America’s love of sparkling water is bubbling to new heights.
On Monday, PepsiCo Inc. PEP, -0.10% said it would pay $3.2 billion for SodaStream, a company that makes kitchen devices that carbonate water. The announcement follows Pepsi’s introduction of its ‘Bubly’ sparkling water brand in February 2018. Last year, Coca-Cola KO, +0.28% announced the acquisition of Mexico seltzer manufacturer Topo Chico.
“The flavored, zero-calorie and unsweetened concentrates that now form the centerpiece of Sodastream’s offering fit in with consumer weariness of not only sugar content, but also artificial sweeteners,” Alexander Esposito, industry analyst at Euromonitor International, said.
Soda companies are now focusing on “healthier, more sustainable beverages,” Esposito added. U.S. consumers guzzled 273.62 million gallons of sparkling bottled water in 2017, up from 90.83 million in 2012, according to data from industry research firm Beverage Marketing Corp.
While they still drink far more soda, those numbers are falling fast: Consumers drank 12.3 billion gallons of soda last year, down from 13.3 billion gallons in 2012. Consumers also drank 13.2 billion gallons of bottled water in 2017, up from just 9.5 billion in 2012, marking the first year that people drank more bottled water than soda.
There are three varieties of carbonated water: seltzer, which is spring water containing carbon dioxide; club soda, which contains potassium bicarbonate and potassium sulfate; and tonic, which is often put in another category because it includes sweetener.
Multiple studies have raised questions about the safety of artificially sweetened diet sodas, leading millions of consumers to opt instead for carbonated water, said Gary Hemphill, managing director of research at Beverage Marketing Corp. “Today’s consumers want healthier refreshment,” he said.
These bubbly waters are seen as a healthier alternative to sugary sodas, which have been linked to obesity and diabetes. Some studies have also raised questions about the safety of artificially sweetened diet sodas.
And yet the prices of cola and carbonated water are comparable: An eight-pack of Poland Spring carbonated water on Amazon AMZN, -0.29% is $4.99, the same price as an eight-pack of Coca-Cola. A SodaStream starter pack retails for $110.
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