MCD – METHOD TO THE BEVERAGE MADNESS

Carbonated soft drink market is shrinking, MCD shifting gears

 

My initial reaction to the news that MCD will be selling all soft drinks, no matter the size, for $1 this summer was one of surprise.  While I still maintain that the company is overly-focused on transaction-counts, an article published last night by the Atlanta Journal Constitution entitled, “Soda business shrinks for fifth straight year” may give some indication as to MCD’s reasoning:

  • According to Beverage Digest, the volume of the U.S. soda business declined 2.1% last year
  • The publication believes that many more years of decline are in store for soft drinks
  • Energy drinks and ready-to-drink teas posted slight increases last year, according to Beverage Marketing Corp.
  • Health and obesity concerns continue to hamper full-calorie soda sales

While MCD has sold drinks for $1 in past summers, the promotion this year is lasting 150 days compared to 100 days in years prior and this year drinks of all sizes will be priced at $1.  The concession may serve to effectively take traffic from competitors and fuel the discounting war.  The “ready-to-eat” smoothie market has grown dramatically in recent times, with more than 80% of the consumption growth coming in the last five years, according to smoothiestatistics.com.  There are valid concerns regarding MCD’s ability to sell $4 blended drinks alongside $1 soft drinks, but the respective market trends are indicating a shift from soft drinks to the “health and wellness” segments.

 

Howard Penney

Managing Director


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