Tuesday 19 July 2016 3:55 pm

Zeroing in on the competition: This is what Coca-Cola’s new ad campaign tells us about the drinks market

Coca-Cola's announcement that it is pouring £10m into its newly-branded Zero Sugar variant is proof of two things.

First, that the carbonated soft drinks market is alive and well. Second, that it is recognising changing consumer and industry attitudes towards health and sugar.

But does this huge investment reveal the big brands are concerned about the newer, healthier offerings creeping onto the market?

Coca-Cola Zero Sugar was launched in the UK this summer

If the corporate world and the evils it is believed to contain has an edible equivalent in the public mind, it is surely sugar.

We are bombarded with warnings about the dangers of sugar and its brazen prevalence in almost everything we eat.

Today's young people are reading the message loud and clear – turning their backs on alcohol in favour of soft drinks, health drinks and natural additives with proven health benefits.

And the government is doing its bit to reinforce this message about the evils of sugar, via the much talked about sugar tax (or sugar levy) that will raise prices on sugary beverages from April 2018.

Space for opportunity

As the biggest sugary drinks manufacturers – and some food manufacturers – scramble to alter their recipes and their marketing to circumvent both the tax and the increasing hostility to brands perceived as harmful, there is an opportunity for brands with healthier beverages to nip into that space before those biggest players can do so.

As people’s health concerns increase, and the shift from drunk in the pub to sober in the restaurant, bar or cafe continues, soft drink manufacturers and marketers have a land of opportunity before them.

This is an almost untouched market. There are waters, flavoured or sparkling, on the one hand, and their market share is growing.

Sugary drinks, meanwhile, have seen their market share decline for nine years straight in the US, according to the 2014 Beverage Digest Fact Book.

Nonetheless, according to Euromonitor in 2014, the US soda market is worth approximately $39bn (£29.44bn), while the market for unflavoured or flavoured sparkling water, energy drinks and "functional" water is just $4bn.

In the UK, Fever Tree has been one of the brands to take full advantage of the market's desire to go natural and stay healthy.

But the lesson from Coca-Cola is this: there is still a wide-open space for new challenger brands to fill with intelligent and innovative offerings that are also able to differentiate themselves by talking about what’s best for the planet, your tastebuds and your health.

Coca-Cola may be a Goliath in this field, but the Davids will be hot on its heels, and worth watching out for.