Deal could boost companies' images - and profits

May 04, 2006|By ALLISON CONNOLLY | ALLISON CONNOLLY,SUN REPORTER

A ban on calorie-laden soft drinks in schools is not necessarily a blow to the giant beverage companies that sell them.

Instead, the voluntary ban could boost their public images as well as their bottom lines, several experts said yesterday.

"The companies are worried about the avalanche of bad press they've received about predatory marketing in our schools," said Gary Ruskin, executive director of Commercial Alert, a nonprofit critical of commercialism in schools. "This will help alleviate their [public relations] black eye."

Three of the nation's largest beverage companies - Coca-Cola Co., Pepsi Co. and Cadbury Schweppes PLC - agreed yesterday to stop selling non-diet sodas to schools, in the face of rising childhood obesity rates.

While many lauded the soft-drink makers for agreeing to the voluntary ban, marketing experts say the companies are going to reap benefits from it.

The carbonated, nondiet soda segment saw a 0.6 percent decrease in the more than 10 billion cases shipped last year, its first decline in 20 years, said Andrea Foote, editor-in-chief of New York City-based Beverage World, a trade magazine. The ban could be used as a marketing tool by the companies to advertise their noncarbonated products, which have much more growth potential, she said.

"The truth of the matter is, younger drinkers are drinking fewer carbonated beverages than their older counterparts," Foote said. "The carbonated market is such a huge, mature market, you're not going to get double-digit growth rates."

Ruskin, of Commercial Alert, said the ban could preserve the companies' toehold in the nation's schools, where they could continue to cultivate young customers with their energy drinks, bottled water and juices. For example, Coca-Cola owns Minute Maid juices, PowerAde sports drinks and Dasani water. Pepsi owns Tropicana juices, Gatorade sports drinks and Aquafina water.

"They know the schools are a great place to market to kids," Ruskin said. "If they stay in the schools, they live to see another day."

Barbara Kahn, professor of marketing at Wharton School of Business, said it is to the companies' advantage to agree to a voluntary ban rather than wait for a legislated one. At the same time, she said, they might not only win public relations points but also new customers, as McDonald's did when it added salads and calorie counts to its menu.

"When there's public outcry, it's in the marketer's best interest to respond to what the customer wants," Kahn said.

And despite the negative publicity linking full-calorie sodas to obesity, soda sales at the supermarket probably won't be affected, said Erik Gordon, assistant marketing professor at Johns Hopkins School of Professional Studies in Business and Education.

"The people concerned about this already have made the dietary adjustments," Gordon said.

allison.connolly@baltsun.com

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