June 26, 2013 at 2:32 PM ET
Coca-Cola announced plans on Wednesday to sell a cola sweetened with sugar and the naturally occurring no-calorie sweetener, stevia, in Argentina, becoming the first to market with a product long seen as critical to the soda industry's growth.
The new product, Coca-Cola Life, will have half the calories of regular Coca-Cola.
The world's largest soda company has used stevia in 45 products, such as Vitaminwater Zero and Fanta Select, but never in its flagship cola. Stevia comes from a plant native to Paraguay.
The move would put Atlanta-based Coke ahead of rival PepsiCo in the race for better-tasting low-calorie beverages as the U.S. carbonated soft drink market continues to decline because of growing concerns about obesity.
Pepsi has also been using stevia in drinks for years, but mostly in noncarbonated, fruit-flavored drinks. As recently as last month, PepsiCo CEO Indra Nooyi said stevia did not work well in colas.
Nooyi told a conference hosted by Bernstein Research in May that a breakthrough in sweetener technology could help reverse the decline in sodas in the United States and that it needed to occur sooner rather than later.
"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. "But if we can address the barriers to consumption, we can actually bring back the lapsed users."
PepsiCo said in February that preparation was underway for the review and commercialization of a new "beverage innovation project," but it had not yet been submitted to U.S. regulators for review.
On Wednesday, a spokeswoman said PepsiCo was "working to identify sweetener and flavor options that can help us provide more reduced or zero-calorie beverage choices."
Coca-Cola Life will go on sale this week in Argentina, where Coca-Cola has 50 percent of the soda market, compared with Pepsi's 16 percent share, according to industry newsletter Beverage Digest, which was first to report the news.
There is no date for introducing the product elsewhere. Company executives at a news conference in Buenos Aires likened the launch with the 2005 debut of Coca-Cola Zero, which was first introduced in Australia and later sold elsewhere.
ConsumerEdge Research analyst Bill Pecoriello said a global rollout seemed likely as it would also preempt PepsiCo's sweetener innovation. "A healthy dose of skepticism as to the long-term success potential is warranted, given past introductions," he added.
There has been a recent wave of mid-calorie sodas like Pepsi Next and Dr Pepper 10, but they have not maintained market share, Pecoriello said.
Copyright 2013 Thomson Reuters.