Bubble Trouble: Health Conscious Israelis Take Fizz Out of Cola Sales

Soft-drink manufacturers see prospects as flat as an open soda bottle.

Nir Keider

Israelis are losing their taste for Coca-Cola and other fizzy drinks − and bottlers are scrambling to win them back.

Sales of colas, the top-selling category of soft drink, fell 14% in the 12 months prior to March, according to figures from the market research company Nielsen Israel. Worse still, it’s not just the number of liters sold but for the first time ever, sales in shekel terms are down as well, by 7%.

“It’s the first time ever that the cola market is in decline, and that comes after the stagnation that has characterized it in recent years,” said one executive for a soft drinks company, who spoke on condition of anonymity.

Industry sources attribute the decline to a growing concern among Israelis, like their peers in other developed economies, about healthy eating and drinking. They are opting for products with less sugar and other ingredients they regard as harmful.

The decline in sales prompted Jafora Tabori, the local bottler of RC Cola, to announce yesterday it would be offering a low-sugar cola under its Schweppes brand using the artificial sweetener Stevia.

Jafora, the second biggest soft-drink maker with an 11% market share, will be spending 12 million shekels ($3.5 million) to launch the product, said Tal Malka Salhov, a marketing manager at the company.

“We’re an industry under attack around the world, which means people are consuming less of our products,” she said. “In the United States First Lady Michelle Obama is calling for people to drink more water and in California there’s a bill calling for products containing sugar to be labeled with a warning. In Israel, the Health Ministry publishes figures on how much sugar there is in every product.”

Sales of RC Cola dropped nearly 12% in liter terms and 10% in shekels in the past year, estimates Nielsen, based on data collected from the country’s retailers.

The only cola to show an increase is Pepsi, bottled locally by Tempo Beverages, which saw unit sales rise 16.5% in the 12 months, probably due to a successful discount campaign and other marketing tactics.

The biggest loser, however, is Central Bottling Company, whose Coca-Cola and other drinks make up 90% of cola sales and bring the company some 500 million shekels a year in revenues. Its cola sales dropped 15.3% in unit terms and 7.2% in shekels, with sales of Coke − the crown prince of colas − sagging 10.6% and 2.9%, respectively.

Industry executives note that sales of bottled water have been stagnant in the past year. They say that the move to water is benefiting home mini-bars that filter tap water.