Coca-Cola To Introduce Cola Drink With Natural Sweetener Stevia While The Market For Carbonated Drinks Suffers

The Coca-Cola Co. (NYSE:KO) will launch Coca-Cola Life, a mid-calorie drink made with stevia, a natural sweetener whose effectiveness in colas was once questioned by rival Pepsi, as the industry copes with a downturn in demand for its carbonated products, Reuters reported on Wednesday.

The new drink will go on sale this week in Argentina, but the company did not give dates for introducion of the product elsewhere, the report said.

Coca-Cola already uses stevia, a plant used as a sweetener for centuries in some Latin American countries, in products including Vitaminwater Zero and Fanta Select, but this is the first time the company has rolled out a stevia-sweetened version of its flagship drink.

Reportedly as much as 300 times sweeter than sugar, stevia was approved as a food additive in the U.S. in 2008, and since then there has been a 400 percent increase globally in products containing stevia, according to Mintel, a market research firm.

Coca-Cola’s move is expected to prompt rival PepsiCo Inc. (NYSE: PEP) to jump on the stevia bandwagon, even though PepsiCo CEO Indra Nooyi said in May that stevia did not work well in colas. Addressing a conference in New York, Nooyi said a breakthrough in sweetener technology could help stem the decline in the sales of aerated soft drinks in the U.S.

“If you let this go too long, another three or five years, the consumer will walk away from (carbonated soft drinks),” she said at the conference, according to Reuters. “But if we can address the barriers to consumption, we can actually bring back the lapsed users.”

PepsiCo’s mid-calorie sodas such as Pepsi Next and Dr Pepper 10, which do not contain stevia, have been struggling to gain a significant footing in the market.

Coca-Cola’s new launch has come at a time when New York City Mayor Michael Bloomberg’s ban on oversized sodas served at restaurants, sports bar and other public venues, is winding though appeals courts.

Since 2009, Coca-Cola has been using stevia, but has limited its use mostly to non-carbonated, fruit-flavored drinks, which retain some sugar content. The exclusive use of stevia in soft drinks, according to Mintel, is not a practical choice because it is an acquired taste and is several times costlier than artificial sweeteners.