health and wellness the greatest threat to carbonates in the americas

CURRENT STATE OF THE CARBONATES MARKET IN NORTH AND SOUTH AMERICA JULY 2015

http://www.euromonitor.com/

NORTH AND LATIN AMERICANS ARE AMONGST THE MAIN CARBONATES CONSUMERS GLOBALLY

PERFORMANCE OF THE CARBONATES MARKET COUNTRY BY COUNTRY


© Euromonitor International

3

North and Latin Americans are amongst the largest carbonates consumers in the world with eight countries in the region amongst the top 15 per capita carbonate consumer countries.

Latin America consumed the most carbonates globally in 2014 (56 billion litres) followed by North America (52 billion litres) and Asia Pacific (36 billion litres).

North and Latin Americans are amongst the main carbonates consumers globally Top 15 carbonate countries by total

volume consumption (2014)

Country Per capita consumption of carbonates (lts)

Argentina 155

USA 154

Chile 141

Mexico 137

Uruguay 113

Belgium 109

Germany 98

Norway 98

Saudi Arabia 89

Bolivia 89

Australia 87

New Zealand 86

Canada 85

Brazil 81

Ireland 81



4

00 to 01

01 to 02

02 to 03

03 to 04

04 to 05

05 to 06

06 to 07

07 to 08

08 to 09

09 to 10

10 to 11

11 to 12

12 to 13

13 to 14

14 to 15

-6

-4

-2

0

2

4

6

North America

Latin America

Tota

l Vol

ume

YOY

Gro

wth

Carbonate volume growth 2000-2015During the last five years, North America has seen a -7.6% decline in carbonates consumption while Latin America has seen a 7.6% increase.

The Latin American market is facing challenges but at the same time offers opportunities for companies to enter the soft drinks market with innovative products, improved logistics and powerful marketing campaigns.

When compared to other soft drinks, carbonates is one of the more mature categories with opportunities remaining in healthy positioning, innovative packaging, new ingredients and flavours.

The carbonates market is seeing varied growth and decline across the Americas in 2015


NORTH AND LATIN AMERICANS ARE AMONGST THE MAIN CARBONATES CONSUMERS GLOBALLY

PERFORMANCE OF THE CARBONATES MARKET COUNTRY BY COUNTRY



6

Performance of the market varies country by country, but a common theme emerges: consumers increasing interest in the health and wellness trend is driving reductions in carbonate sales.

Middle and higher income segments are more prone to perusing health and wellness products

What is going on specifically in each country? In the following slides we present the current state of the market by country, starting with the worst 2014 percentage growth market to the best performing.

Health and Wellness the greatest menace for carbonates



7CANADA

-3.81% Consumption of carbonates in Canada continues to decline, with diet products taking

a bigger dip in sales compared to standard carbonates as consumers are increasingly concerned over sweeteners in low calorie carbonates. While stevia has been on the agenda, it is yet to make an impact on the market. The only category with a good positive growth is ginger ale, reportedly due to its healthier and more natural image.



8

*On-trade: Distribution through bars, clubs, restaurants and other stores that offer services for out of home consumption *Off-trade: Establishments that sell goods for home consumption, such as supermarkets, small grocers, discounters among other channels

UNITED STATES

-1.67% Carbonates once again witnessed disappointing volume sales in 2013 and 2014. This was

largely related to the declines in low calorie carbonates, which saw deep volume declines over the last 5 years as consumers migrated away from the category. Some of this can be attributed to an increased consumer desire to cut out artificial sweeteners as these are viewed as poor tasting and bad for a person’s health. In addition, however, many consumers have become more interested in premium carbonates that use cane sugar and minimise the number of artificial ingredients used, since these are considered to be worthwhile indulgences. There has also been an increased interest in carbonated bottled water, which is viewed as much healthier than low calorie carbonates as they typically contain very few ingredients, which generally tend to be natural.



9VENEZUELA

0.20% Carbonates are the preferred drink of Venezuelans, holding 59% of total soft drinks volume

sales in 2014. The performance of carbonates was adversely impacted by a severe contraction of the population´s purchasing power which forced Venezuelans to reduce the frequency of purchase and migrate towards home-made beverages. In 2012, a juice price regulation was approved thus creating a huge incentive towards the purchase of juice to the detriment of carbonates. Before the implementation of the Law of Costs and Fair Prices (Ley de Costos y Precios Justos) in March 2012, the unit price of carbonates was 30% lower than that of nectars. In 2014, they had virtually the same unit price. The slowdown in consumption of carbonates is not attributable to health concerns with consumers showing no signs of switching from regular to low calorie beverages. Public policies favouring the purchase of juice and bottled water are responsible for the fall in per capita consumption.



10

0.41% In Colombia, carbonates have reached a period of stagnation. In 2014, growth in volume

and current value terms was negligible. Carbonate consumption is supported mainly by middle-low and low income consumers. The decline in Colombian poverty, which increased the size and purchasing power of low-income consumers, has counterbalanced high income consumers’ migration toward categories considered healthier such as juice, bottled water or RTD tea. This trend has allowed lower-cost firms such as Ajegroup to gain ground and has forced leaders Femsa and Postobon SA to keep their prices low in order to remain competitive.

COLOMBIA



11

0.47% Carbonates performance is growing slowly. The performance of diet products is only

marginally better than full-flavour cola carbonates and the trend is expected to get stronger in the next five years underpinned by health and wellness trends. Consumers are also switching to more naturally perceived soft drinks, such as juice and flavoured water. As international brands dominate the market, they have the resources to expand their portfolio into new categories.

URUGUAY



12

0.49% Cola carbonates had weak performance in Mexico in 2014 due to the implementation of a new tax

on sugary drinks. The tax has resulted in an adjustment of consumption behaviour among consumers. A few consumers are switching to low calorie carbonates and more consumers are switching to flavoured waters or RTD teas which are perceived as healthier and are very trendy at the moment. Others are simply curbing volume consumption, purchasing 2 instead of 3 litre presentations, for example. This comes to the detriment of brands that have lower unit prices and are known for their large presentations, such as Big Cola and Red Cola. Non-cola carbonates are struggling even more than cola carbonates, as they are most popular amongst children whose habits are changing more rapidly.

MEXICO



13

0.65% Consumers in the country have been switching from carbonates to other categories that are

considered healthier, such as juices and bottled water. Although the per capita consumption of carbonates in Peru is still low compared to other countries, the carbonated market has reached maturity and has already begun to decline. Reduced sugar carbonates have not been successful as a healthier option in the country, because they are not considered healthy. Peruvians convey a negative perception of artificial sweeteners, and most are considered unhealthy.

PERU



14

1.05% Carbonates have been struggling to grow due to health concerns in Brazil, an issue

causing consumers to migrate to other categories perceived as healthier, such as juices, RTD tea and bottled water. Accounting for more than 60% of soft drinks market (total volume) in 2014, carbonate companies have been attempting to revert the stagnation scenario, investing in value-added products and marketing actions. Product highlights include Brasil Kirin and the creation of Fibz, a cola and guaraná carbonated drink with added fiber, and their initiative to revamp “Tubaínas,” a regional low-cost carbonate that has emerged as a cool and retro product, carrying new labels and collectible packaging.

BRAZIL



15

1.06% Low calorie carbonates are not growing in accordance with the expectations of leading

manufacturers, such as Coca-Cola Zero. The pursuit of a healthy lifestyle and the rejection of certain cola carbonates ingredients (phosphoric acid) are making non-cola carbonates outperform other categories while consumers keep pushing manufacturers to opt for more refreshing and natural perceived products such as functional RTD tea or bottled water. In the mid term, economic alternatives keep taking share away from major brands thanks to their aggressive low pricing strategies and attractive promotions.

COSTA RICA



16

1.23% Argentina carbonates consumption continues to expand in per capita terms. Due to the economic

crisis, there is evidence that for the first time ever, carbonates, driven by value-priced unit prices, are growing at a faster pace than flavoured water options. Due to this, low calorie carbonates continue to perform well driven by the successful entry of Coca-Cola Life, and buoyed by aggressive price positioning of local b-brands. It’s important to state that Coca-Cola Life, sweetened with Stevia, is driven by diet and natural ingredient health factors. Cola carbonates consistently have more than 60% of the market and will continue gaining ground to all non-cola flavours with the exception of the lemon flavour boom, which has posted the strongest growth driven by more than ten local players.

ARGENTINA



17

1.53% In Chile, the increasingly growing health and wellness trend has changed consumer

behaviour. Several consumer segments, particularly young, educated and more affluent professionals, have been increasing their awareness regarding excessive consumption of carbonated drinks, due to the high sugar content of these products. Issues like obesity, diabetes and better appearance have become very important to this consumer segment, and following this trend, categories like juice, RTD tea and particularly flavoured bottled water have increased sales. These products offer a good balance between taste and low calorie/sugar content. On the other hand, these products in actuality are often not healthier or contain less sugar than a carbonated drink, but are perceived and appear to be more “natural” for the consumer. This is unlike carbonates which are increasingly perceived as sugared water with added colorants and flavour.

CHILE



18GUATEMALA

1.82% In Guatemala, carbonates still account for 35% of total volume sales of soft drinks. The

recent trend towards consumption of what is perceived as healthier choices has left carbonate volume sales to slowly lose ground during the last five years. Products such as RTD tea, which was introduced as an exclusive product at higher prices, has become increasingly affordable and largely available. Carbonates in Guatemala have also been affected in terms of value, with economy options becoming more popular versus traditional brands. Industry sources agree that although there is substitution, carbonates are far from becoming completely replaced, especially given the high importance they currently have in the market.



19ECUADOR

2.51% More consumers are purchasing healthier carbonates, which is why “light” options are becoming

more popular. This trend, which is mainly seen amongst middle-high and higher-income groups, is expanding towards lower income groups due to the government’s efforts to improve eating habits. Low calorie cola carbonates increased by 5% in off-trade* current value terms in 2014, because they are considered less harmful and therefore better than standard versions due to their low or zero sugar content.




20

3.02% Carbonates growth has declined in the past year due to consumer awareness of health

issues related to the consumption of high sugar drinks. In the Dominican Republic, this global trend is not as intense as in other more developed countries due to the fact that more than half of the population is considered low income and cannot afford healthier drink alternatives. Low calorie carbonate consumption has increased amongst the higher income segment but still shows a declining trend. The higher income consumers have more awareness of health issues and can make decisions that are not based on income restraint. Non-cola carbonates are popular amongst Dominican people, especially children.


DOMINICAN REPUBLIC



21

5.39% Health and wellness trends are emerging in the country; however, there is still great demand

for carbonates. Cola companies are trying to respond to this trend by supporting their low sugar/low calorie brands through additional distribution. In addition, non-cola carbonates post healthy rates of growth and are increasing their availability through the on-trade* channel in 2014. Moreover, consumers are alternating between different types of soft drinks following their perception of what is healthy and what is not. Some consider juice a healthier product but do not always take into account artificial ingredients or levels of sugar.


BOLIVIA


THANK YOU FOR LISTENINGEuromonitor International is the world’s leading provider of global business

intelligence and strategic market analysis. We have more than 40 years of

experience publishing international market reports, business reference books

and online databases on consumer markets.

Our global market research database, Passport, provides statistics, analysis,

reports, surveys and breaking news on industries, countries and consumers

worldwide. Passport connects market research to your company goals and

annual planning, analysing market content, competitor insight and future

trends impacting businesses globally.

If you are interested in learning more about carbonates data and analysis, visit

http://blog.euromonitor.com/soft-drinks/ or request a demo.

http://blog.euromonitor.com/soft-drinks/



http://go.euromonitor.com/Passport-DemoRequest.html


health and wellness the greatest threat to carbonates in the americas

Business

carbonates market country

carbonates consumption

standard carbonates

main carbonates consumers

largest carbonates consumers

north america latin

latin american market

low calorie carbonates