Flavours and Textures: How Local Consumer Taste Palates Are Defining Global Soft Drinks
As global soft drinks companies compete with local manufacturers for share in developing nations, textures and flavours that cater to domestic consumer tastes take centre stage.
For generations, “a Coke and a smile” (and an unparalleled international distribution arm featuring local bottlers, licensed manufacturers, and a deep retail presence) was enough to capture significant market share in developing nations. The idea was simple. Much like blue jeans and rock and roll, Western beverages represented a lifestyle for which consumers in these markets would pay a premium. As of 2012, however, things have changed—growing consumer sophistication has put the focus squarely on developing products specifically tailored to consumer taste, to develop products with flavours and textures that local consumers find both familiar and satisfying. And, more often than not, these preferences are outside of the carbonate category.
In terms of both historic and forecasted absolute ready to drink volume growth, five countries emerge at the top across the entire soft drinks market: China, Mexico, Indonesia, Brazil, and India. Amongst individual categories, non-carbonates are projected to lead growth in China, Indonesia, and India. For China, fruit/vegetable juice should see an 11,783.6 million litre increase from 2011-16 in terms of ready to drink consumption. This is over 57 times the absolute growth expected in carbonates, and represents 62.9% of the total global fruit/vegetable juice forecasted growth, while carbonate growth is forecasted for a mere 1.4%. Similarly, Asian Specialty Drinks, RTD Tea, Concentrates, and Sports and Energy Drinks double carbonate growth, individually, in Indonesia. And, despite strong historical carbonate performance in India, fruit/vegetable juices should see stronger growth. So, while carbonates are still, and will continue to be, the most consumed off-trade beverage outside of bottled water, the growth potential of non-carbonate soft drinks in these regions represent a category that cannot be ignored. But if the days of capitalizing on growth with brand name colas are numbered, how can manufacturers best appeal to local consumers? The answer lies in the originator of global carbonate dominance: The Coca Cola Company.
Top Five Historic and Forecasted Soft Drink Countries, RTD Volume and US
Source: Euromonitor International
Coca Cola's Minute Maid finds success in health and wellness trends of developing countries by adjusting juice texture
The Coca Cola Company's (TCCC) Minute Maid Pulpy became the cola giant's fourteenth brand to reach US$1 billion in global retail sales in 2011. More notably, it was the first TCCC brand developed and launched in an emerging market to reach this milestone. Nor was this merely a by-product of launching a fruit/vegetable juice in a growing health and wellness conscious market. As opposed to cola carbonates, which often rely on global brand recognition and cross-generational formulas for success, Minute Maid Pulpy has relied on product development and innovations inspired by local flavours and textures.
The launch of Minute Maid Pulpy was also not an overnight phenomenon. TCCC made its first big splash in the Asian fruit/vegetable juice market in 1999 by replacing its Hi-C brand in Japan with Qoo, a calcium/vitamin fortified 20% juice drink. This brand subsequently entered the Chinese market in 2001. Qoo found success by marketing to children. With its sweet flavour and packaging, 5-12 year olds became enamoured with the eponymous little blue cartoon character that graced the bottles. But the packaging also emphatically showcased the beverage's nutritional value of enriched calcium, zinc, and Vitamin C to appeal to young parents. By 2004, Qoo had reached over 100 million litres sold off-trade with US$67.1 million in retail sales. Qoo's light texture and sweetness made it ideal for children, as fruit juices favoured by adults were usually heavier and thought of as a breakfast drink. This formula adaptation, originally designed to address product segmentation amongst age groups, forecasted the eventual successes of adapting taste and texture to local populations.
With Qoo's success, TCCC was ready to take advantage of growing category segmentation in the fruit/vegetable juice market with a brand tailored for adults. At this time, 100% juices were increasing in popularity as consumers sought healthy alternatives to sugary carbonates. High unit prices, however, inhibited early demand: In 2011, 100% Juice category leader China Huiyuan Juice Group Ltd's Hui Yan retailed in supermarkets for US$2.51/litre. Despite the growth potential for 100% juices in the region, Minute Maid would have difficulty competing with local companies like China Huiyuan Juice Group Ltd and Liwayway Marketing Corp due to rising costs and brand loyalty.
Against this backdrop, TCCC/Minute Maid released Minute Maid Pulpy toward the end of 2004, supported by massive promotional campaigns in large cities. Due to the fact that Minute Maid Pulpy contained less than 24% actual fruit juice, TCCC was able to retail the product at a much lower price point, most recently at US$0.83/litre in 2011. Promoting a juice drink with such low actual juice content and added sugar would likely result in failure in Western markets due to the importance of 100% fruit juice in the context of health and wellness. But, in China and throughout the Asia-Pacific region, consumer notions of freshness and health are connected much more to the consumption of actual fruit. Minute Maid Pulpy acknowledged this by including pieces of fruit in the drink, thereby creating a thicker texture that would not appeal to most North American consumers but has proven very popular in this region of the world.
The resulting juice drink, with its thicker texture and pulp, as well as statements of “no added preservatives”, appealed to consumers seeking healthy alternatives to concentrates, but who could not afford 100% Juices. The key to Minute Maid's success was to focus on a category and flavour profile that was most relevant to the area, and then adjust the constitution of the beverage to specifically meet the expectations and desires of the consumers. This, in effect, allows the positioning of global brands (in this case, Minute Maid as an affordable, healthy juice) to remain constant even when the product formulation changes between regions. As such, Minute Maid Pulpy went from the 10th most popular fruit/vegetable juice brand in China in 2004 with US$16.0 million in off-trade retail sales, to first in 2011 with over US$1.9 billion.
Global beverage manufacturers follow suit
The extraordinary success of Minute Maid Pulpy has not gone unnoticed. Similar to how The Coca Cola Company was able to bring innovation to flavour and texture in order to approximate local taste, other global companies are examining local market preferences as part of their product development. In March of 2012, the Cadbury India arm of Kraft Foods Inc re-formulated their Tang powdered concentrate formula as Tang Mango. This new flavour is still fortified with Iron and Vitamins A, B, and C to appeal to Indian parents seeking nutritional beverages for their children, but the drink now features a thick texture. This is reflective of the fact that many Indian consumers prefer mango drinks that are thick and pulpy. By tailoring specifically to local consumer expectations, Kraft hopes to increase share in a concentrated beverage category currently dominated by local brands, as well as to appeal to consumers in the growing fruit and vegetable juice market. Nestlé SA has also adjusted their “Nestlé fruit-dimensional” powdered concentrate by placing fruit pulp inside to further attract Southeast Asian consumers seeking that fresh fruit feel.
As these companies show, success in developing nations will require not just insight into growing categories, but an understanding of local palates. Whether it be adjusting soft drink texture, mimicking familiar flavours, or even modifying drink colours to better approximate local expectations, one thing is clear: The draw of a brand name is no longer enough to draw consumers away from local brands more in line with their tastes.
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