The number of students choosing soda or pop as a regular daily drink appears to be on the decline, a trend that could impede growth for The Coca- Cola Company (NYSE: KO), PepsiCo Inc. (NYSE: PEP) and Dr. Pepper Snapple Group (NYSE: DPS). According to a recent report from the Centers for Disease Control (CDC), 24% of American students drank soda daily in 2010, a 5% decline from the year before.
Parents and dieticians may rejoice in the news given that sugar-sweetened beverages are the largest source of added sugars in the diets of American youth and a major cause of childhood obesity and diabetes. However, it may be cause for concern over at Coca-Cola and PepsiCo given the amount of advertising the companies devote to targeting teens. According to AdDataExpress, Coca-Cola considers 12 year olds to be a part of its target market, while PepsiCo’s focus is even narrower, targeting any soda drinker under 25-years of age.
Yet teens are cutting back on their soda consumption or opting for other beverages, such fruit juice, coffee, tea and sports drinks. To a lesser extent, some even chose diet soda.
The shift away from regular soda may be temporary, but it may be harder to snare the younger generation with so many other options and educational campaigns to steer American youths towards more healthy choices. Many school districts have gone so far as to ban or limit certain sugary snacks and soft drinks in school vending machines. Preschool teachers, meanwhile, are rejecting cupcakes and other sugary treats in favor of healthier fruits, vegetables and cheeses for special occasions. Heck, I’ve watered down so many of my son’s sugared beverages, he can drink most with little to no sugar and he thinks flavored water is soda.
By no means am I suggesting that Coca-Cola, PepsiCo and Dr. Pepper Snapple are on the verge of collapse. But as is the case with many other U.S. companies, investors should expect to see more of the revenue growth from these companies generated in overseas markets.
As of this writing Cynthia Wilson did not own a position in any of the stocks named here.