Competitive Watch: Drug Stores Grow CSD Sales

As consumers migrate toward more healthful beverage choices, Cadbury Schweppes and select Brooks-Eckerd stores are turning the spotlight on diet carbonated soft drinks with a new test-merchandising program that has boosted sales across the category.

"The strategy was driven by consumer data," Rick Schuttenhelm, vice president of national accounts at Cadbury-Schweppes Americas Beverages, told Drug Store News. "Our data told us that diet and flavors were growing at a rate greater than regular brands." The research also showed that the drug channel skewed behind other channels in diet and flavor sales.

Cadbury Schweppes developed a portfolio lineup that segmented diet products separately. The pilot -- four shelves of diet in a section with headers featuring all diet brand logos and a "Charge it up" slogan -- was rolled out to six Brooks-Eckerd stores in the first quarter of 2006.

"Our test focused on bringing all diet products together and flagging that area with lane blockers to draw consumers' attention to the category," Schuttenhelm said. "The test really focused on two trends -- the growth of diet and flavors -- by merchandising Diet Sunkist, Diet A&W and Diet Canada Dry side-by-side."

Massing all flavors together might attract consumers who want a diet product, but may not even realize some flavors are available in diet versions, Drug Store News said.

The results of the test were surprising. "In those stores, unit sales were up 136 percent, and dollar sales were up 95 percent for Cadbury Schweppes diet brands," Schuttenhelm said. In addition, unit sales of regular carbonated brands were up 20 percent, and dollar sales were up 62 percent for Cadbury Schweppes brands. "We wanted a program that would get consumers interested and spike diet sales, but not adversely affect sales of regular CSD," Schuttenhelm said. "We are very happy with the results."

Cadbury Schweppes is rolling out the program to 48 Brooks-Eckerd stores, but Schuttenhelm told Drug Store News that he cautious about taking the program industrywide until Cadbury Schweppes has six months of sales figures under its belt.

Cadbury Schweppes isn't alone in its efforts to maximize sales by giving diet products a greater focus. While overall carbonated soft drink sales in drug stores are "very healthy," dollar sales for diet products are outpacing dollar sales of regular CSDs, said Mike Cinque, Coca-Cola's vice president of sales for U.S. drug stores.

"I believe there is still significant potential in the diet category," Cinque said. "Our retailer partners are focused on the health and wellness of their customers, which provides us with a great opportunity to partner with them to reach our key diet customers."

Competitor Pepsi also has ramped up its diet and flavor presence. "We've recently expanded our Diet Pepsi portfolio with the introduction of Jazz, a new line of zero-calorie colas available in flavors like black cherry french vanilla and strawberries and cream," said Michelle Naughton, a spokeswoman for Pepsi-Cola North America.