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Varchild2008 (84.67)

Why SUGAR Prices mean Little to Beverage Profits

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August 16, 2009 – Comments (3) | RELATED TICKERS: PEP , KO , DPS

TFirst in a comment to a recent Blog Post of mine wrote me a question asking,
(Paraphrased)

"What will happen with DPS as Sugar Prices continue to rise?"

Well.... DPS and Coca-Cola and Pepsi are all ahead of the game.  They all are slowly jumping on board 2 trends:

Trend 1)  "STEVIA"   This is an Herb that was recently discovered in Africa.  It may be difficult to re-produce beverages using Stevia and still retain the same taste as the Sugar equivalent beverage.

However, Dr. Pepper Snapple Group already announced earlier this year their intent to produce and market a beverage using STEVIA as their Sugar replacement.  This beverage is called "ALL SPORT."  It may very well become the first drink to use Stevia.  Perhaps it will be sold in stores near you in 2010 / 2011.

Trend 2)  Health conscious consumers means increased demand for Healthier beverages.
Pepsi + Coke + DPS have all been pushing healthy versions of their drinks.

The biggest thing going with DPS is their Snapple Makeover.  They took out almost all of their SUGAR content right out of their Juice.

KIWI PEAR
GREEN TEA
NONI BERRY

These drinks and others all have 3 or less grams of Sugar per bottle.  That is a huge drop from the nearly 30 grams of Sugar in the original juice drinks.

So, if the All Natural lineup of Snapple starts to get noticed for its Health Conscious and almost Sugar-less approach for Consumers, then we may see the Sugar Packed Snapple get phased out.

Dr. Pepper Snapple Group is already setting themselves up well by decreasing the content of Sugar in their Drinks.

Coca Cola's  COKE ZERO  also removes the Sugar.  

Beverage company's have seen the writing on the wall regarding commodities and have taken steps years ago to address inflationary impact to their commodities costs.}

So, do not let anyone make you *scared* of Sugar Prices....  We are still a Far Cry away from 1970s era Peak Sugar prices.

3 Comments – Post Your Own

#1) On August 16, 2009 at 9:41 PM, Seano67 (37.69) wrote:

I've actually tasted Stevia. They sell that in some health food stores in a powdered sugar type form. It's *super* sweet, I believe like hundreds of times sweeter than sugar itself.  This was years ago, and I don't remember whether I liked it or not.

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#2) On August 16, 2009 at 10:05 PM, Varchild2008 (84.67) wrote:

Yes.. I admit that the future of STEVIA is extremely on shaky ground... I don't think we will ever see a "Dr. Pepper / Stevia" brand...perhaps ever....

But, maybe it can be used to some success to push new drinks that incorporate it.

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#3) On August 17, 2009 at 8:45 AM, lemoneater (79.26) wrote:

 

I've heard of Stevia before "the wonder sweetener", I wonder how labor intensive it is to produce. Could someone grow it in their backyard? If it is a good solution why isn't it popular already? Is there a powerful sugar lobby? Or is there a high fructose corn syrup lobby? Or does Stevia has a strange aftertaste?

I love Snapple White Tea Nectarine. I hope they keep that flavor although it is sweetened with sugar. I've had to avoid Noni Berry and Kiwi Pear because aspertame usually gives me a headache more's the pity. I wonder how many people are similarly effected.

Interesting post. Thanks!

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