Coca-Cola’s Dasani Water Drops Will Expand Its Low-Calorie Offerings

September 12th, 2012 by Trefis Team
+9.31%
Upside
62.83
Market
68.68
Trefis
KO: Coca-Cola logo
KO
Coca-Cola

Coca-Cola Co (NYSE:KO) will launch Dasani Drops as part of its aim to offer more products containing fewer calories. The water drops will be priced at $4 and will be introduced in October. Coca-Cola is not the first company to pioneer in water mixers. Kraft Foods (NYSE:KFT) launched its MiO water mixers in March 2011 and generated sales of more than $100 million in the first nine months of  launch. This means beverage companies see this segment as one with growth potential. The flavor drops can be added to water as per the requirements of consumers. Moreover, the drops are sugar-free and contain zero calories. [1]

See full analysis for Coca-Cola Co


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Overall, there has been a surge in demand for beverages with low calorie contents. Hence, the beverage companies are working hard to broaden their portfolios and coming up with new and innovative drinks. For instance, Dr Pepper Snapple (NYSE:DPS) launched its mid-calorie drink Dr Pepper TEN in the last quarter of 2011 while PepsiCo (NYSE:PEP) launched its Pepsi Next earlier this year. Both the drinks claim to taste the same as the original, flagship drinks but contain fewer calories.

DPS could also be rolling out other TEN products in a short time. According to the company’s CEO Larry Young, the company is running the test products in four or five different markets. Coca-Cola does not have any mid-calorie soda at present. Moreover, PepsiCo is also reportedly fiddling with the formula of Diet Pepsi to improve its taste. The current artificial sweetener used in the drink, aspartame, loses some of its sweetness during transportation and at high temperatures. In addition, Diet Pepsi sales were down 8.2% in 2011, so the company is definitely focusing on the right area. [2]

PepsiCo is also upping its marketing expenditure by $600 million in 2012 with a greater focus on soft drink sales in North America. The most recent marketing campaign involves actor Sofia Vergara as the face of Diet Pepsi to target the female customers in the country.

We have a $39 price estimate for Coca-Cola Co, which is roughly in-line with the current market price.

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Notes:
  1. Coca-Cola’s newest drink is just a few drops, September 11, 2012, moneycontrol.com [↩]
  2. PepsiCo Is Testing New Diet Pepsi Formulas, August 31, 2012, wsj.com [↩]