Brazilian soft drink sector fizzes over

Brazil's thirst for soft drinks appears unquenchable, as shown by the 10 per cent increase in consumption in 2002. Double-digit growth is nothing new, however, as a new report from beverage industry analysts Canadean​ shows: soft drink consumption has risen by 190 per cent in the last decade.

With an estimated 175 million inhabitants, Brazil boasts the fifth largest population in the world. Significantly, 29 per cent of this population falls within the core soft drinks age band, while the market is also boosted by the country's healthy tourist industry and favourable climate, Canadean said.

Carbonates are by far the most popular products and Brazil is the third biggest global market for carbonated drinks, exceeded only by the US and neighbouring Mexico. Carbonates sales increased by a comparatively modest 2 per cent in 2002, but the sector as a whole is huge, dominated by cola (around 45 per cent of sales) and popular local variant guarana (27 per cent).

Although the dominance of carbonates may not yet be under any threat, carbonate manufacturers are following the trend set in other countries and diversifying into other drinks categories, flavours and variants, Canadean said. For example, low calorie carbonated drinks are growing in popularity, driven by the trend towards healthier living.

Although still drinks is one of the smaller sectors in the Brazilian market, it is the most dynamic. Consumption increased by 34 per cent in 2002 alone and the sector has now grown by well over 1,100 per cent since first appearing in 1998. Fruit drinks dominate, led by orange/citrus which enjoys a 75 per cent share of throat.

The second and third largest sectors, namely packaged water and bulk/HOD water, also grew strongly, the report shows. Consumption of both sectors has been helped by the popularity of healthy products. In addition, competition between the vast number of packaged water brands has resulted in extremely competitive pricing.

Bulk/HOD water is also highly fragmented with over 300 brands available. The penetration of coolers in the workplace and at home has increased with producers leveraging the combined propositions of price, personal service and reliable delivery.

Consumption of soft drinks made from fruit powders rose sharply for the second year running. With the top six brands accounting for almost 90 per cent of total consumption, the sector is far less fragmented than many of its rivals. Furthermore, pricing of fruit powders is among the lowest in the whole of the soft drinks market.

Although consumption of soft drinks has risen sharply, and explosively in the case of certain sectors, this trend looks like continuing with only a slight slowdown expected in the short term, Canadean said. The market should be buoyed further by new products and market entrants expanding choice and lowering prices. The number of convenience stores is on the up, supporting 'on-the-go' consumption, while vending machines are becoming more commonplace. The food service industry is also accelerating.

Canadean believe that all of these factors will help fuel future growth and predicts that the total market will increase by just over 9 per cent in 2003.