Challenging Soda

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Move over, soda. Water and other beverages are looking to knock you off your throne as king of the vending machine.

The ever-popular soft drink category lost market share to water last year, notes VendScape Data Service of Pittsburgh. In a 2002 survey of products sold in beverage vending machines, VendScape found that significant losses for soda occurred in all classes of trade (locations): education, plants/factories, office and public (airports, leisure parks, hotels—any site open to the general public). Still, 81% of all vended beverages sold were soft drinks.

The beverage industry has fought to keep the category going, launching a number of flavored brand extensions, like Pepsi Blue, Vanilla Coke and Dr Pepper Red Fusion. But, though soda has held onto its position as the No.1 choice in vended beverages, it will face more challenges.

Healthier alternatives: "It looks like it will continue to lose market share to healthier beverages, especially water and juice and juice drinks. This is due to consumers' increasing health consciousness. Beverage companies have responded to the trend and now have aggressively acquired more brands in the water and juice categories," says Hena Akhtar, senior business analyst of Management Science Associates, one of two research firms that produce the VendScape service (the other is Validata).

Fueled by the growing epidemic of childhood obesity, schools have taken the issue one step further, especially in California. The San Francisco School Board is considering a nutrition policy that would eliminate the sale of soda and unhealthful snacks by September 2003, the San Francisco Chronicle reports.

The American School Food Service Association (ASFSA) supports what these schools have done. "We have to look closely at foods in competition with school meals," states Gaye Lynn MacDonald, ASFSA president and fsd, Bellingham (WA) School District.

Taking action: "School districts are examining their policies and practices and they're taking some actions. There is a definite increase in the implementation of using beverages other than soda. I have seen some school districts strictly enforcing that carbonated beverage machines be on timers so that when school meals are being served and eaten, the machines are off," she adds.

The downside to eliminating soda is the potential loss of revenue. For San Francisco, for example, the new nutrition policy would cost the district at least $500,000 per year at a time when all school districts are facing state cuts. While MacDonald admits this is a concern, increasing the number of machines that offer noncarbonated beverages such as flavored waters, juices, juice blends, milk and sports drinks will still help accrue funds for schools.

"Philadelphia had taken the beverage machines in one or two schools and replaced the previously vended items with items meeting particular nutrient standards. The idea was to see if they would buy the selections if there were nothing else available. After the first couple of weeks of complaining, the students bought the (new) products. The machines were making as much—if not a little more—money than they had previously."

More changes pending: "In my state of Washington, there's a bill in the Senate that would set nutritional standards for foods sold in competition with meals at the elementary and middle school level. It would start in school year 2005-'06. It also calls for a statewide task force to look at the issue. The task force would have a very broad cross-section of members, including members of the beverage and snack industry."

MacDonald adds that districts are evaluating their beverage contracts. They're discussing whether or not to go out and bid again.

Soda and the soft drink industry, of course, are not without their own proponents and advocates. The National Soft Drink Association (NSDA) position is that soda is a refreshment beverage that can be consumed in moderation as part of a balanced diet. "A growing body of scientific evidence by governmental and academic researchers looking specifically at soft drink consumption shows there is no connection between soft drink consumption and health problems, including obesity, tooth decay and bone health," says Sean McBride, NSDA director of communications.

Moderate consumption: "Also, recent research conducted by the Georgetown University Center for Food & Nutrition Policy shows that soft drinks are not linked to obesity in children, calcium displacement, poor eating habits or a lack of physical activity. The research showed that 67% of 12-to-16-year-olds drink one 12-ounce can of regular carbonated soft drink per day or less, and that 20% do not drink any soft drinks."

In addition, last fall the NSDA asked bottler members to collect data in schools and the organization had someone independently verify the methods for how it was collected. The data showed that the average student was consuming 16 ounces of carbonated soft drink per week at school and also consuming 12 ounces of another non-carbonated beverage.

McBride says the NSDA feels that the real solution to the obesity problem is daily physical education and more nutrition education for every student. "Also, as a society we have to get children and adults to log off the computer, turn off the television, get up off the couch and get moving."

Partnerships: Soft drink companies have developed successful partnerships with schools; beverage sales often support academic programs and important after-school activities at a time when many schools lack the necessary funding.

"Each year, schools across America earn tens of millions of dollars from the sale of beverages at school. There are no strings attached to the money. Local educators, in consultation with parent and community groups, determine what beverages are offered in vending machines and how the proceeds will be spent," McBride points out. The NSDA wishes to keep the responsibility of beverage choices to parents and school officials, without government regulation.