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January 27, 2015

Estimating Category Leaders in FMCG Industries

Virgilijus NaruseviciusAnalyst Insight by Virgilijus Narusevicius - Senior Data Scientist

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In this article, we have attempted to characterise category leaders across FMCG industries and the typical market shares they achieve. “Category leader” is generally a highly coveted status as it allows price-setting power and a better ability to influence category trends, enables economies of scale and implies a better bargaining power over retailers and suppliers. It also suggests that the company is doing many things right and it is thus rather common to benchmark against the category leaders and study their past strategies. However, category leader shares vary between industries and a successful company in one industry may differ from another.

 

Figure 1: Average Category Leader Share across FMCG Industries

CAMI1

 

Source: Euromonitor International

Note:  Retail value sales

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January 22, 2015

Unlocking the Potential of India’s Nascent Energy Drinks Market

Ina DawerAnalyst Insight by Ina Dawer - Senior India Analyst

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Energy drinks shows a promising future, with manufacturers such as Red Bull and Monster now looking beyond pubs and restaurants for promotions and advertisements. Euromonitor International’s forthcoming research on non-alcoholic drinks in India reveals that energy drinks’ off-trade volumes are forecast to grow by11% year-on-year between 2014 and 2019. This is a notable acceleration on the 8% compound annual growth rate (CAGR) predicted for 2013-2018 in our previous year’s research. The stronger expected growth comes after quantifying the impact of changes in “soft” demand drivers like increased marketing promotions and product launches.

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January 21, 2015

World’s Multi-million Dollar Liquid Concentrates Brands

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

For years, liquid concentrates, worth around US$9 billion by retail value in 2014, seemed a neglected small category in the vast soft drinks market, and analysts once wondered if there was any glimpse of life and thought further investments might be questionable. The fact that there is no single brand in liquid concentrates reaching the billion dollar sales mark means the interest of manufacturers is exceedingly lacklustre. However, the economic slowdown or outright recession in some developed markets and new product development seemed to revive the category – the expansion of SodaStream and Kraft’s MiO and the ongoing popularity of Robinsons and Teisseire has put liquid concentrates back in the spotlight again. Some consumers who traded down to liquid concentrates when they were short of cash may well stay within the category, even when their income bounces back. Euromonitor International’s latest data show that the global off-trade volume sales increased by around 3% in 2014, and the category is expected to generate net growth of over US$900 million in 2014-2019. This figure does not seem to offer massive business opportunities compared to juices and energy drinks, but it is still worth looking at where the growth areas are and the state of play of the major companies.

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January 12, 2015

Global Soft Drink Market Grows 3.3% as Key Markets Bounce Back

BottledWater7Global soft drinks volumes expanded just over three percent in 2014, while value sales grew by more than six percent to reach US $867.4 billion dollars.  While the US remains the world’s largest market in both value and volume terms, markets such as China, Brazil and Mexico are fast closing the gap with continued strong growth. While global volume expansion has remained steady for several years, value growth accelerated in 2014, thanks to an improving outlook in key markets like Brazil.

On a regional level, Asia Pacific and Middle East Africa were the runaway leaders in terms of volume expansion, up 6.9% and 8.7%, respectively, in 2014. Going forward, these two regions will continue to drive overall volume growth, yet vast investments will be necessary to take meaningful share in markets like India, Nigeria, or Indonesia.

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December 22, 2014

Soft Drinks Players will Battle for Cuba if Trade Embargo is Lifted

With recent news that the US is restoring full diplomatic relations with Cuba, analysts are speculating that the trade embargo between the two countries may be lifted. It is expected that iconic soft drink brands such as Coca-Cola and Pepsi will quickly enter Cuba if the trade embargo is lifted, but these companies may find it difficult to compete with both local players and Peru's Aje Groupe, which has established itself as a strong competitor in emerging Latin American markets.

JonasFelicianoAnalyst Insight by Jonas Feliciano - Senior Beverages Analyst

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December 17, 2014

FOSHU Gives Hint of Life to Japan’s Soft Drinks Market

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

Many soft drinks companies in Japan face gloomy prospects as most categories are expected to continue to decline over the next few years. Despite various economy stimuli, one thing no politician or economist can change is the nation’s ageing population. As staples, soft drinks products require a sizeable consumer base and periodic sales peaks, for example during spells of warm weather, to maintain volume sales. In this highly saturated market the shrinking population is causing volume sales to decline and is a challenge to manufacturers seeking to sustain their businesses. However, the concept of FOSHU beverages has given manufacturers a glimpse of hope in recent years.

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December 1, 2014

Can Fairlife Distance Itself Far Enough from Coca-Cola to Be a Success?

Lianne van den BosAnalyst Insight by Lianne van den Bos - Food Analyst

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Fairlife, dubbed “Milka-Cola” on twitter, is the latest addition in Coca-Cola’s attempt to invest in healthier drinks as consumers cut down on carbonates, which constitute over half of Coca-Cola’s sales. The milk drink is the epitome of on-trend: twice the protein and calcium compared to whole milk, half the sugar, lactose-free, sustainably produced and even the bottles are recyclable. Yet here is the catch; for a global brand that relies heavily on its long-established image, will consumers believe in a healthy milk drink that is supported by one of the world’s largest producers of drinks that have been criticised as less than healthy?

Why look for alternative drinks?

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November 23, 2014

A Few Factors Monster May Want to Know When Tackling China – the Thirsty Dragon

Hope.LeeAnalyst Insight by Hope Lee - Beverages Analyst

Monster Beverage Co has certainly tasted the sweetness of distribution support from The Coca-Cola Company (TCCC). Its global market share has climbed significantly since the distribution deal started a few years ago and it is now the biggest threat to Red Bull GmbH. Upon the completion of the deal, Monster and TCCC will be able interplay with their energy drink brands and subbrands in different regions or core markets and make strategic decisions as to how to grow their combined brand portfolio.

Before the new Monster fully grows and forms, Monster’s management started to show its long-awaited ambition to enter China. Euromonitor International data shows that China is an apparently underdeveloped market for the two ambitious partners. Without a solid physical presence in this strong growth region, TCCC/Monster could lose out on playing a part in China’s energy drinks boom. Monster said that, “China is a very long-term strategic goal for us – we want to be there, we want to get there as quickly as we can. There’s a complex regulatory procedure to get through to register.” These words show its eagerness to make an entry and its desperate need for help from TCCC. So let’s have a look at the opportunities and challenges China may present to the new Monster.

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Monster: Marketing Energy Drinks in China – the Soft Aspects

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

Marketing-wise, Monster needs to consider how to position itself and what story to tell to win the young consumers’ hearts. TC Pharmaceutical’s Red Bull held the Red Bull Hip-Hop Challenge and set up the Red Bull Style Hip-Hop Party, which were popular among Hip-Hop and fashion fans. It also launched “Extreme Domino”, showing a variety of extreme sports to create a domino effect, and bringing its audience a rich world of imagination as well as vividly embodying the brand’s “personality”. Shenzhen Eastroc Beverage Co Ltd reported that it splashed out RMB107 million to obtain advertising rights on prime-time CCTV in 2014. Likewise, Monster may be looking for an association with a national sports team, a film star or even a well-known US star for endorsement purposes. Even the Chinese translation of the brand name needs to be distinctive, attractive and easy to remember. So far, Monster’s Hong Kong Chinese website does not seem to have a Chinese version name. As things stand, the energy drinks market is very much a manufacturer-led industry, in which the targeted consumers tend to be influenced by clever and continuous marketing campaigns. Some brand names are acceptable in certain cultures, but may not sound right in others. The direct translation of Monster into Chinese would be “an ugly object” – and Monster is unlikely to want to be associated with this not so favourable meaning.

Continue reading "Monster: Marketing Energy Drinks in China – the Soft Aspects" »

November 11, 2014

Will SodaStream's Re-Focus Finally Expand Sales?

JonasFelicianoAnalyst Insight by Jonas Feliciano - Senior Beverages Analyst

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After a third-quarter earnings call revealed a net income decline of 42%, SodaStream acknowledged the error in positioning its line of machines and syrups as “home soda makers”. Amidst the fast decline of carbonate sales in the US, the company is instead aligning itself to the growth of bottled water, hoping to entice consumers with healthier and more natural products. This change in strategic direction could pay major dividends as consumers continue to look beyond carbonates and beyond the big brands for their soft drink purchases. While SodaStream’s line of Sparkling Naturals is a good start, embracing less sweet and more complex flavours popularised by small brands like Sparkling Ice and LaCroix could finally see the Wall Street darling justify its high initial stock prices with robust sales.

Continue reading "Will SodaStream's Re-Focus Finally Expand Sales?" »

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Recent Posts

Estimating Category Leaders in FMCG Industries

Unlocking the Potential of India’s Nascent Energy Drinks Market

World’s Multi-million Dollar Liquid Concentrates Brands

Global Soft Drink Market Grows 3.3% as Key Markets Bounce Back

Soft Drinks Players will Battle for Cuba if Trade Embargo is Lifted

FOSHU Gives Hint of Life to Japan’s Soft Drinks Market

Can Fairlife Distance Itself Far Enough from Coca-Cola to Be a Success?

A Few Factors Monster May Want to Know When Tackling China – the Thirsty Dragon

Monster: Marketing Energy Drinks in China – the Soft Aspects

Will SodaStream's Re-Focus Finally Expand Sales?