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As consumers shun sugary soda, Coca-Cola launches line of flavored seltzers

Coca-Cola is launching a new line of flavored seltzers, seeking to give consumers a healthier alternative as more Americans ditch sugary soft drinks. 

In March, the beverage giant will launch a line of eight seltzer waters in stores. Dubbed "AHA," they will include flavors like lime and watermelon, strawberry and cucumber, orange and grapefruit, apple and ginger, blueberry and pomegranate, and peach and honey. Some options — such as citrus plus green tea and black cherry plus coffee — are also caffeinated.

Flavored seltzer has seen an explosion in popularity thanks to brands like LaCroix, owned by National Beverage. But Coca-Cola's previous ventures into sparkling water, including Dasani Sparkling and PureFill water dispensers, have lagged the competition. Other brands, such as Pepsi-owned Bubly or Spindrift, which markets its seltzer as including real fruit juice, have also crowded the category. 

When it launches, the AHA product line will replace Dasani Sparkling in stores. 

"As the largest and fastest-growing part of the category, mainstream flavored sparkling water is a segment we know we must double-down on," Celina Li, vice president of water in Coca-Cola North America, said in a statement. "AHA is our big-bet brand in this big-bet category."

Sparkling water is making a splash

Coca-Cola is doubling down on flavored seltzer for good reason — a growing number of Americans are shunning soda because of health concerns with sugary drinks. Meanwhile, sparkling drinks represent a $550 million global market, according to investment bank UBS. 

The company's revenues have also fallen from $46.8 billion in 2013 to roughly $32 billion last year, a drop of 32%, as Coca-Cola sold its bottling operations around the world to local partners.

This year, Coca-Cola saw an uptick in sales thanks to consumer demand for no-sugar versions of its sparkling soft drink brands. Coca-Cola revenues rose 2% in its latest fiscal quarter, and the company sees further room for growth in water. 

"Our performance in the water category has not been as strong as we'd like. We're working on further plans to address this in the marketplace in the near future," Coca-Cola CEO James Robert Quincey said in an earnings call with analysts last month. 

That could spell trouble for brands like LaCroix. Shares of National Beverage sank as much as 12% on Thursday after Coca-Cola's announcement. National Beverage's stock price, which hit a record high of $124 in 2017, is down 44% this year.

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