Coca-Cola Makes a Bold Move in the Healthy-Drink Market

A newly popular premium-beverage category is growing in both popularity and diversity of flavors.

As fewer people report regularly drinking alcohol and more reach instead for healthy alternatives to soda, one beverage giant is betting that its latest product release will cater to a growing demographic. 

Young adults born into Generation Z, after 1997, are a famously health- and sustainability-conscious cohort with a bounty of beverages to choose from in today's market. 

Upstart beverages beloved by Gen Z like Poppi, a healthy probiotic soda with zippy branding, are now valued in the billions. So it's no doubt that Coca-Cola KO wants to cash in on some of that growing market share. 

And doing so with a company it's had a century-long history with -- and acquired in 2017 for $220 million -- may be just the ticket.

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Coca-Cola Is Trying to Change With the Times

In April the Atlanta soft-drink giant will release a new drink with that very acquisition. Called Topo Chico Sabores, the drink will be a sparkling mineral-water beverage with natural flavors and no sugar. It'll come in three flavors -- blueberry, tangerine and lime -- and will use ingredients from where the drink itself is produced. 

The water will be infused with a delicate balance of minerals and carbonation, so it tastes like natural mineral water without disrupting the natural Mexican environment from where Topo Chico originates. 

Coca-Cola has made no secret of its efforts to slowly pivot away from sugar-based sodas and beverages. 

While Coke and Sprite may be enjoyed at most bars or restaurants on any given day, the soda-drinking trend seems to be waning among one key demographic: young Americans. 

In fact, the number of young people who consumed at least one daily sugar-sweetened beverage has fallen to 61% from 80% in recent years, according to a study by Harvard researchers.

So Coca-Cola is betting that Topo Chico, a premium mineral water with a healthier reputation, could help propel it into the future. 

'Transcends' Sparkling-Mineral-Water Space: Exec

Coca-Cola's new revenue-streams chief, Dan White, explained that Topo Chico argues that the brand has "transcended the sparkling mineral water space," and he lauded his company for its success. "And that’s where really the growth from Topo Chico comes from and what we’re really leaning into," he said.

"We’ve really done a very, very good job of allowing the brand to become what consumers want it to be," he said.

Following Coca-Cola's acquisition of Topo Chico, its market share went to 35% in 2021 from 20% in 2017. And given its expansion into new spaces, it isn't likely to slow down soon. 

White expects Topo Chico could be a $1 billion brand, similar to that of Diet Coke or Dasani. 

"It’s on a trajectory to do that," he told Retail Dive.

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