Coke to market first 'natural' mid-calorie cola

(REUTERS) - Coca-Cola Co announced plans on Wednesday to introduce a cola that is sweetened with sugar and naturally occurring, no-calorie sweetener stevia, the first such product to hit a market that is seen as key to the future of the soda industry.

Coca-Cola Life will have about half the calories of regular Coke. It will go on sale this week in Argentina, where Coca-Cola has 50 per cent of the soda market, compared with PepsiCo Inc's 16 per cent, according to industry newsletter Beverage Digest, which was first to report the news.

The world's largest soda company has used stevia in 45 products, such as Vitaminwater Zero and Fanta Select, but never in its flagship cola.

The move would put Atlanta-based Coke ahead of rival Pepsi in the critical race for better-tasting low-calorie beverages.

There is no date for introducing the product elsewhere.

Company executives at a news conference in Buenos Aires likened the launch with the 2005 debut of Coca-Cola Zero, which was first introduced in Australia and later sold elsewhere.


Consumer Edge Research analyst Bill Pecoriello said a global rollout seemed likely because it would also preempt PepsiCo's sweetener innovation.

"A healthy dose of skepticism as to the long-term success potential is warranted, given past introductions," he added.

There has been a recent wave of mid-calorie sodas such as Pepsi Next and Dr Pepper 10, but they have not maintained market share, Mr Pecoriello said.

Coke and Pepsi have been using stevia, a plant native to Paraguay, in drinks for years, but mostly in noncarbonated, fruit-flavored drinks. As recently as last month, PepsiCo chief executive officer Indra Nooyi said stevia did not work well in colas.

Ms Nooyi told a conference hosted by Bernstein Research in May that a breakthrough in sweetener technology could help reverse the decline in sodas in the United States (US) and that it needed to occur sooner rather than later.

"If you let this go too long, another three or five years, the consumer will walk away from (carbonated soft drinks)," she said at the conference. "But if we can address the barriers to consumption, we can actually bring back the lapsed users."

Regarding its own innovation, PepsiCo said in February that preparation was underway for the review and commercialisation of a new "beverage innovation project", but it had not yet been submitted to US regulators for review.

On Wednesday, a spokesman said PepsiCo was "working to identify sweetener and flavour options that can help us provide more reduced or zero-calorie beverage choices."

Coca-Cola shares closed up 1.8 percent at $40.43 on the New York Stock Exchange. PepsiCo stock was up 1.6 per cent at $81.31, while Dr Pepper Snapple Group Inc rose 1.8 per cent to end the day at $45.80.

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