Soft drinks are hot - and getting hotter

Related tags Soft drinks Soft drink Coca-cola

Soft drinks are set to become the biggest beverage sector in the
world, overtaking hot drinks, with consumption rising by around 5
per cent a year, according to a new report from Zenith
International. But while the US remains the biggest market for
now, it is Asia which is likely to be the main driver of sales
growth in the future.

Growth in the global soft drinks market is far greater than that in other beverage categories, according to Zenith, and total sales should reach 467 billion litres this year, equivalent to 75 litres per person.

"Economic and climate variations around the world present complications for all soft drinks companies, but many have succeeded at weathering the elements,"​ said Zenith's research director Gary Roethenbaugh.

"As a combined category, soft drinks offer a powerful growth proposition. The unrelenting advance of bottled water and still drinks, coupled with the scale of carbonates, help place soft drinks on track to become the number one beverage sector in 2005."

The report shows that carbonates are the largest soft drinks segment, with a 2002 share of 42 per cent, but that bottled water is catching up fast with a 32 per cent share. Growth in the water segment is the fastest in the industry as a whole at 9 per cent, and is being driven by increasing awareness of the health benefits of proper hydration, and by a high level of innovation, with flavoured and functional waters take an increasing share of throat.

Still drinks, another segment which has shown strong growth in recent years, now accounts for 11 per cent of total sales, the report shows, while the fruit juice/nectars segment is the fourth largest with an 8 per cent share. Dilutables is the smallest category with 7 per cent of sales.

With the world's two largest carbonate producers (Coca-Cola and Pepsi Cola) headquartered there, it is not surprising that the US emerges as the world's biggest soft drinks market by a substantial margin, with a 24 per cent global share in 2002. Along with Mexico and China, the US is also one of the world's biggest bottled water markets.

The presence of China among the top three markets in both the carbonates and water categories shows the growing importance of Asia to soft drink producers, the report shows. In fact, Asia, along with the Middle East and eastern Europe, accounted for all of the top five fastest growing countries over the past five years, with the highest growth achieved by Pakistan, with volume up by 146 per cent since 1997.

And Asia is likely to remain the driver of global soft drink consumption over the next few years, according to Zenith. By 2007, Asia and Australasia is forecast to become the biggest single region for soft drink sales with a 25 per cent share, overtaking North America on 24 per cent.

Zenith predicts that 90 billion litres will be added to global soft drinks consumption by 2007, annual growth of 4-5 per cent. "Asian growth is expected to lead the way at 7-9 per cent a year,"​ said Roethenbaugh.

"The huge populations, increasing affluence and underdeveloped soft drinks markets of China and India present massive opportunities. Strong growth is also anticipated in a number of countries across East Europe, the Middle East and Africa."

Related topics Markets Soft drinks

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