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Global strategic planners and soft drinks investors are facing an increasingly complex marketplace, where consumers are slowly moving away from carbonates and drinking a variety of beverages. The evolution of this consumption pattern represents both an opportunity and challenge for major players. Portfolio management in overall soft drinks and brand building in still drinks reflects major player’s top line growth strategy. For carbonates giants, striking the right balance between tackling the slowdown in carbonates and building different growth platforms for still drinks is an issue. For major bottled water companies, the distinctive mass market and international premium brand strategy to target different consumers in various markets serves to balance volume and value sales. Rather than introducing more brands, they seem focussed on developing their existing brands with the right price platforms. Going forward, The Coca-Cola Company should perhaps be more assertive in exploring dairy businesses for long-term business sustainability.
The global briefing Soft Drinks Global Corporate Strategy uses our Competitor Analytics framework to analyse the competitive landscape and identify major players’ strengths and white spaces. Additionally, the Soft Drinks Forecast Model is also used as a supplementary tool to showcase a cautious but optimistic picture of the global soft drinks market for the next few years.
The Coca-Cola Company leads the overall soft drinks market, while PepsiCo continues to trail behind by a large margin. The Coca-Cola Company’s sharp focus on soft drinks, wider geographical presence and wider brand portfolio underpin its strong global leadership. The company’s equity investment in Kold, the brands swap with Monster, and full acquisition of Culiangwang indicate its determination to diversify its revenue streams. In contrast, PepsiCo made no major acquisitions within soft drinks in 2014 or 2015.
Both Nestlé and Danone have mass market and international premium brand platforms, which work well catering for different income groups. Nestlé did not see substantial growth in RTD tea; however, it outpaced rivals in RTD coffee thanks to its dominance in China. Danone’s focus in bottled water may restrict its long-term market share gains as consumers demand more diverse drinks.
Suntory represents a strong Japanese force in the global arena. Its acquisition of GlaxoSmithKline’s Lucozade and Ribena effectively expanded revenue from overseas, to help spread the risk from domestic slowdown. So far it looks on the right track to achieve geographical expansion. Chinese soft drinks companies are tentatively expanding abroad and their growing ambition for overseas assets and their possible next steps should be watched.
Market maturity, stringent regulations and diversity in drinks are challenges. Driving volume growth is increasingly difficult and value-added products are alternative growth drivers. Sustaining consumers’ interest in carbonates, perhaps through new growth platforms, healthier products, and interactive engagement with consumers are also increasingly important in marketing.