The US is the home of the major carbonate brands, and the fizzy drinks remain the backbone of soft drinks consumption there. But the most impressive growth is currently coming from packaged water, with consumption leaping 18 per cent in 2002 alone, some six times more than the market as a whole, according to a new report from Canadean.
Packaged water accounted for almost 80 per cent of total soft drinks growth in 2002, and with around 48 per cent of the US currently suffering moderate to extreme drought conditions, the chances are that water sales will rise even further in 2003.
Packaged water is relatively inexpensive to produce and package, offering the potential for high profits, Canadean said. As such, the sector has attracted significant investment from the major companies such as Coca-Cola and PepsiCo. Non-mineral, still water in single-serve packs - the preferred variety of the major carbonate groups - has been the main contributor of the rapid growth, increasing by 20 per cent in 2002 alone and accounting for just under 95 per cent of the sector's total consumption.
Although strong growth among the leading players has led to increased consolidation, packaged water remains a highly fragmented market with less than 45 per cent of total sales attributable to the major brands, the report suggests.
But if packaged water has shown the most spectacular growth, it still has a long way to go before it can mount a serious challenge to carbonates. This sector, the largest in the US soft drinks market, is over three times larger than packaged water, but it has long since reached maturity and growth is harder to come by.
Even the recent launch of a number of new flavour variants from leading brands - such as lemon or vanilla versions of Coke and Pepsi - only boosted overall sales slightly, the report said.
Cola is the leading sub-sector, enjoying a near 60 per cent share of the carbonates market, and was the main beneficiary of the new flavour launches. The second largest sub-sector, lemon and lime, had contrasting fortunes with a 3 per cent decline. Meanwhile, the dominance of regular carbonated drinks continues to be eroded by their low calorie counterparts.
The juices and nectars sector, the third largest in the US, experienced extremely fierce price competition from the major suppliers during 2002. Although orange remains the most popular flavour, it appears to be in a steady decline, with apple and tomato moving in to the gap. The explosive growth in cocktail/mixed fruit flavours since 1999 has now slowed, the report says, with only a modest improvement taking place in 2002.
Despite a stuttering economy and the ever present threat of further terrorist attacks, consumer spending in the US has remained buoyant, according to Canadean. This, the company claims, coupled with a high number of new product innovations, should help support further growth in soft drinks consumption of around 3 per cent in 2003.
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