Doctor Pepper Invests in Sugar-Free Drink Company Admist New Soda Taxes

There was more than just the future president to vote on earlier this week. A tax on sugar-sweetened beverages (namely soda) was voted through in the Californian cities San Francisco, Oakland and Albany, as well as in Boulder, Colorado and Cook County, Illinois, which includes Chicago. Boulder had the highest tax with 2-cents-per-ounce, while the other cities passed a tax of 1-cent-per-ounce. The idea behind these new taxes is to generate revenue for the city and is deterrence towards consuming these sugary and unhealthy beverages. These are not new trends either, since 2009 there have been more than 40 attempted soda tax efforts in cities across the United States. Before this new wave of cities that voted through these “anti-soda” taxes, Berkeley, California, and Philadelphia, Pennsylvania were the only cities to have such a law.

This relates to the current trend in the soft-drink industry, where per capita soda consumption was the lowest in 2015 that it had been in 30-years. While Coca-Cola and PepsiCo, the two biggest players in this market, are not stopping their sugary drinks, there has been a shift towards starting to implement smaller sizes of these drinks. This puts the marketers of these brands in a tricky situation. How do you continue to sell products at the same or greater rate when consumer tastes are starting to change? To me, this is the perfect situation to do what Doctor Pepper just announced. They invested in a beverage startup company called Bai Brands, which offers sugar free and naturally sweetened sodas that are a true fraction of the calories of the household usual’s. They are offering new takes on classic flavors like cola, root beer, and citrus. One thing that really struck me, was a quote from their CEO, Ben Weiss, who said, “We're under the belief that people aren't running from soda -- they're running from sugar…If you can create a beverage that's reminiscent of all those great flavors we grew up on, but doesn't have the suspicious ingredients, I think the consumer will go there”. Here, Bai Brands recognized an issue with the current state of the market and is making, what they consider, a better and healthier alternative that still has those classic tastes.

I think it will be really interesting to see what types of decisions and moves competing soda companies will make. I think this is great PR for Doctor Pepper as well as a potential successful investment. Being able to pivot and adapt marketing campaigns is a vital responsibility that these beverage marketers will have to undertake. What do you think of this new soda tax that is starting to pop up in a slew of cities? Leave a comment below about how you think marketers can use this setback to reach even newer heights.