---
title: "Why Americans stopped drinking soda"
url: https://modern-mba.com/case/la-croix
sector: "Food & beverage"
sector_url: https://modern-mba.com/sector/food-and-beverage
published: 2022-04-18
updated: 2026-09-02
reading_time_minutes: 8
charts: 0
video: https://www.youtube.com/watch?v=Y2BkQVTfv10
publisher: Modern MBA
license: All rights reserved. Quote with attribution and a link.
---

# Why Americans stopped drinking soda

Coca-Cola and PepsiCo spent years funding scientists to argue that exercise, not sugar, explained obesity — and lost anyway. American soda consumption fell from 50 gallons a head to 37.5, Coca-Cola's revenue dropped 20% across a decade, and in 2016 Americans drank more water than soda for the first time. This case study explains why the successor was a Midwest seltzer nobody took seriously, what La Croix did that Big Soda's own diet brands could not, and why first-mover advantage in flavored water may be worth less than it looks.

## Key figures

- **50 → 37.5** — Gallons of soda drunk per American per year, a 30% fall
- **$48B → $33B** — Coca-Cola's annual revenue across the decade to 2021
- **21% vs 0%** — Annual case volume growth, National Beverage against Coca-Cola

## The argument

Big Soda's defense was that singling out soda was unfair when candy, fast food and inactivity all contributed, and it spent millions funding scientists and lobbyists to argue there was near-zero association between sugary drinks and BMI. The science was too strong and the numbers too severe — obesity had tripled since 1975, diabetes quadrupled, and by 2007 nearly 40% of Americans were obese with one in five calories arriving as liquid. Coke and Pepsi eventually conceded causation. They kept winning the legislative fight, which is why American soda taxes exist only at city and county level, and lost the consumer one anyway.

The decline is unambiguous. US soda sales fell 25% by 2015, teenage consumption 24%, and by 2017 consumption hit a thirty-year low — from 50 gallons a person annually to 37.5, a 30% drop. Coca-Cola's revenue fell from $48 billion to $33 billion across the decade. PepsiCo looks like it escaped, but only because snacks are 55% of its business; strip those out and its beverage volumes shrank for six consecutive years.

The successor was not another cola or a premium water. It was La Croix, a fizzy seltzer sold since 1991 and treated as a Midwest curiosity, which had the one thing diet sodas could not manufacture: no sugar, no sodium, and no artificial sweeteners to be suspicious of. National Beverage skipped television for social media and packaging, and case volume grew 21% a year while Coca-Cola's sat at exactly zero. The open question is whether that lasts — because bubly, AHA, Topo Chico and Spindrift all arrived, and sparkling water may commoditize the way bottled water already did.

## Takeaways

1. The health case was overwhelming before the industry conceded anything. Since **1975** obesity worldwide **tripled**, diabetes **quadrupled** and obese children and adolescents rose **tenfold**; by **2007 nearly 40% of Americans were obese** and **one in five calories** came from liquid.
2. **Big Soda's argument was that it was exercise, not sugar**, and it funded scientists and lobbyists to say so — going as far as claiming a **"near zero"** association between sugary drinks and BMI. Coke and Pepsi eventually conceded causation rather than correlation.
3. Soda was uniquely bad at exactly the thing being measured: **no nutritional value, cheap, easy to drink, deceptively light and highly concentrated in sugar.**
4. **Big Soda lost the science and won the legislation.** Anti-soda measures in America exist almost entirely at **city and county level** because state and federal efforts were killed. Elsewhere they landed: **Chile and India tax soda from 18% up to 40%**, **Singapore banned advertising it**, and **Mexico restricted when commercials can air.**
5. Consumption fell regardless. **US soda sales dropped 25% by 2015**, teenage consumption **24%** per the CDC, and by **2017 it hit a thirty-year low** — from **50 gallons per American per year to 37.5**, a **30%** decline. **Juice fell 36%** per capita by 2021, taking orange juice's health halo with it.
6. **Coca-Cola's decade is the clean number: revenue down 20%, from $48B in 2011 to $33B in 2021** — an average decline of **1% a year** across ten years.
7. **PepsiCo looks like the exception and is not.** Revenue rose from **$66B to $79B**, but **snacks are 55% of the business** — Doritos, Cheetos, Lay's, Quaker, Tostitos — against **45%** for drinks. Isolate beverages and growth is **2% a year**, in line with inflation.
8. The volume data is worse than the revenue data for Pepsi. **Its sodas regressed for six consecutive years to 2021**, shipping **3% less on average annually from 2015 to 2020** and as much as **−5%** in some years, with Gatorade, Lipton and Brisk masking the damage.
9. **Coca-Cola's volume did not fall — it simply stopped.** Case volume growth across Coke, Diet Coke, Coke Zero, Fanta and Sprite has been **0% since 2015**. Not decline, absence.
10. **2016 was the turn: Americans drank more water than soda for the first time in history** — and that created a problem, because tap water is free, bottled water is commoditized, and premium brands like Fiji, Smartwater and Evian never outgrew their niche.
11. **The successor came from a brand that had existed quietly since 1991.** La Croix, owned by **National Beverage**, went from a Midwest indulgence to the default millennial drink, ticking every nutritional box: **no sugar, no sodium, no artificial sweeteners** — the last of which is exactly what consumers distrusted about Diet Coke and Coke Zero.
12. **The marketing was the opposite of Big Soda's.** Rather than high-production television, National Beverage spent on **social media and packaging** — and the rainbow cans became a physical status symbol at shelf, with customers writing unpaid love letters in newspapers and flooding Instagram.
13. The three-year swing is stark. **National Beverage grew 10%, 16% and 18%** from 2016 to 2018 — while **Coca-Cola posted its worst three-year run in history at a combined −23%** and **Pepsi managed a combined 3%**.
14. **Case volume is the metric that shows it was not a fad**: National Beverage averaged **21% growth a year for six years**, and the company passed **$1 billion in sales for the first time in 2019**.
15. **The reporting is deliberately opaque on all sides.** National Beverage blends La Croix's numbers with Clear Fruit, Rip It, EverFresh and Mr. Pure; Coca-Cola reports Coke, Diet Coke, Coke Zero, Fanta, Sprite and Schweppes as one group; PepsiCo groups Pepsi, Mountain Dew, Sierra Mist and Mug. **Nobody outside those companies can compare a single brand against another.**
16. **And the first-mover advantage is already eroding.** Coca-Cola dismissed La Croix as a millennial fad, tried seltzer versions of **Dasani and Smartwater in 2017** that were **both discontinued**, and only launched **AHA** and pushed **Topo Chico** in 2019. **Pepsi moved faster with bubly in 2018**, whose playful packaging openly copies La Croix. With **Spindrift** also entering, the risk is that sparkling water commoditizes exactly as bottled water did — and that National Beverage's refusal to expand beyond the US leaves it a one-trick pony.

## Common questions

### Why has soda consumption declined so much?

Because the health evidence became impossible to argue with and consumers acted on it before governments did. Obesity tripled and diabetes quadrupled worldwide from 1975, and by 2007 nearly 40% of Americans were obese with one in five calories coming from liquid. Coca-Cola and PepsiCo spent millions funding research arguing that inactivity rather than sugar was responsible, and eventually conceded causation. US soda sales fell 25% by 2015 and hit a thirty-year low by 2017 — from 50 gallons per person a year down to 37.5.

### Is Coca-Cola losing money?

Not losing money, but shrinking. Revenue fell about 20% across the decade, from $48 billion in 2011 to $33 billion in 2021 — roughly a 1% decline a year. The volume picture is arguably more telling: case volume growth across Coke, Diet Coke, Coke Zero, Fanta and Sprite has been flat at 0% since 2015. The business is not collapsing, it simply stopped growing, which is a serious problem for a company valued on the assumption that it would.

### How is PepsiCo growing while Coca-Cola shrinks?

Because PepsiCo is only half a beverage company. Snacks — Doritos, Cheetos, Lay's, Tostitos, Quaker Oats — make up 55% of revenue against 45% for drinks, so rising snack sales mask declining soda. Isolate the beverage business and growth runs about 2% a year, roughly inflation. The volume data is worse still: Pepsi's sodas regressed for six consecutive years, shipping about 3% less annually from 2015 to 2020, with Gatorade, Lipton and Brisk absorbing the damage.

### Why did La Croix become so popular?

It had the one thing diet sodas could not manufacture: nothing in it to be suspicious of. No sugar, no sodium, and crucially no artificial sweeteners, which was the specific objection consumers had to Coke Zero and Diet Coke. It also arrived at the moment — 2016 — when Americans drank more water than soda for the first time and the industry had no obvious successor, since tap water is free, bottled water is commoditized and premium brands never escaped their niche. National Beverage then skipped television for social media and packaging, and the rainbow cans became a visible status object.

### How fast did La Croix grow?

National Beverage's revenue grew 10%, 16% and 18% across 2016 to 2018, during the same three years Coca-Cola posted its worst run in history at a combined −23% and Pepsi managed 3%. More durably, case volume — the industry's demand measure — averaged 21% growth a year for six years, against 0% at Coca-Cola. The company passed $1 billion in sales for the first time in 2019, which is what made clear the popularity was not a social media fad.

### Why can't you compare La Croix's sales to Coke's directly?

Because every company in the category groups its brands deliberately. National Beverage blends La Croix's figures with Clear Fruit, Rip It, EverFresh and Mr. Pure. Coca-Cola reports Coke, Diet Coke, Coke Zero, Fanta, Sprite and Schweppes together. PepsiCo groups Pepsi, Mountain Dew, Sierra Mist and Mug. So there is no public way to know whether Diet Coke outsells Coke, whether Sprite beats Mountain Dew, or how La Croix compares to any of them. Only insiders have those numbers.

### How did Coca-Cola and Pepsi respond to La Croix?

Slowly, and Coca-Cola worse. It dismissed La Croix as a millennial fad, believing Diet Coke and Coke Zero would hold health-conscious drinkers, then in 2017 extended Dasani and Smartwater into seltzer — both since discontinued. Only in 2019 did it launch AHA and push Topo Chico. PepsiCo moved faster with bubly in 2018, whose playful branding and packaging openly imitate La Croix, and it has gained real ground since.

### Will La Croix stay on top of the seltzer market?

Wall Street is skeptical, for two reasons. National Beverage has shown little appetite for expanding beyond the United States, which caps how large it can get and raises the risk it becomes a one-trick pony. And sparkling water may commoditize exactly as plain bottled water did — if consumers cannot meaningfully distinguish bubly from AHA from Spindrift from La Croix, and only care that it is unsweetened and naturally flavored, then first-mover advantage stops being worth anything.

## Discussion

- Big Soda lost the scientific argument and still won every legislative fight above city level. Which of those two outcomes actually determined what happened to soda sales?
- Diet Coke and Coke Zero solved the sugar problem years before La Croix and consumers rejected them anyway. What was the objection really about?
- National Beverage skipped television entirely for packaging and social media. Would that have worked for a brand without a genuinely differentiated product, or did the product do the work?
- Every company in this case groups its brands so no single product can be evaluated. What does that tell you about what the numbers would show if they didn't?
- If consumers cannot tell bubly from AHA from La Croix, is there any durable advantage in flavored sparkling water — or is the category's ceiling already visible?

## Sources

Revenue and case volume by segment from The Coca-Cola Company, PepsiCo and National Beverage Corporation annual reports and 10-K filings, 2011 through 2021; US per capita soda and juice consumption from CDC and industry consumption data; global soda consumption per capita and soda tax rates as reported by national health authorities; brand launch dates and discontinuations as announced by the companies

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From [Modern MBA](https://modern-mba.com/). Read this case in full at [https://modern-mba.com/case/la-croix](https://modern-mba.com/case/la-croix), or watch the episode at https://www.youtube.com/watch?v=Y2BkQVTfv10.