Consumers interested in making healthier beverage choices are also showing a strong desire for a wider variety of beverages, reports John Sicher, Editor and Publisher of trade publication Beverage Digest.  As U.S. sales of carbonated soft drinks decreased for the third year in a row, sales of non-carbonated beverages have grown steadily in the past five years from about one-quarter to one-third of the non-alcoholic beverage market, Beverage Digest data indicates.

In a recent report on the challenges facing Coca-Cola Enterprises, The Atlanta Journal-Constitution noted that, since 2000, Coke has doubled the number of stock keeping units (SKUs) it delivers to 420. During the same period, the Pepsi Bottling Group, PepsiCo’s largest bottler, has increased its SKUs by 100% to 450.

Sicher predicts that in the next decade, the number could grow to more than 1,000 SKUs being managed by a major beverage company. "The industry is changing dramatically," he said. "It's gone from an industry which 20 years ago was all about marketing a relatively small number of brands to an industry where the premium is really on things like smart innovation and excellent logistical execution by the bottlers."

The Journal-Constitution writes that Pepsi was the first to diversify with its Lipton joint venture in 1991 and Starbucks deal in 1994. By 2000, Pepsi had acquired SoBe and it added Gatorade in 2001. According to Beverage Digest, these decisions have given Pepsi the lead in teas, ready-to-drink coffees and sports drinks.

Coca-Cola, however, has jumped in with its acquisition of Glaceau enhanced waters and Fuze juice drinks plus agreements for Campbell's juice drinks and Caribou and Godiva bottled coffees.

As a result of the proliferation of SKUs and new market complexities, Coke is retiring its 45-foot side-bay trucks and is adding 35-foot box trucks that carry “pre-packed palettes of an assortment of beverages tailored to each outlet,” reports the newspaper.

Changes in the grocery stores, gas stations, pharmacies and super centers -- where Coke and Pepsi products used to compete for shelf space on the soda aisles – show just how much things have changed.  Ben Jones, a 21-year-old merchandiser for Coca-Cola Enterprises, works a Publix store from the vending machine near the front door and coolers and floor display near the check-out lines, to special units at the end of aisles and rows of soda in the main soda aisle. He places beverages at 16 different points in this one particular store. 

“We hit them at every angle,” Jones told the paper as he left the soda display and headed for the water and energy drink sections.