So here's the deal: soda sales have been on the decline as consumers flock to better-tasting, ostensibly healthier, more "natural" beverages like Vitamin Water, which is owned by Coca Cola (NYSE: KO).

According to Beverage Digest, U.S. soda sales in major retail channels overall declined 3.5% in the first quarter, and convenience-store sales dropped fell 4.2%.

How does the soft drink industry plan to combat the trend? According to the Wall Street Journal(subscription required) , "To win back sales, several Coca-Cola and Pepsi bottlers are conducting pilot tests on a variety of bottle sizes they hope will appeal to consumers put off by the 20-ounce bottle or looking for a cheaper option to cushion the blow of high food and energy prices."

I'll be shocked -- shocked -- if this does anything to boost soda sales. Soda sales are declining for a very good reason: soda is bad for you and people now have great-tasting alternatives. At the risk of being alarmist, I think that soda sales -- at least in the United States -- are in a permanent state of decline. I think Coke knows that: they saw the future and bought Vitamin Water.