Nutrition key to turnaround for kids' drinks - report

By Neil Merrett

- Last updated on GMT

Related tags Coca-cola

Sales of children's beverages in the US declined by four per cent
last year to $4.6bn over the same period in 2006, as concerns over
obesity and child health increasingly shape the market, research
has found.

However, market research publisher Packaged Facts expects strong growth ahead for the segment, which will amount to sales of $5.8 billion by 2012, as the industry finds itself switching focus to beverages linked to health and other nutrition benefits.

The findings offer an indication for global manufacturers of the impact that changing consumer behaviour and new legislation regarding vending machines and advertising is having on the market and their operations.

Obesity concerns were seen as the main driver for the sales decline, as industry pledges to curb advertising for children, and pressure to restrict and even cut out junk food and drinks from schools hit sales hard, the research group says.

As a result of these concerns, traditional beverage categories favoured by children were found to have posted " soft sales" over the year, while child-focused bottled water brands and nutritional/sports drinks posted "robust income" over the same period.

According to Packaged Facts, another major area of reform is the issue of packaging size, with single serve and smaller portions continuing to drive innovation in the market to account for convenience, portion control and healthier consumption.

Cathy Minkler, assistant editor for Packaged Facts said that a growing need for ingredient-based, clear label products would further ensure that healthier child-focused drinks underwent strong growth in the future.

"Driven by the trend toward more wholesome ingredients and products, benefits such as pure, real, organic, no artificial color and no preservatives have been appearing on more new kids' beverages," she stated.

"High calcium, probably the oldest claim in the kids' beverage arsenal, still has a strong showing, particularly as milk comes back into vogue and as the popularity of yoghurt smoothies grows."

The trend is not just specific for soft drinks targeted at children, with leading beverage groups around the world battling to find the latest non-carbonated beverage crazes.

In November, Coca-Cola announced had acquired the rights for marketing Campbell's range of vegetable-based juice brands in North America in a bid to expand its presence in the non-carbonated drinks market.

The agreement follows on from the company's $4.1bn (€3.05bn) acquisition in October of Glacéau.

This strengthened the group's position in the market for health-based bottled water products including vitamin-enriched water.

The focus has also moved to Europe, with PepsiCo last June stepping up its presence in Eastern Europe soft drinks production by acquiring an 80 per cent stake in one of Ukraine's leading juice names.

Through the $542m (€406m) purchase of the Sandora company, Pepsi claims it now holds a dominant role within the country's burgeoning market for fruit juice production.

The growing desire of multinationals to diversify their operations for alternatives to the once core-carbonated beverages globally has not been completely plain sailing for some manufacturers though.

In September, German organic soft drinks producer Bionade reiterated that it had no interest in selling off its operations, after claiming it had turned down an offer from Coca-Cola for its operations in 2004.

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