Better times ahead for soft drink producers: report

Posted by Daniel Palmer on 6th November 2009

The global market for carbonated soft drinks saw its growth rate halve in 2008, dropping from 3% in 2007 to 1.4%, but research consultants from Canadean are forecasting better times ahead with the market growth rate expected to accelerate next year. In the meantime, 2009 will see growth slow significantly as the world enters the eye of the global financial storm, according to Canadean’s recently published Global Carbonates Report.

Despite the slowdown, carbonates remains King of the soft drinks sector and account for nearly 4 in every 10 litres of soft drinks consumed around the world. Worldwide per capita in 2008 now stands at 31 litres per person, ranging from 11 litres in the Rest of Africa to as high as 157 litres in what many consider the ‘global headquarters’ of the category, North America. In the parts of the developed world where per capita is high, the market has reached maturity and it will be the developing world that is the source of most of the future rises.

North America may remain unchallenged as the leading per capita market but in terms of volume, 2008 was the year that the region, with more than a quarter of world sales, was dethroned as the leading market. Latin America now holds that crown and, with North American sales expected to shrink by nearly 6% between the end of 2008 and 2012, the gap is set to widen further. During the same period, Latin America is set to expand by 9% which equates to nearly 5 billion litres.

Asia too will play an important role in the future development of the carbonates category and is expected to contribute an extra 9 billion litres to the category in the next five years. Canadean’s Asian team expect the carbonates market in their region to expand by nearly a third. The Middle East & North Africa will not be far behind with growth of almost 30%. Of the other developing parts of the globe, East Europe appears to be set for a more prolonged period of correction and is only expected to return to growth in 2011.

The reliance on the developing world to expand the category is reflected in the fact that the low calorie segment is set to lose share to the regular segment in 2009. In less affluent markets, the sugar debate is less relevant and the demand for ‘light’ or ‘diet’ drinks is minimal, the market researchers said. In more developed markets, the issue of obesity has had a high profile and the low calorie segment has played an important part in maintaining demand. Today low calorie drinks make up 15% of total volume.

Stakeholders in the carbonates category will be reassured that the slow performance of the developed world will be more than compensated for by the buoyant demand of the developing world. They will, however, have to accept that they will need to concede something on price.