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Coke to sell 'natural' mid-calorie cola in Argentina

A view of Coca-Cola bottles at the opening ceremony of a Coca-Cola factory outside of Yangon June 4, 2013. REUTERS/Soe Zeya Tun
A view of Coca-Cola bottles at the opening ceremony of a Coca-Cola factory outside of Yangon June 4, 2013. REUTERS/Soe Zeya Tun

By Martinne Geller

(Reuters) - Coca-Cola Co announced plans on Wednesday to introduce a cola that is sweetened with sugar and the naturally occurring, no-calorie sweetener stevia, the latest move in the high-stakes race to turn around the soda industry.

Coca-Cola Life will have about half the calories of regular Coke. It will go on sale this week in Argentina, where Coca-Cola has 50 percent of the soda market, compared with PepsiCo Inc's 16 percent, according to industry newsletter Beverage Digest, which was first to report the news.

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.

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.

DOSE OF SKEPTICISM

Consumer Edge Research analyst Bill Pecoriello said a global roll out seemed likely because 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 such as Pepsi Next and Dr Pepper 10, but they have not maintained market share, Pecoriello said.

Coke and Pepsi have been using stevia, a plant native to Paraguay, 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, even though Pepsi Next in Australia uses stevia. Pepsi Next in other markets, including the United States, uses a mix of high-fructose corn syrup and artificial sweeteners.

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."

Regarding its own innovation, 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 shares closed up 1.5 percent at $40.33 on the New York Stock Exchange. PepsiCo stock was up 1.6 percent at $81.30, while Dr Pepper Snapple Group Inc rose 1.5 percent to end the day at $45.64.

(Additional reporting by Juliana Castilla in Buenos Aires; Editing by Gerald E. McCormick, Marguerita Choy, Leslie Gevirtz and Lisa Von Ahn)

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