SIC 2086

This category includes establishments primarily engaged in manufacturing soft drinks and carbonated waters. Establishments primarily engaged in manufacturing fruit and vegetable juices are classified in various canned, frozen, and preserved food classifications. Those manufacturing fruit syrups for flavoring are classified in SIC 2087: Flavoring Extracts and Flavoring Syrups, Not Elsewhere Classified ; those manufacturing nonalcoholic cider are classified in SIC 2099: Food Preparations, Not Elsewhere Classified. Establishments primarily engaged in bottling natural water are classified in SIC 5149: Groceries and Related Products, Not Elsewhere Classified.

NAICS Code(s)

312111 (Soft Drink Manufacturing)

312112 (Bottled Water Manufacturing)

Industry Snapshot

Soft drinks have become intrinsically tied to the "American way of life," and the leading soft drink, Coca-Cola, is a virtual icon of American culture. Close to 500 soft drinks manufacturers and bottling companies operate in the United States. Americans consume more soft drinks than any other beverage—more than twice the second beverage, coffee. In recent years, soft drinks accounted for more than 29 percent of American beverage consumption. The U.S. market included nearly 450 different soft drinks.

Soft drinks is a $61 billion a year industry. Coca-Cola and Pepsi-Cola controlled more than 70 percent of the U.S. soft drink market, producing the majority of the industry's best-selling brands. Approximately 500 bottlers operate across the United States. Modern bottling plants produce more than 2,000 soft drinks per minute on each line of operation.

There is more to America's soft drink industry than just the companies that provide consumers with their favorite refreshments, according to the National Soft Drinks Association (NSDA). It is also a big part of the U.S. economy, buying products and services from many different industries, creating thousands of jobs, and contributing to worthwhile causes in local communities.

Soft drink flavorings are the number one product purchased, followed by metal cans and plastics used for packaging. The soft drink industry also is a big buyer of corn syrup, advertising services, glass containers, boxes for shipping bottle caps, warehousing, fruits and vegetables, motor freight, carbonated water, sugar, and many other products and services that contribute to the manufacture of soft drinks.

Organization and Structure

Soft drink companies manufacture and sell beverage syrups and bases to bottling operations that add sweeteners and/or carbonated water to produce the final product. Independent bottlers work under contract with various soft drink manufacturers and are allotted specific territories to serve. The manufacturers provide the bottlers with syrups and bases and with a variety of business services, including product quality control, marketing, advertising, engineering, and financial and personnel training. In turn, the bottlers supply the required capital investment for land, buildings, machinery, equipment, trucks, bottles, and cases. The soft drink industry sells its product in two forms, packaged and fountain service. With fountain service, the soft drink product is dispensed and served in cups, typically in a restaurant or any location with a food service station.

Background and Development

The soft drink industry began in the mid-1880s with the creation of a syrup that was mixed with carbonated water and served at drug store lunch counters. During the early years, soft drinks were sold only in stores that could provide fountain service. Increasing distribution was tied to building additional syrup manufacturing plants.

With the advent of bottling machinery, soft drinks began to be distributed beyond the town drug store. The first merchant to bottle Coca-Cola was Joseph A. Biedenharn of Vicksburg, Mississippi, who installed a bottling machine in his candy store in 1894. The development of large-scale bottling assisted the proliferation of Coca-Cola, and by 1895 the drink was sold in nearly every part of the United States. An infrastructure of independent bottlers working under contract with Coca-Cola, producing the drink to exact specifications, and distributing it within a specific region, soon became the model distribution method for Coke and was emulated by others.

The 1960s and 1970s brought acquisitions and diversification for Coca-Cola and Pepsi-Cola. In 1960, Coke purchased Minute Maid and later acquired Duncan Foods. The Coca-Cola Company Foods Division was created in 1967 and was later renamed Coca-Cola Foods. Meanwhile, Pepsi-Cola merged with Frito-Lay in 1965, changing its name to PepsiCo but maintaining its beverage division under the name Pepsi-Cola. PepsiCo soon ventured into food service and snack foods with the acquisition of Pizza Hut, Taco Bell, and Kentucky Fried Chicken restaurants.

During the 1980s, as consumers became more interested in health and fitness, the soft drink industry faced stiff competition from the makers of bottled water. In response, soft drink manufacturers developed low-calorie and caffeine-free beverages, such as Diet Coke and Diet Pepsi. The start of the 1990s ushered in a new kind of competition focused on "New Age" beverages such as ready-to-drink teas, fruit juice beverages, and flavored waters. Gatorade, the perennial leader among sports drinks, also saw new competition during the 1990s.

From the simple beginnings of one cola, the soft drink industry exploded into a kaleidoscope of traditional sodas, natural sodas, fruit juice drinks, and various kinds of bottled water. Coca-Cola Classic was the best selling soft drink in the United States and around the world in 1992, controlling nearly 20 percent of the domestic market and 46 percent of the worldwide market. Coke Classic controlled 19.3 percent of the soft drink market and posted a sales increase of 1.5 percent for the year. Pepsi-Cola was the second best-selling soft drink for the year, with a 16.1 percent market share, down 0.8 percent over 1991. Diet Coke, Diet Pepsi, and Dr. Pepper completed the list of the top five soft drink brands for 1992.

Some industry leaders contend that the U.S. soft drink market has begun a slow, steady decline, citing its failure to post double-digit growth since the end of the 1980s. Pointing to an aging U.S. population and changing consumer tastes, industry analysts predicted that per capita consumption and the total consumption rate would not increase significantly in the near future. To combat a weak U.S. market, soft drink manufacturers aggressively pursued overseas markets. Although no other country has a soft drink consumption rate as high as the United States, many areas have been targeted as potential for expansion, especially the underdeveloped and highly populated areas of China and India. The Coca-Cola Company has been the clear leader in overseas expansion with nearly 75 percent of its operating profits coming from areas outside the United States.

Traditional cola producers were caught off-guard by the rise of generic store brands during the early 1990s as the recession drove consumers to experiment with these lower-priced drinks. However, these colas were not expected to create a significant amount of brand loyalty, so they did not appear to pose a substantial threat to the major soft drink manufacturers.

Despite market dominance, traditional cola products continued to lose market share. Total soft drink consumption grew roughly 5.0 percent annually between 1983 and 1989, but slowed to 3.0 percent in 1990 and only 1.6 percent by 1991. Even the diet cola market has faltered since 1990, losing ground to new drinks commonly called "New Age" beverages. Diet colas, which enjoyed a 10 to 20 percent sales growth rate during the 1980s, decreased to approximately 3 percent per year. Industry analysts suggest that new drinks, including sodas and bottled water, are the most formidable opponents to traditional colas. This market segment began with the rise of the bottled water industry in the United States and expanded into the creation of the New Age category.

Strongest during the 1980s, bottled water remained a vibrant and growing segment of the beverage market into the 1990s. This industry can be divided into two segments, bulk water and refreshment beverages. Bulk water is nonsparkling water that is consumed instead of tap water, and it represented about 80 percent of the market. Refreshment beverages ranged from water such as Evian to flavored, vitamin-enriched sparkling mineral water from Crystal Geyser. While bulk water usually is bought through a delivery service in five-gallon containers or larger, refreshment beverages are premium, image-driven brands, prepared in smaller containers and sold for both on- and off-premise consumption. These products compete directly with sodas and mixers.

Since 1980, the U.S. bottled water market has grown to nearly 3 billion gallons in annual consumption. After a decade of double-digit growth, the market faltered in 1991, showing only a 0.5 percent gain in volume. Analysts blamed the recession and concerns about safety, prompted by the Perrier recall in 1990, for the downturn. The industry began to rebound in 1992 with a 3.7 percent increase in volume and a 3.2 percent increase in sales. By 1993, more than 700 brands of bottled water were produced in the United States at 430 bottling facilities. Another 75 brands of water were imported.

The Perrier Group was the largest bottled water company in the United States. Acquired in 1992 by Nestle, the Perrier Group includes a collection of strong regional domestic waters plus its flagship brand. The second largest bottled water company in the United States has been McKesson Water Products, with most of its business centered on home and office delivery. More than 80 percent of the company's sales have been in California with its Sparkletts brand.

Beyond bottled water, an entirely new market segment appeared, answering Americas' call for flavored drinks that are lighter, less filling, less sweet, "healthier," and more sophisticated than traditional soda. New Age beverages include flavored sparkling waters, natural sodas, fruit juice drinks, flavored teas, and bottled coffee products. A beverage fits in the New Age category if it is comparatively new to the market, considered by consumers as good for them, and contains natural and/or healthy ingredients without preservatives, according to industry analyst Michael Bellas as reported in Beverage World.

The all-natural soda division has been the most active New Age segment. Although sales slumped in 1990, "all-natural sodas stormed back to reach $309.8 million in sales in 1991, up a whopping 51 percent," reported Eric Sfiligoj in Beverage World. Consumption of all-natural sodas reached 81.3 million gallons annually by 1991, second in the category only to flavored waters. The significant growth of all-natural sodas has been a direct reflection of the success of Vancouver-based Clearly Canadian. Launched in 1987, Clearly Canadian is Canadian water pumped from deep artesian wells and mixed with fruit flavors. The product is sweetened with fructose and contains preservatives.

Sales of New Age beverages were projected to grow at 8 percent annually through 1995, with growth rates hitting 11 percent by 1996, according to Beverage Dynamics. With projections such as these, it was only a matter of time before the national cola brands added their own products to the plethora of New Age drinks. In early 1992, Pepsi introduced Crystal Pepsi, a clear, cola-flavored beverage that was 100 percent naturally flavored and contained no preservatives or caffeine. During its first year of national distribution in 1993, Crystal Pepsi captured more than 2 percent of the soft drink market or roughly $1 billion in sales.

Coca-Cola also launched its New Age soda, Nordic Mist, in 1992. The Coke product is a mixture of sparkling water, high fructose corn syrup, citric acid, potassium, and one of five natural fruit flavors. "New Age isn't our bread and butter," said Bob Bertini of Coca-Cola USA in Beverage Dynamics, "but it deserves a place at the table. We want to be fully represented in every category that makes sense for us. We're trying to respond to changes in the market, but our priority is still colas and traditional soft drinks."

In the face of rising competition from all fronts of the beverage market, both Coke and Pepsi turned to joint ventures with other beverage companies. Pepsi-Cola has been working with Ocean Spray to provide all of its ready-to-drink beverages, including Ocean Spray Splash, a five-flavor line of fruit sparklers, and Ocean Spray Lemonade. In this alliance, Pepsi has become the exclusive distributor of all Ocean Spray single-serve products.

In a joint venture with Nestle, Coca-Cola created the Coca-Cola Nestle Refreshment Company (CCNR) in 1991 to market ready-to-drink coffee, tea, and chocolate beverages. Nestea Iced Tea, CCNR's first project, was introduced in the United States in March 1992. The bottled tea has no preservatives, artificial flavors or colors, and comes in regular and diet versions.

Both cola manufacturers also introduced sports drinks, such as All Sport by Pepsi and PowerAde by Coke. Sports drinks replenish fluids, minerals, and energy lost during exercise, and the market for these drinks has grown into a billion-dollar retail segment. Gatorade accounted for nearly 90 percent of nationwide sales and was the one brand for both Coke and Pepsi to beat. "Gatorade defines the category," says Jesse Meyers, publisher of Beverage Digest, as reported in Time. "There is not a beverage category in any country in the world that is so dominated by one producer."

The movement of major players like Coke and Pepsi into nontraditional beverage markets has shown the effect of changing consumer preferences. Should the New Age category remain as a firmly established and viable drink alternative, these two manufacturers are likely to increase their domestic rivalry, possibly to the detriment of the smaller firms in the marketplace. Moreover, Coca-Cola and Pepsi-Cola have set their sites on a much larger piece of the beverage market, overseas expansion. With improving distribution systems, these two giants have been preparing for what they do best, promoting worldwide consumption of well-known and well-loved products.

The soft drink industry was doing well after its slump in the early to mid-1990s. One of the biggest reasons for this progress was the industry's expansion into fertile overseas markets. Innovative marketing strategies and timely new product introductions caused U.S. consumption of soft drinks to improve. According to Beverage World, carbonated soft drink consumption increased to 13.3 billion gallons in 1994, an increase of 4.3 percent from 1993. Fruit beverages consumption was 3.3 billion gallons in 1994, an increase of 3.8 percent from 1993.

New Age drinks were the best performers in the mid-1990s. Bottled water consumption reached 2.5 billion gallons in 1994, an increase of 10.4 percent from 1993. Sports drinks performed even better, with the consumption reaching 391.1 million gallons in 1994, an increase of 11.4 percent over consumption in 1993.

Bottled water was seen as the best performing star of the soft drinks industry in the mid- to late 1990s. Its success was attributed to many factors including, "A perception of a healthy, natural, good-for-you product," according to Beverage World. Given the concerns over municipal water, it was considered the only beverage category that was driven because it was a tap water replacement. The bottled water industry saw many "firsts" in the mid-1990s. It was the first time that this industry "topped 2.5 billion gallons, measured more than 10 gallons per capita, and totaled more than 3 billion in wholesale receipts," according to Beverage World. The sparkling water segment, however, was the only down spot in the industry, with dollar sales dropping almost 10 percent according to Beverage World.

Since 1989, soft drink container recycling has risen from 48.7 percent to more than 60.0 percent—a 23-percent increase. Nearly 48 billion soft drink containers were recycled in 1995, and soft drink containers accounted for less than 1 percent of the U.S. solid waste stream. Although beverage containers account for less than 20 percent of materials collected in most curbside programs, they generate up to 73 percent of total scrap revenue. Packaging innovations lightened the weight of soft drink containers by an average of 30 percent since 1972. Nearly 78 percent of soft drinks are packaged, while the remaining 22 percent are dispensed from fountains. In 1995, some 62.6 billion soft drinks were packaged in cans, 16.8 billion were packaged in PET plastic bottles, and 3.6 billion were packaged in glass bottles.

During the late 1990s the number of independent bottlers declined as major soft drink manufacturers consolidated bottling operations by acquiring independent companies and combining them to make one large operation. By early 1999 the number of Coca-Cola bottlers in the United States dropped to 96, from 353 in 1980. Some analysts expected the number of bottlers would drop to 50 or fewer by 2004. The mergers of the independent bottlers began as the amount of capital and equipment needed to continue modernization increased rapidly.

The leaders of the soft drink industry market products heavily, constantly vying for brand loyalty. As the coffee industry went after the middle-age market, the soft drink industry promoted heavily to the younger set. Its paid off—marketing research shows that in the late 1990s coffee was below milk, soft drinks, tea, fruit drinks, juices, and alcoholic beverages as the drink of choice during at-home dinners. Pepsi developed hip new ads aimed at the younger crowd, including a young girl who adopted celebrity voices such as Marlon Brando'sto intimidate those who would dare serve her a Coke.

During the late 1990s, it appeared that there was little room for new products in consumers' hearts. In a move reminiscent of Coke's disastrous New Coke campaign, Pepsi rolled out a new diet cola called Pepsi One in October 1998. Hyped by the company as a better tasting diet cola, sales started strong, with Pepsi One capturing 2 percent of the market. It soon faltered as consumers decided it did not taste all that different from Diet Pepsi. Pepsi One's share soon fell to 1.4 percent of the market.

Aggressive marketing paid off for the industry in the late 1990s. In 1999 American teenagers drank twice as much soda as milk. By contrast, in 1979 those figures were reversed. Alarmed at the trends, educators and legislators in Washington enacted laws keeping soft drink manufacturers from selling products in the nations' schools before and during lunch. Principals at some schools began allowing companies to offer free drinks at lunch, thereby getting around the law. Congress introduced the Better Nutrition for School Children Act of 1999 banning the giveaways. Industry spokesmen said the industry remained neutral on the legislation, saying they were for school choice on the matter. They pointed out that some principals were in favor of the free soft drinks as it kept some students on school grounds eating nutritional lunches, instead of leaving campus to eat at fast-food establishments.

Current Conditions

Soft drinks are an integral part of American life and culture. In 2001 Americans consumed them at an annual pace of almost 53 gallons per person. While there are hundreds of brands, the big two of the industry—Coke and Pepsi—have been busy buying smaller soft drink companies in order to increase market share. Competition is fierce, with battles fought daily over shelf space, fountain rights, and pricing. To meet the challenge of staying on top, companies need to accumulate large amounts of capital and equipment and react to the constantly changing retail markets.

Marketing and market share also include plans for new products. Although the emphasis in this area was relatively weak in the late 1990s, by the early 2000s it had become a major industry focus and a significant source of competition. In a break from the past, different products were suddenly hot. For example, Pepsi introduced Pepsi Twist, Pepsi Blue, and a Mountain Dew brand called Code Red; Coca Cola unveiled Diet Coke with Lemon, Vanilla Coke, and Diet Vanilla Coke; and Dr. Pepper/Seven Up unveiled Dr. Pepper Red Fusion. In Brand-week, one Pepsi executive described the heightened competition as "a chess match, only with huge brands worth millions and millions of dollars." The trend toward colored and so-called "extreme" soft drinks even extended to the restaurant industry, where some restaurants began to offer local or regional niche soft drinks. A few locations even began to produce their own brands of soft drinks on-site.

Although certainly not the largest by volume, the market for bottled water arguably had become the industry's hottest segment worldwide by 2003. According to Beverage World, by late 2002 bottled water volume was growing some 10 percent worldwide, outpacing carbonated soft drinks (7.9 percent) and coffee (4 percent) over a six-year period. Beverage Industry reported that bottled water sales totaled about $2.7 billion in 2002. At nearly $1.7 billion, single-service plastic containers represented more than 61 percent of total sales—an increase of almost 29 percent over 2001 levels.

Within the bottled water market, flavored and "nutritionally enhanced" waters were an especially strong category. These products were aimed at health-conscious consumers, especially aging Baby Boomers and women between the ages of 25 and 49. Also known as "nutraceuticals," these drinks were enhanced with a variety of ingredients including vitamins, herbs, and anti-oxidants and were intended to address a variety of health concerns including heart health, vision, blood sugar, and weight loss. On the horizon were products that could potentially address joint health and allergies. Beverage Industry revealed that annual sales of enhanced water skyrocketed from $20 million to $85 million by the early 2000s. The publication cited research that projected sales would reach the $100-$200 million range in 2002.

Just as heightened consciousness over health issues was benefiting the beverage industry in the bottled water segment, it was having a somewhat negative impact on the soft drink category. As in the late 1990s, concerns still existed over excessive consumption among young people, especially in relation to rising levels of obesity. In 2002 the Los Angeles School Board announced that it intended to ban soft drink sales in its schools beginning in 2004. This decision angered industry representatives and trade associations, who pointed out that greater levels of physical exercise would be more effective for combating obesity. By the early 2000s, many schools had established relationships with their local soft drink bottlers in an effort to generate sorely needed revenue to help offset cost of sporting equipment and various programs and activities.

Industry Leaders

Coca-Cola has been the world's most popular soft drink, holding roughly 50 percent of the global market share in the early 2000s. In 2001 the company led the domestic market with a share of 36.2 percent and reported sales of $20.1 billion. Using a franchise system for distribution, Coca-Cola and its subsidiaries sold the flagship brand and other brands in the Sprite, Tab, and Diet Coke families in approximately 200 countries and territories.

Coca-Cola originated in Atlanta, Georgia, on May 8, 1886, when pharmacist Dr. John Styth Pemberton created a caramel-colored syrup in his backyard. He took a jug of the syrup to Jacob's Pharmacy in Atlanta where the product debuted as a soda fountain drink for five cents a glass. Thinking that two C's would look good in advertising, Dr. Pemberton's partner and bookkeeper Frank M. Robinson suggested the name Coca-Cola and designed the now-famous script trademark. Dr. Pemberton, in poor health and in need of funds, soon sold portions of his company. Asa G. Candler, a druggist and Atlanta businessman, acquired complete control of the company for $2,300 in 1891.

In 1892, Candler, along with his brother John S. Candler and two other associates, formed The Coca-Cola Company. In 1894, the first syrup manufacturing plant outside Atlanta was opened in Dallas, Texas. The following year, two more opened in Chicago and Los Angeles. By 1895, Coca-Cola was available in every state in the United States. Large-scale bottling began in 1899 when Benjamin F. Thomas and Joseph B. Whitehead of Chattanooga, Tennessee, obtained the exclusive rights to bottle and sell Coca-Cola. With the financial assistance of John T. Lupton, these men developed a regional franchise bottling system, engaging more than 1,000 bottlers in 20 years.

In 1919, The Coca-Cola Company was sold to Atlanta banker Ernest Woodruff for $25 million. Ernest's son Robert was elected president of The Coca-Cola Company in 1923, when the business was reincorporated in Delaware and 500,000 shares of common stock were sold publicly for $40 per share. The new president led the company for six decades.

Coca-Cola's diversification into the food industry began with the purchase of Minute Maid Corporation in 1960, and the Minute Maid and Hi-C trademarks joined Coke's family of beverages. The company acquired Duncan Foods and formed The Coca-Cola Company Foods Division in 1967, now known as Coca-Cola Foods. In 1986, the company consolidated its U.S. bottling operations, creating Coca-Cola Enterprises (CCE), 51 percent of which was sold to the public. In late 1999 Coca-Cola finished its acquisition of Cadbury Schweppes' non-North American businesses. The transaction added Schweppes, Canada Dry, Dr. Pepper, Crush, and regional brands in 161 countries to Coke's international business.

To sell its products throughout the world, the Coca-Cola Company divided its operations into two sectors, the North America Soft Drink Business Sector and the International Soft Drink Business Sector. The North American division covers Coca-Cola USA, which operates in the United States, and Coca-Cola, Ltd., which operates in Canada. The International division has been divided into five operating units: EC Group, Northeast Europe/Middle East Group, Latin America Group, Pacific Group, and the Africa Group.

Through Pepsi-Cola North America, a unit of PepsiCo Beverages and Foods North America, worldwide consumer-products giant PepsiCo, Inc. holds a leadership position within the beverage industry. In the early 2000s it was second-place behind Coca-Cola, with a domestic market share of 34.5 percent in 2001. That year, the parent company had sales of $26.9 billion, $3.8 billion (14.3 percent) of which was attributable to Pepsi-Cola North America. In addition to its flagship brand, Pepsi markets other well-known beverages including Diet Pepsi, Slice, Mountain Dew, and Mug Root Beer.

The company was first created in 1898. Caleb D. Bradham, a druggist in New Bern, North Carolina, invented the drink and named it Pepsi-Cola, claiming it cured dyspepsia or indigestion. Various owners operated the Pepsi-Cola Company from 1923 through 1963. Under the direction of Donald M. Kendall, who became company president in 1963, Pepsi acquired Frito-Lay, the largest snack chip company in the United States, and became PepsiCo, Inc. Additional acquisitions included Pizza Hut (1977), Taco Bell (1978), and Kentucky Fried Chicken (1986). Although the company eventually divested itself of these three restaurant chains to TRICON Global Restaurants (later renamed Yum! Brands), it continued to make key acquisitions during the early 2000s, including the purchase of Quaker Oats Co.

Pepsi-Cola North America manufactures and sells soft drink concentrate to company-owned and independent franchised bottlers operating facilities throughout the United States and Canada. The company also provides fountain beverage syrups to restaurants. With 2001 sales of $2.6 billion, PepsiCo Beverages International (PBI) controls the company's international soft drink operations. Through this division, Pepsi-Cola products are sold in some 150 countries and territories throughout the world.

The top brands of soft drinks for 2001 were: Coke Classic, Pepsi-Cola, Diet Coke, Mountain Dew, Diet Pepsi, Dr. Pepper, Sprite, Caffeine Free Diet Coke, 7UP, and Caffeine Free Diet Pepsi.

The Dr. Pepper/Seven Up Bottling Group, Inc. (DPSUBG), a division of Cadbury Schweppes plc, held the third-leading soft drink position in the early 2000s. With 2001 sales of $1.8 billion, the company held a domestic market share of 15.5 percent. DPSUBG's products include Dr. Pepper, Diet Dr. Pepper, 7 UP, Sunkist, and A & W.


According to the U.S. Department of Labor, overall employment in food processing (including beverages) has been projected to decline 6 percent by the year 2005. Like other manufacturing industries, food processing has become less labor intensive, and occupational projections reflected this predicted decline. Professional specialty occupations, such as engineers and computer scientists, have been expected to grow, reflecting the industry's continued emphasis on scientific research to improve food products and production processes. However, these jobs have comprised a very small proportion of industry employment.

America and the World

Soft drinks have been produced or consumed in nearly every corner of the world. Growing consumption trends can be attributed to rising disposable incomes, falling trade barriers, universal product acceptance, and a rising demand for American consumer goods. Both Pepsi-Cola and Coca-Cola have company-owned franchised bottling plants in more than 120 countries that produce their respective brands within each country rather than exporting them from the United States.

In the early 2000s, one international challenge facing the industry involved the Middle East. A number of incidents—including a potential war with Iraq; the terrorist attacks on September 11, 2001; and U.S. military action in Afghanistan—had caused some Arab nations to boycott American firms. Such boycotts led Middle Eastern nations to favor local beverages like Zamzam Cola (Iran) and Star Cola (United Arab Emirates) over those marketed by U.S. enterprises. According to Beverage World, even though Coca-Cola and Pepsi used local bottlers to produce and distribute their products, these conditions had led to reduced sales in the region for both companies.

Research and Technology

Advances in computer technology and automation improved all aspects of the soft drink manufacturing industry from inventory control to "smart" vending machines. Those companies with computerized operations have found both increased profitability and improved product quality. One example of a computerized system is a plant-wide automated measurement system used in some syrup manufacturing plants. Working with a personal computer, the automated system can measure nearly every important segment of beverage production, including syrup usage, Brix count (percent sugar), and beverage carbonation. Other system checks include monitoring the purification system for failures and checking the warehouse temperature for the precise dew point. "By keeping much closer control on all critical process variables, we [Abex Beverage Corporation] have been able over time to significantly improve yields, while also increasing the quality and consistency of our product," reported Randy Mostert, Abex production manager, in Beverage World.

Another technological advancement can be found on the user-end of the soft drink industry with the "smart" vending machines. These products use computerized components that keep track of stock supplies, sales patterns, breakdowns, and other conditions, helping to drive revenue and keep costs low.

Further Reading

"1998 Top-10 Soft Drink Companies and Brands." Beverage Digest, 12 February 1999.

Ackerman, Elise. "A Coke Scare in Europe." U.S. News & World Report, 28 June 1999.

Bellas, Michael C. "The Bottled Water Surge." Beverage World, 15 December 2002.

"Beyond Colas and Beyond: The Soft Drink Category Stretches from Traditional Colas into Flavored Soft Drinks. (2002 Soft Drink Report)." Beverage Industry, March 2002.

Brewster, Elizabeth. "The New Nutraceuticals: Nutraceutical Ingredients Spill Over Many Categories." Beverage Industry, November 2002.

Cosgrove, Joanna. "Not Just Water Anymore." Beverage Industry, November 2002.

Foote, Andrea. "The Right Climate for Cola? In the Middle East, Local Producers Look for Opportunity Amid Rising Tensions." Beverage World, 15 December 2002.

Hein, Kenneth. "Cracking the Code for Pepsi: While Red Isn't a Color You'd Normally Associate with Pepsi, Mountain Dew's Code Red Raced from Back-Up Plan to the Forefront of a Flavor Revolution." Brandweek, 14 October 2002.

——. "Diet Vanilla Coke Set to Pour, Backed by Radio, Outdoor, Sampling." Brandweek, 14 October 2002.

Kaplan, Andrew. "It's the Exercise, Stupid: Soda Banned in L.A. Schools, but Who's to Blame?" Beverage World, 15 October 2002.

Kelly, Erin. "Dairy-State Senators Take Aim at Soft Drinks in Schools." Gannett News Service, 10 May 1999.

"Liquid Stats." Beverage World, 18 November 1999. Available from .

Messenger, Bob. "Did Pepsi Try ONE Too Many Times?" Food Processing, August 1999.

National Soft Drink Association. "About Soft Drinks." 21 January 2003. Available from .

"Orion Foods and Pepsi-Cola Form Global Partnership." PepsiCo Press Release, 6 October 1999. Available from .

Scarpa, James. "Straw Poll; the Vote is In: Customers Want More Top-Quality Soda Pop Flavor Variations." Restaurant Business, 15 October 2002.

"Soft Drinks Give Coffee the Shakes." Prepared Foods, August 1999.

"Statement on Vending Machine Technology." Coca-Cola Press Release, 28 October 1999. Available from .

Unger, Henry. "Consolidation Sweeping Coca-Cola Bottlers." The Atlanta Constitution, 23 March 1999.

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