The future of Coca-Cola and Pepsi depends on this unexpected beverage

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Soda Consumption Drops to 30-Year Low in the US: Why Now?

In the next few years, bottled water will likely overtake carbonated-soft-drink sales. However, instead of panicking, Pepsi and Coke are investing.

On Monday, PepsiCo CEO Indra Nooyi said on Monday that less than 25% of the company's global sales are from soda. In comparison, nutritious items such as fruits, water, and unsweetened tea also now make up 25% of the company's sales.

"[Pepsi has] been future-proofing our product portfolio, reshaping it to capitalize on consumers' increasing interest in health and wellness," Nooyi said in an investors' call.

At the top of the list: bottled water.

US consumption of bottled water is about to overtake soda, according to Euromonitor data, reports Quartz.

Water is currently one of the hottest beverages in the nonalcoholic-drink market, with consumption of water brands Dasani, Aquafina, and Poland Springs increasing in volume from 6.5% to 11.4% in 2015. For comparison, the amount of Coca-Cola consumed by Americans dropped by 1% by volume, while Pepsi Cola dropped 3.2%.

When it comes to nutrition, nothing has a better reputation than bottled water. That flawless image fits perfectly into PepsiCo and Coca-Cola's hopes for a reputation makeover in 2016, after sugar-related concerns drove soda sales down and negative headlines up in 2015.

See Coca-Cola through the years:

18 PHOTOS
Coca-Cola through the years, Coke soda
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The future of Coca-Cola and Pepsi depends on this unexpected beverage
The Atlanta based Coca-Cola Co., announced in New York Tuesday April 23, 1985 file photo a change in the 99 year old secret formula for the soft drink. This collection details the history of shapes of the soft drink's bottles. Sold at fountains in Atlanta at the start it was first bottled in Vicksburg, Mississippi. (AP Photo)
UNITED STATES - CIRCA 1950s: Teenaged girl with bottle of Coca-Cola. (Photo by George Marks/Retrofile/Getty Images)
(GERMANY OUT) *23.03.1912-16.06.1977+Physiker, Raketenforscher, D/USA- Porträt mit Coca-Cola-Flasche- 1963 (Photo by ullstein bild/ullstein bild via Getty Images)
The bottles of Coca-Cola are shown May 5, 1986. (AP Photo/Joe Holloway, Jr.)
FRANCE - MAY 01: Centenary of Coca-Cola In France In May, 1986. (Photo by Didier CONTANT/Gamma-Rapho via Getty Images)
The bottle used by Coca-Cola for export to France, stands by the prototype of the very first Coke bottle shown May 5, 1986 in Atlanta, Ga. (AP Photo/Joe Holloway, Jr.)
BOHOL, PHILIPPINES - 1988/01/01: A lemur clings to a coke bottle. . (Photo by Roland Neveu/LightRocket via Getty Images)
Bottles of Coca-Cola, Tab, and Sprite on the shelf of a grocery store in New York City, USA, September 1988. (Photo by Barbara Alper/Getty Images)
SAN FRANCISCO - JANUARY 16: Bottles of Coca-Cola are seen on the shelf at Tower Market January 16, 2004 in San Francisco, California. Coca-Cola is being investigated by U.S. regulators over allegations raised by a former employee that it had inflated its earnings. (Photo by Justin Sullivan/Getty Images)
SAN FRANCISCO - JANUARY 16: Cans of Coca-Cola are seen on the shelf at Tower Market January 16, 2004 in San Francisco, California. Coca-Cola is being investigated by U.S. regulators over allegations raised by a former employee that it had inflated its earnings. (Photo by Justin Sullivan/Getty Images)
UNITED STATES - OCTOBER 20: Bottles of Coca-Cola and Diet Coke are displayed on a shelf in an Associated Supermarket in New York Thursday, October 20, 2005. Coca-Cola Co. said third-quarter profit surged 37 percent, the biggest gain in more than a year, as sales rebounded in the U.S. and demand for Powerade sports (Photo by Ramin Talaie/Bloomberg via Getty Images)
PARK RIDGE, IL - NOVEMBER 07: 2-Liter bottles of Vanilla Coke as seen in a grocery store November 7, 2005 in Park Ridge, Illinois. Atlanta-based Coca-Cola Co. has said it plans to discontinue its Vanilla Coke in the US by the end of the year. (Photo by Tim Boyle/Getty Images)
NEW YORK - FEBRUARY 19: A general view of the new aluminum Coca-Cola bottle at Mercedes Benz Fashion Week Fall 2009 Collections at Bryant Park on February 19, 2009 in New York City (Photo by Donald Bowers/Getty Images for The Coca Cola Company)
Bottles of Coca-Cola Co.'s Coke brand soda sit on a shelf behind the bar at Smith & Wollensky in New York, U.S., on Monday, Feb. 22, 2010. Coca-Cola Co., the world's biggest soda maker, agreed to buy the North American operations of bottler Coca-Cola Enterprises Inc., more than six months after PepsiCo Inc. moved to bring its bottlers in-house to cut costs. Photographer: Daniel Acker/Bloomberg via Getty Images
A Coca-Cola bottle is displayed during a preview of the High Museum's new exhibit, "The Coca-Cola Bottle: An American Icon at 100", Wednesday, Feb. 25, 2015, in Atlanta. The exhibit, opening Feb. 28, explores the iconic design and creative legacy of the familiar soda bottle as art. (AP Photo/Branden Camp)
A piece by artist Andy Warhol, left, is displayed next to a case of Coca-Cola bottles at the High Museum's new exhibit, "The Coca-Cola Bottle: An American Icon at 100", Wednesday, Feb. 25, 2015, in Atlanta. The exhibit, opening Feb. 28, explores the iconic design and creative legacy of the familiar soda bottle as art. (AP Photo/Branden Camp)
LONDON, ENGLAND - MARCH 19: Rita Ora attends photocall to celebrates 100 years of the Coca-Cola Contour Bottle at the Coca-Cola Contour Centenary Bar on March 19, 2015 in London, England. (Photo by Mike Marsland/WireImage)
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However, the beverage isn't without its critics.

Sparkling Bottled WaterSmartwater

"Bottled water is the marketing trick of the century," writes John Jewell in The Week.

Companies selling bottled water, he argues, have managed to convince Western consumers that buying water is a healthier choice than sugary soda.

According to Jewell, the comparison is a case of false equivalence. Bottled water isn't simply an alternative to soda — it's an alternative to the much more inexpensive and eco-friendly tap water.

"The purchase of bottled water allows us to communicate our uniqueness and the care we have for bodies and the environment," writes Jewell.

This nutrition-minded and independent sense of self is exactly what soda giants like Pepsi and Coke are currently trying to tap into.

jennifer aniston smartwaterSmartwater

However, while bottled water can cost 2,000 times as much as tap water, the beverage yields surprisingly low profit margins for companies. So these beverage giants are not only investing in simple bottled tap water — the most straightforward marketing trick in existence — but also new, pricier takes on the classic H2O.

Earlier this year, Pepsi debuted new sparkling Aquafina flavored waters. The drinks were the "official hydration sponsor of New York Fashion Week" this spring, a glitzy title that continues the elevation of the most basic beverage. At the same time, Coca-Cola has rolled out sparkling Smartwater, with actress Jennifer Aniston as spokesperson.

Bottled water is a $13 billion business that, logically, doesn't need to exist. It is also an industry that won't stop growing. As Americans turn away from soda, that's exactly the kind of beverage companies like Pepsi and Coke need in their portfolio.

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