Wednesday, December 11, 2013

The Illusion of Diet Soda Fades

As soon as you see through the illusion, diet soda can seem terribly expensive. A dollar a liter for water with chemicals added? Perhaps people are no longer fooled, based on the latest reports of soda sales. From the CNN story “Soda sales are losing their fizz”:

Americans are on pace to drink 38.6 gallons of soda per person this year, but that's down 3.5 gallons from five years ago.
Year-over-year, consumers spent 7.2% less on diet cola and 7.8% less on diet lemon-lime drinks.

The decline extends a long-term trend that hit beer around 1997 and soda around 2002. In either case, it reflects consumers’ desire to simplify things, to save time and money, improve health, and lose body fat. The sudden drop in diet soda is something new, though, and it comes in spite of corrupt government initiatives, such as last year’s New York City aspartame law, intended to force people to drink diet soda in place of sugared soda and fruit juice. Word of the tendency of diet soda to make people fat and its apparent effects on brain function may be finally getting around. Yet even if diet soda were not harmful to health, how can you justify the price for a product that, in food quality terms, is inferior to tap water?

As a trained economist, of course I would like to give consumers credit for making a more rational decision, but television may be part of the change too. It is television advertising that created the illusion that diet soda is a real product, and the declining hold of diet soda may be related to the declining reach of television advertising, following on people’s switch from CRT to the less hypnotic flat-screen technology for TV viewing.