UNITED KINGDOM – U.S. sales of carbonated soft drinks are expected to continue dropping for the fourth consecutive year, according to the “2007 USA Soft Drinks Report” by Canadean, FoodNavigator.com reports.

According to Canadean, Coca-Cola and PepsiCo have said growth potential lies “firmly outside the category … With further innovation in carbonates and bottled water unlikely to generate the required growth in volume and margins, Coca-Cola and PepsiCo have both adopted new strategies.”

Soft drink manufacturers have explored alternative avenues to boost sales, include introduction of health-focused beverages, overhauling iced or ready-to-drink teas, and investing in new markets.

The new report found that the bottled water category continues to post strong sales, driven in part by the growing popularity of multi-packs sold in discount stores. But the report also noted that with falling consumer prices on bottled water, the category’s profitability is dropping, making it a “far less attractive proposition” than it has been previously.

Iced and ready-to-drink teas sales have been rejuvenated by new products, such as Arizona’s 1 gallon HDPE bottle, and the popularity of new premium green, low calorie and unflavored/unsweetened tea segments. Consumption of iced and ready-to-drink teas is forecasted to jump 13 percent this year.

Sports drinks also have strong growth indicators, lead by PepsiCo’s Gatorade brand. The report stated that “line, flavor and pack extensions have enabled niches to be successfully targeted without affecting core demand. In response, Powerade has been promoted aggressively and the resulting price competition has added further momentum to the market.”