Coke, Pepsi offer smaller drinks for less

ByABC News
May 5, 2008, 11:15 PM

NEW YORK -- Coming to a convenience store near you this summer: smaller single-serving Coke and Pepsi products with a smaller price.

Rising ingredient and packaging costs have pushed the price of the standard 20-ounce bottle as high as $1.49 and put off consumers feeling pinched by gas prices.

"Bottlers are being hit because of the economy and higher gas prices, and they need to take action to improve their highest-margin channel," says Bill Pecoriello, Morgan Stanley beverage analyst.

While soft-drink volume was down 4.8% in the first quarter, says tracker Nielsen, it fell 5.2% in convenience stores, where the 20-ounce has been king since 1993.

That hits bottlers where it hurts. Single-serving bottles account for about 50% of their profits. They now are testing 12- and 16-ounce containers at prices as low as 99 cents in hopes of reviving growth.

"A smaller package at a lower price point could help create a greater number of sales transactions," says John Sicher, editor of beverage tracker and newsletter Beverage Digest.

Among tests:

In 1,700 convenience stores in North Carolina and Virginia, Coca-Cola Bottling Co. Consolidated, Coke's second-biggest bottler, has yanked 20-ounce Coke and Diet Coke from coolers and replaced them with 16-ounce bottles for 99 cents and 24-ounce bottles for $1.49 for the really thirsty.

The aim is to offer Coke products "at a great price in a difficult time," says Brian Wynne, vice president, business development for CCE.

It's a way to offer "desirable prices" in a tough economy, says Jeff Dahncke, spokesman for the bottling group.