The market for dairy-based soft drinks is still small, but demand is on the rise, analysts have claim – backing up a 2012 Rabobank forecast that soft drink-dairy category “convergence” would increase.
In its February 2012 report, Best of Times, Worst of Times: Global Beverage Outlook 2012, Rabobank highlighted increasing consumer demand for health and wellness beverages, adding that there would be “increasing convergence of soft drinks and dairy beverages” in 2012 as a result.
They were right, analysts claim.
In mid-2012, PepsiCo further bolstered its presence in dairy, teaming-up with German firm Theo Müller in an attempt to exploit the US dairy market. Coca-Cola also made its first direct investment in the US dairy industry, partnering with Select Milk Producers to produce the Core Power high protein milkshake brand.
According to Euromonitor, PepsiCo’s global share of drinking milk product sales increased from 0.3% in 2007 to 1.3% in 2012. The Coca-Cola Company’s global market share has also doubled since 2007 to 0.2%.
Speaking with BeverageDaily.com, Mintel global food and drink analyst Caroline Roux claimed that Coke’s recent investment signaled a bright future for the category.
“Coke’s investment in Core Power demonstrates that further growth is expected whilst innovation will remain buoyant,” said Roux.
Inherent, well-known health benefits
Mirroring Rabobank’s 2012 forecast, Roux said that consumers have a growing understanding and interest in nutrition. She added that milk’s “inherent and well-known health benefits” have given it a boost.
“Milk, as an ingredient, through its inherent and well-known health benefits, gives new products or brands the health credentials consumers are after, as well as the natural cues,” she said.
“Milk is spot on as a ‘natural functional’ foodstuff," Roux said. "That is why a third of US milk drinkers claimed to be interested in ‘functional’ milk drinks that might contain nutrients that help with heart health, stress reduction, or have other benefits."
This consumer interest encouraged dairy-based soft drink innovation over the last couple of years, she added.
“As a consequence, the number of newly launched soft drinks containing dairy products keeps growing. Most the new products are launched in Asia but the number doubled in Europe between 2011 and 2012,” she added.
Small market but demand is rising...
Euromonitor health and wellness analyst Diana Cowland backed-up these expectations, claiming that while the market for dairy-based soft drinks is still small, demand is rising.
“As of yet the market for dairy-based soft drink products remains small but interest in these products is rising," she said.
Despite being considered just small change for now, Cowland believes that in time the category will grow.
“As highlighted by Euromonitor International’s data above, multinationals have witnessed success in dairy-based products in recent years, as such it is likely that these companies will continue to grow their presence in dairy-based fruit juices, particularly in emerging markets,” she said.