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Flat sales send Pepsi to No. 3, behind Coke, Diet Coke

Coca-Cola is winning the fight for America’s soda drinkers.

Diet Coke bubbled up into the second spot in the U.S. soft drink market, ending Pepsi’s decades-long run as the perennial runner-up to regular Coca-Cola.

Coca-Cola sold nearly 927 million cases of its diet soda in 2010, to Pepsi’s 892 million, a report by trade publication Beverage Digest released Thursday said. Diet Coke was nearing a virtual dead heat with Pepsi a year earlier.

Regular Coke remains the undisputed champion at 1.6 billion cases.

For Coke, wresting the No. 2 spot from Pepsi capped a year in which it took more of the soda business from its rival.

Diet Coke’s rise reflects a long-term trend toward diet sodas. Ten years ago, only two of the top 10 were sugar-free. Now, four are on the list: the diet versions of Coke, Pepsi, Mountain Dew and Dr Pepper.

Overall, U.S. soft-drink sales have fallen for six straight years as consumers switched to healthier alternatives such as juices and tea and cut back on spending in the recession.

While both Diet Coke and Pepsi sold less soda in 2010, the decline was more pronounced for Pepsi.

The downward trend in U.S. soda sales intensifies pressure on the longtime rivals to compete.

Coca-Cola has pumped up its traditional advertising, including online ads. PepsiCo, which has lost market share in recent years, maintained some traditional ads but also steered dollars toward it Pepsi Refresh Project, an online donation program meant to build brand awareness.

Though the Refresh Project has proven popular, some have questioned whether it actually drives soda sales.

Coca-Cola Co. sold 0.5 percent less soda in 2010. For PepsiCo, the figure fell 2.6 percent.

The top 10 sodas in the U.S., in order of popularity, are: Coke, Diet Coke, Pepsi-Cola, Mountain Dew, Dr Pepper, Sprite, Diet Pepsi, Diet Mountain Dew, Diet Dr Pepper and Fanta.

Frick said that method would put onus on administrators of the programs and those who benefit from them to prove their worth convincingly enough to regularly win votes in the legislature.

“It can be a challenge to get bills passed around here,” he said. “I’d rather have these credits prove their worth and go through an affirmative vote.”

Wineholt said that method is “kind of like ready, shoot, aim.”

The chamber and other business groups support the regular study and tighter oversight provisions, but said the credit programs should be the beneficiaries of legislative inaction, forcing lawmakers to vote to kill a program, rather than save it.

The state spent — or gave up in potential revenue — $3.7 billion through the tax code in fiscal 2010, according to a Department of Budget and Management report. Those credits, exemptions or deductions were applied to everything from the boat titling tax to the corporate income tax.

Frick’s bill would apply to 29 tax credits that cover activities from the long-term employment of an ex-felon — $300,000 was claimed under that credit in fiscal 2010, according to the budget department report — to research and development. Some $6 million in credits were claimed that year under that program.

The bill also applies to some other high-profile business incentives, including the biotech tax credit, which has historically offered $6 million per year, but was bumped up to $8 million by the governor and General Assembly last year. The Sustainable Communities Tax Credit, which is offered to developers who renovate historic structures in urban areas, was approved last year and funded with $10 million.

Other programs that would fall under the bill include enterprise zones, job creation tax credits, hiring employees with disabilities and incentives for green buildings. The bill would also include the credit for energy companies that buy coal mined in Maryland. That program spent $4.5 million last year, and is the target of a cut in Gov. Martin O’Malley’s budget proposal.

Gene Burner, president of the Manufacturer’s Alliance of Maryland, said the bill would have a “chilling effect” by putting a potential termination date on government subsidies flowing to businesses.

“The credits are supposed to be incentives,” he said. “If this is in the law, what kind of incentive is that?