Euromonitor pinpoints that health and well-being continue to shape consumer choice in the soft drinks market, especially in developed markets where consumers are increasingly demanding multi-functional beverages. The report maps how bottled water, fruit juice and functional drinks are pressurising carbonates, which in contrast is demonstrating moderate growth in both developed and developing regions, despite a string of major launches in flavoured cola.
Euromonitor also evaluates the success of manufacturers deploying flexible strategies in building share in geographic markets at different levels of development. In mature markets major players focus on building added value brands to protect margins, with functionality a key feature. 'Good-for-you' soft drinks such as enhanced water, fortified juice and flavoured water increasingly appeal to health conscious consumers.
The report contrasts this to the situation in developing markets where marketing initiatives are focused on developing global brands infused with strong local flavour. Geographical penetration through strategies designed to reach potential consumers continues remain the core focus for multinationals in the short to medium term.
In terms of distribution, alternative channels, such as home delivery of bottled water, is growing rapidly in key developing markets such as Mexico, China and Indonesia. This has triggered a string of acquisitions in the HOD market in both developing and developed markets in recent years.
Supermarkets/hypermarkets are the primary distribution channels for soft drinks, responsible for over one third of the total retail volume sales of soft drinks. Developed markets such as Germany saw the increased importance of discounters amid the economic slowdown in the past year.
Euromonitor also provides analysis on fountain sales of carbonates through foodservice channels and convenience stores. The development of chained fast food outlets is instrumental in the ongoing growth in fountain sales. Unsurprisingly North America accounts for the bulk of global fountain sales, but increasingly Asia Pacific is growing in importance as a direct result of expansion by Tricon's KFC and McDonald's.
The total global volume sales of soft drinks reached 327 billion litres in 2003, up around 5.7 per cent over 2002. North America continues to be the biggest consumer in the soft drinks market, accounting for around 25 per cent of total global volume sales. However, volume growth in North America was sluggish in 2002, with sales affected by the poor economic condition in the US and the maturity of the market. Despite similar uncertainty in the economy in Western European, consumers there continued to increase their consumption of soft drinks, enticed by new product launches.
Although the report shows Asia Pacific has the lowest level of per capita consumption at only 22 litres - just one third of the world's average - the region registered the fastest growth in volume sales. According to Euromonitor the principal contributing factors to the growth have been growing urbanisation, deeper penetration by multinationals and improved retail infrastructure.
Among major soft drinks markets, emerging markets such as China, India and Indonesia demonstrated buoyant volume growth in 2002. The report also reveals that this dynamism continues to be evident in Mexico, with strong growth underpinned by rapid expansion of the home delivery industry.