mexico. In addition to sodas such as Sprite, Fanta and Coke, the company now owns a number of juice, sports-drink and water brands, including Minute Maid, Powerade, Glacéau Vitaminwater and Odwalla.

The company’s rebranding of Coke Zero Sugar is also part of that broader effort. Coca-Cola says it changed the drink’s name “to be as clear and descriptive as possible” after internal research showed that many consumers didn’t realize that Coke Zero didn’t have sugar or calories. It also changed the drink’s packaging “to make it look more like Coca-Cola.” Out: mostly black labels. In: more red, and the words “zero sugar” and “zero calorie” printed prominently on the front.

“We’re confident that loyal Coke Zero fans will love the new-and-improved recipe, and that fans of original Coca-Cola looking to reduce their sugar intake will want to try it, too,” the company said in a July blog post.

Consumers, however, were not immediately convinced: “Coke Zero Is Gone Because We Live in a Grim Dystopia in Which Nothing Good Can Exist,” a GQ headline proclaimed in July. People also took to Twitter to complain.

R.I.P., Coke Zero: The five stages of ice-cold grief

Coke Zero Sugar, first introduced in the United Kingdom last year, is now sold in more than 25 countries. The company says the revamped drink will be available worldwide by early 2018.

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