Category Insight: Global Trends in the Carbonated Soft Drink Sector 2017

5 min read

Carbonated soft drinks (CSDs) cover 38% of the beverage market in the UK, and this is set to grow in coming years (British Soft Drinks Association, 2016). Current forecasts from Canadean (2016) estimate that over 228 billion litres of CSDs will be consumed globally by the end of 2016, increasing 7% by 2018. However, despite this growth, there are several global factors that could impact this. Identifying and responding to consumer trends in this sector is important for development.

Country-Specific Trends

Consumer behaviour and new product development differs massively from country to country.

According to Mintel, Germany has the largest CSD market in Europe, with over 6.9 billion litres consumed annually. Mexico is the largest consumer of carbonated soft drinks in the world, with the market expanding year on year. Perhaps this has had an impact on other South American countries that are now emerging as new key markets.

As well as differences in consumer behaviour, there are also big differences regarding government regulations, taxes and certification. However, there are still some key, common trends that are being acknowledged globally.

Sugar

Perhaps one of the largest and most open discussions surrounding the beverage industry in recent years is to do with sugar use and consumption within the industry. CSDs have traditionally been made with high sugar content and this has fallen into the spotlight around the world.

(Source: Mintel, report on Sugar & Sweeteners, 2016)

In the UK and across much of Europe, governments have introduced a ‘Sugar Tax’ on many CSDs containing too much sugar. This is driven by health professionals who have linked sugary drinks with obesity, as well as an increased awareness on the contents and ingredients of consumables.

(Source: Mintel, report on Sugar & Sweeteners, 2016)

The USA, although a large consumer of CSDs, has not yet introduced policies on the sugar contents of drinks. While nearly 75% of brits are concerned about sugar intake from CSDs, only 41% of Americans feel the same (Mintel, 2016).

This has had a huge impact on the way in which CSDs are manufactured and new product development in the industry. With government legislation scrutinising the industry, 2016 has seen an increase in products with sugar-free, natural sugar and low calorie claims.

 

Interestingly, we have found that the low-sugar alternative CSDs create more foam in the filling process when compared to full sugar varieties. Therefore, brands that are looking at producing reduced sugar drinks will benefit from the addition of our processing aid, CO2Sustain®, which acts to solubilise the CO2 and reduce fobbing during bottling. 

 

Craft

The craft beer movement of recent years is increasingly having an impact on the CSD sector too. Craft CSDs are manufactured in small batches, often using natural or locally sourced ingredients. According to Mintel, consumers’ preference for natural ingredients, or ingredients with perceived health benefits, will continue to drive demand for craft CSDs.

In 2016, both PepsiCo and Coca-Cola created their own lines of craft beverages in the soft drinks sector – Stubborn Soda and Blue Sky respectively.

As a new and emerging market within the CSD sector, this is expected to skyrocket over the next few years as consumers become more ingredient savvy.

Eco-Friendly

Under pressure from global organisations, governments and charities, beverage manufacturers are transforming the way in which CSDs are manufactured. From cutting down on water wastage in production, to decreasing energy usage, sustainability has been bought to the forefront of the industry.

Positioning a CSD brand as being environmentally friendly and sustainable is vital to protect brand perception. An increase in eco-consumers means that big brands have to be much more open about their environmental policies and ingredients. In fact, over 40% of new product development in this sector uses green packaging and branding in an effort to portray their relationship with the environment.

We can expect to see an increase in the role of sustainability and environmental influences driven by consumers, but also driven by policy and regulations. New product launches should take this into consideration when creating new brands and packaging.

Health

As a result of the sugar tax and similar industry changes, CSD brands have been forced to change their ways from the ingredients they use, through to their product ranges and marketing. It is by adapting this approach that CSD brands have managed to thrive despite major global challenges and changing trends.

One of the ways in which brands have diversified, is by creating ranges that have perceived health benefits. According to Mintel, 80% of Chinese consumers look for beverages with additional nutritional benefits, specifically added vitamins and minerals and medicinal herbs. This is definitely worth keeping an eye on, as the market here is already huge in China alone, and it is likely that this could spread across the world.

20% of American consumers prefer CSDs with multi-functional benefits, for example, added caffeine to give energy boost, protein drinks and probiotics. There seems to be a common global theme of CSDs containing real fruit or natural ingredients.

Forecast 2017

2016 has proved a challenging year for the CSD industry but despite this, sales in the sector continue to grow. An adaptive approach is vital in markets that are prone to changes and reacting to these global trends is important to growing a CSD business.

Considering the trends and consumer preference, we envisage that new product development in the carbonated soft drink industry in 2017 should focus on:

  • Sugar free or natural sweetener claims to counteract consumer attitudes and governmental regulations
  • Craft lines to appeal to a new audience, while also using natural and responsibly sourced
  • Eco-friendly packaging and branding with an openness surrounding sustainability
  • Highlighting perceived health benefits such as natural ingredients, vitamins, hydration and protein

Consumer behaviour is definitely changing a lot in this industry; however this doesn’t mean to say that the industry is in decline. Research suggests that the CSD sector is on the rise and expected to be 7% up next year. It is the adaptation to market changes that will determine individual companies’ and product success.

References

British Soft Drinks Association, 2016: Carbonated Drinks

Canadean, 2016: Global Beverage Forecast Press Release

Mintel, October 2016 Report – Ingredient Insight: Sugars and Carbohydrate Sweeteners