Carbonated drinks braced for ‘economic storm’

By Neil Merrett

- Last updated on GMT

Related tags Soft drink Carbon dioxide Analyst

While leading soft drink groups continue to pledge a path towards product diversification, the often-criticised carbonated drink will continue to undergo sales growth despite wider economic worries, says a new report.

Analyst group Canadean says that having revaluated its global predictions for soft drink growth over 2008 to account for the ‘worsening economic’ climate, volume sales are still expected to rise by between one to two percent.

Growth within emerging markets like Central and South America, as well as a value shift towards more private label brands in developed markets are expected to play a major part in shaping the future market for carbonated beverages, says the report.

According to the analyst, changing conditions within the global finance market have forced it to rethink pervious expectations for the segment over the year, leading to a cut in its previous predictions by a single percentage point.

The report says that sparkling soft drink output for the year should now be around 208 billion litres or 31 litres for every global consumer.

Bracing the storm

Despite stagnant overall growth, the report suggested that carbonated drink makers are likely to be better position than other beverage manufacturers to deal with the ‘economic storm’.

The carbonate category remains the giant of the global soft drinks sector; almost four in every ten litres of soft drinks consumed around the world is a carbonated soft drink,”​ stated the analyst. “Even before the revisions to the forecast, the category was showing some signs of maturity in many developed parts of the world but this will be more than compensated for by the developing countries.”

However, while 2009 is predicted to see similar growth in overall global sales volumes for carbonated drinks brands, Canadean expects an acceleration in sales of about two per cent for the segment in 2010.

The analysts claims that the impacts of the ongoing financial downturn are being most felt in more developed beverage markets, a trend it says is reflected in a shift towards own label products and retailers.

“The high cost of oil during this quarter pushed up petrol prices and it appears the carbonates sales in garage forecourts slowed accordingly, impacting on the overall convenience channel,”​ stated the analyst. “These factors, along with the depressed on-premise sales triggered by stay at home consumers have meant that the effect of the downturn is more pronounced in value terms than volume.”

Emerging markets

In terms of emerging markets for carbonated beverages, both Asia, which has undergone an eight per cent rise in sales volumes this year, and Middle East & North Africa region (MENA) were identified by the report as key growth areas.

A ‘buoyant’ Chinese economy was identified by Canadean as a major driver in this growth.

However, North America, which accounts for a quarter of total soft drink sales volumes, is expected to lose its crown this year as the largest market for carbonates to Central and South America.

On a per capita basis, consumers in Canada and the US are expected to remain the largest overall all consumers, says Canadean.

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