Americans have become more conscious of the effects of what they drink and eat. This is particularly true with soda, a trend that is not good for branded soda companies, particularly Coca-Cola Co. (NYSE: KO) and PepsiCo Inc. (NYSE: PEP). While their growth prospects overseas may remain, important research shows their best days in America are behind them.
According to new research from Gallup:
Nearly two-thirds of Americans say they avoid soda in their diet, while more than half say they avoid sugar. Meanwhile, more than nine in 10 Americans claim they try to include fruits (92%) or vegetables (93%) in their diet — slightly more than said this previously.
Based on the data, the vegetable industry should be thriving. However, there are no vegetable companies as large as Coke and Pepsi, so it is harder to discern the trend. Too bad, investing in large public companies that sell vegetables would be a good way to make money.
Unfortunately for the large soda companies, Americans have become educated about the fact that these drinks are bad for them. This level of education did not exist a generation ago. Now, almost everyone of any age is aware of health trouble like diabetes, which consumption of soda does not help.
Gallup researchers point out further:
Since 2002, soda and sugar have moved into the category of food a majority of Americans appear to consider bad for them. This year, more Americans than ever say they try to avoid drinking soda, while there has been little change in sentiment about avoiding sugar intake
In other words, soda is in a category of its own. People on average don’t worry about sugar as much, and Gallup indicates they worry even less about salt and carbohydrates.
Every once in a while, an entire industry falls into disrepute, and no amount of clever management or marketing can reverse the process. Soda has entered that category. Coke and Pepsi better find other businesses.