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New ‘natural’ Coke to hit the market

Coca-Cola is set to launch a new ‘naturally’ sweetened version of its classic soft drink – one sweetened with sugar and stevia, a no-calorie, plant-derived sweetener.

The new product, called Coca-Cola Life, has half the calories of classic Coke and will be introduced in Argentina first, in much the same way that Coke Zero was first introduced in Australia before being launched in other countries.

The company has previously used stevia in a range of non-carbonated drinks, such as Vitaminwater Zero, and competitor Pepsi has also introduced products containing stevia, though chief executive Indra Nooyi has questioned whether the sweetener works well in colas.

Soft drink as the new cigarettes?

The product innovation – and the search for a lower-calorie sweenter — is likely a response to consumer trends emerging in the U.S., Australia and elsewhere, which has seen some consumers abandon soft drink consumption on the basis of real or perceived health concerns. Some see soft drinks as ‘empty calories,’ providing much sugar but no nutritional value, and contributing to the rise in obesity.

Most famously, in 2012 New York City mayor Michael Bloomberg helped introduce a ban on restaurant soft-drink servings over 16 ounces (about a half a litre). The ban has since been struck down, but an appeal is winding its way through New York state courts. Bloomberg previously supported measures meant to curtail cigarette smoking.

Outlook for our local Australian Coke bottler

Coca-Cola Amatil (ASX: CCL), which bottles and distributes Coke products throughout Australia, New Zealand, Fiji, Indonesia and Papua New Guinea, issued a rare earnings downgrade last month, in part due to pressure from mega-supermarket chains Woolworths (ASX: WOW) and Coles, owned by Wesfarmers (ASX: WES).

But while the local short-term news may be disappointing, and across the world some consumers are shunning soft drink, one hesitates to say the epic, long-term success of Coke won’t continue. Few brands are so beloved, and few businesses are so sustainable and profitable. For instance, shares of Coca-Cola Amatil have vastly outperformed the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) over the last ten years.

Whether Coca-Cola Life takes off, or never leaves Argentina, Coke products will likely have a very long shelf life indeed.

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Motley Fool contributor Catherine Baab-Muguira does not own shares in any company mentioned here.

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