While the world's best-known soft drink brands are undoubtedly carbonates such as Coca-Cola and Pepsi-Cola, the fastest growth in the soft drinks sector is coming from still drinks.
A new report from market analysts Canadean shows that growth in still drinks is fast outstripping that of their carbonated counterparts, and shows no sign of slowing in the near future.
Canadean said that still drink consumption is expected to rise 6 per cent this year, bringing volume to 22.4 billion litres. Predicted growth rates until 2005 will then continue to be higher than those for juices & nectars and carbonates, although below those for packaged water, iced tea/iced coffee and sports/energy drinks.
Despite an ill-defined profile, partly due to the practice in some markets of not declaring the juice content on the packaging, still drinks are said to offer considerable potential for development due to their enormous range and diversity, the report said. Low cost products (with little or no juice content) sit at one end of the category spectrum, while more expensive, branded drinks, frequently highly innovative, occupy the other end.
Orange is the single most popular flavour, with around a quarter share, but the sheer size of the 'other flavours' segment is indicative of the plethora of fruit and non-fruit still drinks available. The wide appeal of the category is seen as an opportunity for producers to enhance or fortify their drinks to deliver nutritional and other benefits, said Canadean, while new entrants will increase the range of products even further by adding to the number of 'cross-over beverages', i.e. those which contain elements of more than one traditional category.
Canadean said that since per capita consumption of still drinks worldwide is currently running some 1.5 litres below the level for juice and nectars, there is scope for growth in the sales of existing and new products, while the fragmented nature of the industry also creates opportunities for companies to expand sales organically, through joint ventures and acquisitions.
As with most other major soft drink brands, sales by the multinationals are at their strongest in North America and western Europe. In the North American market, which counts for around one third of world volume, the top three companies - Coca-Cola, Cadbury Schweppes and Procter & Gamble - account for half of sales.
Elsewhere, however, most producers operate at a national or at best, regional level. In Asia, for example, which in volume terms is almost as large as North America, the international presence tends to be weakened by the relatively low entry costs for new players and the short lifecycles of what are generally inexpensive products.
The report highlights consumption and production patterns for still drinks in more than 80 countries, and highlights in particular the growth potential of Argentina, Chile, Denmark, Italy, Norway and Switzerland.