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Coca-Cola (KO) to Replace Coke Zero with Zero Sugar in the U.S.

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Coca-Cola Co. (KO - Free Report) is replacing its Coke Zero beverage in the U.S. with another diet-soda brand, Coca-Cola Zero Sugar, as the company tries to hold onto customers pulling back on sugary drinks.

The iconic beverage company said that Zero Sugar is already a strong seller in Europe, the Middle East and Latin America. Coca-Cola spent more than five years on research, recipe mixing and testing of Zero Sugar before its debut.

“It is a reinvention of Coke Zero,” CEO James Quincey said in a call with investors. Zero Sugar features a new recipe and design, making it appear and taste closer to the standard Coca-Cola. Like Coke Zero, Zero Sugar contains the artificial sweetener aspartame.

Zero Sugar is aimed to appeal to customers looking for lower-sugar options. The beverage’s name is also made to better communicate its no sugar content to customers as new taxes on sugar-sweetened beverages are being introduced across the country.

“It may surprise you to learn, but it’s true that customers have not always been clear that either Diet Cokes or Coke Zeroes are absolutely zero sugar. That’s just a fact of consumer research, Quincy said.

Coca-Cola also plans to use Zero Sugar as an alternative to diet sodas. Consumers have not been buying artificially sweetened diet sodas as low and no-calorie cola sales fell 5% by volume in North America last year. Diet Coke was the third-biggest brand in 2016, but has experienced a 2% loss in sales.

Coke Zero, on the other hand, has gained popularity. Last year, it was the number 10 soda brand in the U.S. and had a sales growth of 3.5%.

Coca-Cola Zero Sugar will become available in the U.S. in August. Coke Zero will then be phased out.

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