pulse report drinks q2-2014

8/10/2019 Pulse Report Drinks Q2-2014

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PULSE REPORT

IRI Pulse Report Drinks

Welcome to the Pulse Q2 2014 edition for drinks. We hope you find it

useful. Please do not hesitate to contact us if you have any questions

or comments at [email protected].

Q2 2014

IRIworldwide.eu


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PULSE REPORT

About the Report

2

This drinks report is one of 10 super category reports designed to show high-level

comparison and analysis for retail markets across major countries in Europe. This report contains data gathered from around Europe. This market was split into the

following categories: 1.) soft drinks, 2.) juices, squashes and syrups, 3.) mineral water, 4.)

coffee, 5.) tea and 6.) cocoa.

The report highlights key metrics, such as total sales figures, market trends, category

shares, and winners and losers for Europe and for individual countries.

The data has been sourced from IRI retail databases and Eurostat the statistical branch

of administration for the European Commission.

The countries included in the report are: France, Germany, Italy, the Netherlands, Spain

and the United Kingdom (UK).

The market channels used for each country in this report are as follows:

Country Channels used

UK Hypermarkets, supermarkets, drugstores and impulse outlets

ESHypermarkets, supermarkets, hard discounters and drugstores,including the Canary Islands

DE Hypermarkets, supermarkets, hard discounters and drugstores

NL Hypermarkets, supermarkets, hard discounters and drugstores

ITHypermarkets, supermarkets, small self service, hard discounters anddrugstores

FRHypermarkets and supermarkets

For analytical purposes, the data sourced from available retail databases has been

consolidated to provide consistent results. However, for some countries it has not been

possible to source data pertaining to certain categories. When this has occurred, it has been

documented in the Notessection found at the end of the report.


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On the Radar

3

ECONOMIC FIGURES INFLUENCING CONSUMER BEHAVIOUR

Source: Eurostat, September 2013

Increasing prices and good weatherhave supported positive drinksdevelopment in Europe. World Cuppromotions, though, were notenough to bring additional growth

across all countries.

POPULATION INMILLIONS

UNEMPLOYMENT(%)

AVERAGE 12MONTHS

INFLATIONRATES GDP IN MILLIONS ()

Jan.2012

Jan.2013

Sep.2013

Average2012

Sep.2013

Average2012 2012

2013(Estimate)

France 65.3 65.6 11.1 10.2 +1.2 +2.5 2 032 297 2 059 358

Germany 80.3 80.5 5.2 5.5 +1.8 +2.4 2 644 200 2 694 499

Italy 59.3 59.6 12.5 10.7 +1.8 +3.5 1 565 916 1 568 388

Netherlands 16.7 16.8 7.0 5.3 +3.1 +2.8 600 638 604 459

Spain 46.8 46.7 26.6 25.0 +2.3 +2.3 1 049 525 1 051 076

UnitedKingdom 63.4 63.8 7.5 7.9 +2.7 +3.7 1 901 001 1 854 920


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952 1 019 1 152 993 955 1 026

469 492 498 460 465 494

1 435 1 6001 764

1 425 1 397 1 592

4 0494 155

4 3044 061 3 994

4 194

1 7801 912

2 087

1 770 1 7871 963

1 6411 774

1 972

1 755 1 670

1 829

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

31-mar-13 30-jun-13 29-sep-13 29-dic-13 30-mar-14 29-jun-14

Euros,

inmillions

Period Ending

UK

France

Germany

Italy

Netherlands

Spain

GLOBAL TRENDS

4

-2.1%

-0.5%

+4.0%

TOTAL EUROPE +0.4%

VALUE SALES IN MILLIONS ()

Total EU 43 606

DE 16 553

FR 7 608

UK 7 226*

IT 6 178

ES 4 125

NL 1 917

TOTAL DRINKS VALUE SALES AND % CHANGE VERSUS PRIOR YEAR

*based on an exchange rate of1.150 to the pound

+0.6%

+1.3%

-1.6%

TOTAL DRINKS VALUE SALES FOR THE LAST SIX QUARTERS

Source: IRI retail databases; period ending 29 June 2014


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2 091

6 032

9 000 8 828

16 742

-4.02.0

-4.60.3

4.1

Soft

Drinks

Mineral

Water

Coffee Juices,

Squashes

& Syrups

Tea

Euro

s,

inmillion

Total Sales % vs. YA

38.4%

2.1%4.8%

20.2%

20.6%

13.8%

Soft Drinks Coffee Mineral Water Juices, Squashes & Syrups Tea Cocoa

Europe

5

9 000 8 828

6 032

913

16 742

2 091

Euros,

inmillions

CATEGORY VALUE SALESIN THE LAST YEAR

CATEGORY SHARE OF VALUEIN THE LAST YEAR

Europe includes: France, Germany, Italy, the Netherlands, Spain and the United Kingdom

TOP 5 CATEGORIES: EVOLUTION

Value sales () and % change versus year ago


KEY TRENDS

During the past year, value sales within

the drinks sector grew slightly across most

European countries, supporting overall EU

level momentum (+0.4%).

Price increases played the major role in

category growth. In most European

countries, one or more drinks categories

experienced price inflation. Volume, in

turn, slipped for the year.

During the last quarter, good weather

helped some countries (France, Italy) to

grow volume of non-alcoholic beveragecategories.

In the last quarter there was also the

World Cup, which is traditionally used by

some drink companies to intensify

promotions. Still, total Europe did not feel

a big volume impact for the drinks sector

(e.g., Spain and Italy did not see any

effect versus last year).


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PULSE REPORT

Europe

6

CATEGORY INSIGHTS

Mineral water is among the top performing categories in every European country. The

category did not experience negative trends in any measured country. In most markets, still

water and water with minimal CO2are key drivers of mineral water category growth.Furthermore, good weather is particularly good at supporting mineral water volume.

Soft drinks is the second big contributor to positive growth within the European drinks

market. Soft drinks are growing in most of the measured markets. Italy and Spain are

exceptions. In Italy, many soft drink categories lost volume and did not benefit from World

Cup promotions. The same is true in Spain. Though some soft drink categories experienced

growth, negative Coca-Cola development led to losses in the Spanish cola segment. Overall,

positive soft drink development was supported by good weather and increased promotions.

Additionally, in the Netherlands, Coca-Cola was listed at Aldi and entered the hard discounter

channel.

The hot drinks sector is in decline, led by coffee. Every country, except Spain, has a declining

coffee market. In most countries, coffee pods are experiencing growth. However, the growth

is not enough to offset huge losses in the other coffee segments, such as ground coffee and

coffee beans. In some countries, premium segments experienced growth (e.g., in the UK,

premium instant coffee is growing).

Europe includes: France, Germany, Italy, the Netherlands, Spain and the United Kingdom


TOP LOSERS: VALUE SALESCHANGE VERSUS A YEAR AGO ()

TOP WINNERS: VALUE SALESCHANGE VERSUS A YEAR AGO ()

354.5

327.5

15.8

0 100 200 300 400

Mineral Water

Soft Drinks

Juices, Squashes & Syrups - 23.0

- 428.8

- 88.1

-500 -400 -300 -200 -100 0

Cocoa

Tea

Coffee

.Millions Millions


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355

1 285

1 779

1 630

2 361

0,35,2 1,7 -6,4

0.9

Soft

Drinks

Mineral

Water

Juices,

Squashes

& Syrups

Coffee Tea

Euro

s,

inMillion


16.9%

23.4%

21.4%

4.7%2.6%

31.0%

Soft Drinks Mineral Water Juices, Squashes & Syrups Coffee Tea Cocoa

France

7

KEY TRENDS

In the French drinks market, value and

volume trends are starkly different, thanks

to a price war between retailers.

Favorable Spring weather supported

volume growth among most drinks

categories. Coffee is a notable exception.

Soft drinks have returned to positive

growth in both volume and value,

particularly colas.

Mineral water is seeing volume grow, while

values sales are on the decline.

Strong performance of Sodastream and

mainstream syrup are supporting growth

within the syrups sector.

1 779

1 630

1 285

197

2 361

355

Euros,

inmillions





Value sales () and % change versus a year ago


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- 7.5

- 88.1

-100 -80 -60 -40 -20 0

Cocoa

Coffee

.

France

8

CATEGORY INSIGHTS

In mineral water, promotional activity is on the decline, but price wars are intense. The

Cristaline brand is demonstrating strength, thanks to its low price positioning.

Coca-Cola brands are now increasing in volume and value (except Coca-Cola light). Other

brands (Lipton, Oasis) are growing too.

Syrup - the soda machine trend in France has driven the positive development of syrup.

Moreover, during the financial crisis syrup remained the cheapest drink. The mainstream

flavours (grenadine and mint) are also increasing their appeal with more promotion. A new

segment appeared in June with Ouiz, a concentrated syrup brand. Its a new way to drink:

the concept is to flavour water where you are with a little bottle of syrup.

In the coffee market, pods continue to grow well, while other coffees are facing declines.

Pods and green teas are driving growth within the tea sector.



1.1

27.8

49.9

116.4

0 50 100 150

Soft Drinks

Mineral Water

Juices, Squashes & Syrups

Tea


Millions Millions


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651

2 778

3 635 3 508

5 808

-5,5

1,4 3,9 0,0-6,5

Soft

Drinks

Coffee Mineral

Water

Juices,

Squashes

& Syrups

Tea

Euro

s,

inMillion


35.1%

1.0%

3.9%

21.2%

22.0%

16.8%


Germany

9

KEY TRENDS

Though the last moving annual total (MAT)

shows the drink category declining slightly

(-0.5%), year-over-year growth for Q2 is

positive (+ 0.9%).

Promotional activity associated with the

Soccer World cup in June and July supported

positive momentum.

Q1 price increases in the alcohol-free

beverage sector drove total drinks category

volume down and price up for the quarter.

In Q2, this trend is only visible in the

carbonated soft drinks (CSD) sector. Soft drinks, particularly energy drinks,

Fassbrause, adult lemonade and mineral

water are experiencing growth.

3 635 3 508

2 778

173

5 808

651

Euros,

inmillions







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Germany

10

CATEGORY INSIGHTS

Mineral water continues to demonstrate very positive development, driven by still water and

water with little CO. Both segments are poised for continued growth, despite higher average

prices in the market.

Soft drinks are gaining volume but losing value sales. Cola and lemonade are key sectors,

driven by traditionally strong World Cup Soccer (especially Coca-Cola and PepsiCo).

Meanwhile, the strongest growing segment in Germany is energy drinks, which is growingacross both private label and branded sectors. Private label volume was boosted by Aldi and

its promotional activity during the quarter. The branded business is also very much sustained

by promotions.

The high-priced adult lemonade segment continues to demonstrate strength. Eckes Granini

DieLimo, Gerolsteiner Limonade and San Pellegrino Lemonade can assist the segment. The

relatively new Fassbrause segment is growing and private label activity is on the rise in this

market space.

Value sales of coffee continue to decline, despite growing volume. Ground coffee is putting

downward pressure on the roasted coffee sector. Though single portion coffee is seeing

volume increase, significant price pressures are impacting value sales. Coffee bean saleswere increasing in the past, but the categorys value sales are declining due to price

deflation.




- 2.7

- 251.8

- 37.5

-300 -250 -200 -150 -100 -50 0

Cocoa

Tea

Coffee

.

0.8

78.5

131.1

0 50 100 150

Mineral Water

Soft Drinks


Millions Millions


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PULSE REPORT

257

874

1 758

1 383

1 833

1.00.2

-2.8-3.8-3.3

Mineral

Water

Soft

Drinks

Coffee Juices,

Squashes

& Syrups

Tea

Euro

s,

inMillion


29.7%

1.2%

4.2%

22.4%

28.5%

14.2%

Mineral Water Soft Drinks Coffee Juices, Squashes & Syrups Tea Cocoa

Italy

11

KEY TRENDS

In Italy, price and a strong wellness positioning

are supporting growth of the still water segment

which, in turn, is supporting the overall mineral

water category.

Above average temperatures are having a positive

impact on the water category, but a negative impact

on other drinks categories.

High prices are negatively impacting hot beverages

(e.g., coffee, with the exception of pods). Tea is

being viewed as a lesser-cost alternative to

expensive hot beverages, and is thus seeing a sales

boost. Petrol price increases, which are impacting all

aspects of production (fuel, heating and electricity in

factories, packaging PET [polyethylene

terephthalate], etc.).

High fuel prices are also driving consumers to make

real choices of convenience that cause negative

trends (volume and value) for most drink

categories (water excluded). Buying on promotion

and substitutions are prevalent trading down

behaviors.

1 758

1 383

257

73

1 833

874

Euros,

inmillions







12/20

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Italy

12

CATEGORY INSIGHTS

In the first half of 2014 some themes continue to influence category trends:

Weakness of consumer demand due to the economic crisis;

Increase of inflation rate, particularly driven by price increase of several raw

material (e.g. petrol that impacts the cost of transport and packaging [e.g., PET])

Retailers transferring rising cost of inputs to the shelf prices

Volume within the soft drink market has been impacted by price increases and

trade-down activity.

The CSD sector experienced remarkable decline during the past quarter. Many segments

(colas, orangeades, lemon lime, tonic, chinotti) recorded strong negative trends despite

World Cup Soccer events and associated promotional activity.

The pod segment both in the coffee and tea market is an increasing phenomena: in 2013 and

in the first quarter of 2014 it showed a double digit trend despite the super premium price

positioning.




- 60.4

- 34.2

- 3.9

- 40.5

-80 -60 -40 -20 0

Cocoa


Coffee

Soft Drinks

.

2.45

3.18

0 1 2 3 4

Mineral

Water

Tea

Millions Millions


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PULSE REPORT

93127

631

162

893

13.00.8 1.8 -6.5-6.2

Soft

Drinks

Coffee Juices,

Squashes

& Syrups

Tea Mineral

Water

Euro

s,

inMillion


0.5%

4.9%

32.9%

46.6%

8.5%

6.6%

Soft Drinks Coffee Juices, Squashes & Syrups Tea Mineral Water Cocoa

The Netherlands

13

KEY TRENDS

Total drinks is declining in the Netherlands,

in value (-2.1%) and volume (-2.8%).

Value declines were sharper versus Q1 (Q1

-1.4%), volume declines eased slightly

increased (Q1 -3.5%)

Price increases have impacted volume and

despite higher promotion pressure,

shoppers are buying less.

Hot and cold drink sectors saw volume

decline despite lower prices.

Despite Aldis introduction of Coca-Cola

into their assortment, one of the firstnational brands at Aldi, hard discount

supermarkets are losing share to

supermarkets, where promotional activity

is quite high.

631

16293

10

893

127

Euros,

inmillions







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The Netherlands

14

CATEGORY INSIGHTS

Strong growth in syrups and squashes which is driving the drinks sector in The Netherlands.

This category keeps winning share of throat at the expense of other drinks, likely due to its

appeal to more price conscious shoppers in economical tough times.

Sport and energy drinks are declining within supermarkets. Grey channels, such as Action

and Op=Op Voordeelshop, are capturing share in these segments, largely due to promotionof key brands, including Red Bull and Monster energy.

All hot drinks (coffee, chocolate and tea) are declining in volume. Although premium coffee

methods (cups and beans) are still winning the volume share, this trend is not big enough to

bring value growth to the whole category. The pod sector is growing, supported by the

introduction of the Velours brand (that is available exclusively at Albert Heijn) and further

private label introductions in other banners. Also, within this category other channels pop up

with private label cups outside the supermarket channel (for example V&D).

The total tea category is declining. Only green tea is growing, but does not bring the volume

and value to the total category. The biggest brand, Pickwick, saw volume dales decline 6.9%.

Lipton continues to grow due to high promotion pressure and the introduction of newflavours. They have also introduced the new brands of Clipper and Dilmah that are high

priced premium products.

Private label vegetable drinks are new to the drinks category in The Netherlands, driven by

consumers quest for natural and healthy solutions. The sector is seeing low levels of

volume.




- 41.6

- 1.3

- 8.8

-50 -40 -30 -20 -10 0

Cocoa

Tea

Coffee

.

2.80

6.78

10.73

0 5 10 15

Mineral Water

Soft Drinks


Millions Millions


15/20

PULSE REPORT

133296

806 779

2 099

1.80.0 1.1 -0.70.3

Soft

Drinks

Mineral

Water

Coffee Cocoa Tea

Euros,

inMillion


0.3%

3.2%

19.5%

50.9%

18.9%

7.2%

Soft Drinks Mineral Water Coffee Cocoa Tea Juices, Squashes & Syrups

Spain

15

KEY TRENDS

During Q2 2014, soft drinks sales stabilised

in the Spanish marketplace.

Summer 2014 was when the FIFA World

Cup took place but the event did not have

a positive impact on the sales of soft

drinks.

Categories with a low market weight have

reduced promotional activity compared to

a year ago but they have a positive value

trend (for example coffee and tea).

Indian tonic, smoothies and coffee pods

are experiencing volume growth in theSpanish market.

806 779

296

2 099

133

Euros,

inmillions







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PULSE REPORT

CATEGORY INSIGHTS

In soft drinks Coca-Cola and Orangina Schweppes sales decreased from a year ago, exerting

downward pressure on the soft drinks sector overall. Meanwhile, Indian tonic, iced tea, sports

drinks, energy drinks and fresh drinks increased their sales from last year, as a result or new

premium products and brands that have been launched recently. Sales in Indian tonic havegone up steadily (+11.7% value) thanks to the gin and tonic market.

Sales within the cola sector fell during the quarter, largely due to declines of Coca-Cola brand

products.

Coffee growth was strong during the 2ndquarter, supported by double digit growth of coffee

pods (+19.5% versus year ago last year).

Don Simon (JGC) continued their aggressive reduction price campaign in the fresh segment.

Mineral water continues to experience strong growth, driving growth within the overall water

category. Though brands are strong, private label sales fell sharply (-3.4%).

Spain

16




- 2.0

- 0.2

- 0.3

-3 -2 -2 -1 -1 0

Soft Drinks

Juices, Squashes &

Syrups

Cocoa

.

2.3

8.3

17.1

0 5 10 15 20

Mineral

Water

Coffee

Tea

Millions Millions


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PULSE REPORT

2.3%

7.9%

15.4%52.9%

13.6%

8.0%


569575

1 115981

3 823

-7.75.1

17.0 3.4-1.3

Soft

Drinks

Coffee Mineral

Water

Juices,

Squashes

& Syrups

Tea

Euro

s,

inMillion


The United Kingdom

17

KEY TRENDS

Cold drinks have benefitted from a warm

summer while tea and coffee have both

seen declines.

The coffee category is seeing sales decline,

driven by declines in regular instant coffee

volume (-6.2%). Super premium instant

coffee is seeing positive momentum.

Ground coffee is being buoyed by pods.

Mineral water has seen strong volume

gains (+14.4%). Volume gains are driving

overall value sales growth.

Euros,

inmillions






1 115981

575

163

3 823

569


18/20

PULSE REPORT

The United Kingdom

18

CATEGORY INSIGHTS

The weather remains a significant factor in UK drinks sales, with a good summer after a cold

spring driving consumers to spend on cold drinks rather than hot drinks. Water benefitted

most from favorable weather patterns.

Tea remains in long-term decline, as consumers move away from black tea. Other sectors,

such as fruit & herbal and green tea, are seeing growth, but from a small base. Unilever haveremoved their Lipton brand from the shelf and replaced it with a fruit and herbal offering

under the PG brand.

In coffee, the premium priced variants are driving the sector. Instant coffee contributed

nearly 3/4 of the category value growth, particularly that of innovative micro-ground variants

and caf style products. Ground coffee is growing in both value and volume, driven by

innovation in pods.

Total water category growth is being driven by plain still water (+16.5%). Evian, Buxton and

Volvic are key brands that are leading the growth within this segment. Segment growth is

being driven by increased consumption of water without any major changes in price levels.

Increasing health awareness, well publicised war against sugar, summer weather, keysporting events (e.g. Commonwealth Games, Tour de France) are likely to have resulted in

plain still water growth. Additionally, there has been distribution gains by Evian and Buxton

in Major Mults that have influenced the growth of this segment.

Whilst smaller in comparison, sparkling segments within both plain and flavoured water sub-

categories, are growing faster than overall plain category. Sparkling segment growth is

being driven by premium international brand San Pellegrino. Local brands, Buxton Sparkling

and Highland Spring Sparkling are winning through both increased consumption and high

levels of promotions.




- 47.7

- 5.5

- 15.1

-60 -50 -40 -30 -20 -10 0

Cocoa

Coffee

Tea

.

18.8

142.5

186.4

0 50 100 150 200

Soft Drinks

Mineral Water


Millions Millions


19/20

PULSE REPORT

Final Notes

19

Notes on category definitions for countries

Due to the diverse products found in individual countries across this market it was necessary toconsolidate the available data into the categories in this report. In some cases, it was not

possible to align products across all 6 countries. Those exceptions are listed below:

Soft drinks

The UK data in this report does not contain iced tea and other tea based beverages and the

other countries do not.

Juices, squashes & syrups

The German data in this report includes smoothies and refrigerated fruit juice and the other

countries do not.

Mineral water

The French data in this report includes flavoured mineral water whereas the other countries

do not.

The Italian data in this report includes flavoured sports drinks whereas the other countries do

not.


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PULSE REPORT

Resources

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FOR MORE INFORMATION

Please contact Bjrn Steinbach,

IRI at [email protected] or

+49 (0) 211 36119 150 with questions or comments about this report.

To gain insight into opportunities across specific categories, segments, channels or retailers,

contact your IRI client service representative regarding custom analyses leveraging thefollowing resources:

InfoScan Censusis a syndicated retail tracking service that enables manufacturers and

retailers to acquire industry insights used to make better business decisions. InfoScan

Census utilizes the data that IRI collects from grocery, drug, and mass merchandise retailers

to provide the most comprehensive and accurate syndicated data offering in the FMCG

sector. With access to accurate, granular detail by category, geography, measure, and time

period, clients have the tools needed to develop marketing and sales strategies based on

product performance, distribution, and promotion responsiveness. All data about drinks

comes from InfoScan Census.

IRI Consulting provides strategic insights and advice leveraging a variety of data sources,predictive analytics, enabling technologies, and business analyses to help FMCG

manufacturers and retailers address significant sales and marketing issues effectively.

pulse report drinks q2-2014

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