Soft-Drink Market Awash in Caffeine

New war is brewing in the soft-drink market - over caffeine.

The repertoire of products that will hit store shelves over the next few months includes everything from caffeinated water and orange juice to coffee-blended cola. The newest such product is Coca-Cola Company's drink Surge, a green, citrus-flavored soda high in both caffeine and calories.

The sudden craze for caffeine points up the fickleness of consumer tastes, as well as companies' eagerness to cater to them. A few years ago, when Americans wanted the stimulant out of their drinks, both Coke and Pepsi rolled out caffeine-free colas. But now coffee houses are booming, and a new generation of young adults, raised on caffeine, want something they think delivers more of a punch.

The market for caffeinated, high-energy drinks is "a very large niche that continues to need to be filled, and we think Surge is going to appeal to a lot of people who like that in a soft drink," says Coca-Cola spokes-man Mart Martin. Coke is so confident about Surge's success that it is planning to roll the new product out in January without being test-marketed.

With Surge, Coca-Cola hopes to lure young consumers who have made PepsiCo Inc.'s Mountain Dew (also high in caffeine) one of the best-selling soft drinks in America.

"I guess it's less socially risky to come out with a product today that has caffeine than it was five years ago," says beverage analyst Jay Nelso with Brown Brothers Harriman & Co.

Surge is Coca-Cola's biggest gamble on a soda brand since it decided in 1985 to replace the Coca-Cola formula with New Coke, a flop that cost the Atlanta-based company $35 million.

The drink, being marketed with the slogan "Feed the Rush," contains 52 milligrams of caffeine per 12-ounce can, compared with Coke's 47 milligrams. Mountain Dew also has 52 milligrams per 12-ounce can, and Pepsi has 38. That compares with 200 milligrams for the same-size serving of coffee. In addition, Surge contains a high-energy carbohydrate called maltodextrin, also found in Coca-Cola's sports drink PowerAde.

"It's not so much that they [consumers] are screaming, 'caffeine, caffeine, caffeine.' They're screaming, 'energy, energy, energy,' " says Havis Dawson, editor of Beverage World Magazine in New York. "Everybody is busier and has to be energetic at all hours of the day," so people feel a need for a stimulant, he says.

Some critics question the marketing strategy. "I am very concerned with children drinking soft drinks with high levels of caffeine," says Melinda Hemmelgarn, editor of Food & Nutrition Resource Newsletter.

Meanwhile, Coke's chief rival, Pepsi, is testing-marketing in Philadelphia Pepsi Kona, a blend of Pepsi-Cola and coffee. And it has slowly been rolling out its berry-based cola, called Josta, that is high in caffeine.

Added to the mix is caffeinated water, which debuted in 1995 with Water Joe. A half-liter bottle contains 65 milligrams of caffeine. About 400,000 bottles of Water Joe are sold each week. The drink has spawned at least a dozen imitators. Industry analysts, however, say that caffeine water has captured a tiny percentage of the market and that products similar to Pepsi Kona have come and gone over the years.