Latin America is Developing a Thirst for Higher Value Soft Drinks
It is well known that consumers in Latin America like their soft drinks. In 2011 soft drinks per capita volume trailed only North America and Western Europe and by 2016 per capita volume will just about pull even with Western Europe. To achieve this, people in Latin America spend a relatively large amount of their disposable income on soft drinks. In fact, households in Latin America spend a greater proportion of their disposable income on soft drinks than any other region. Click to tweet! In 2011, Latin American households spent 4% of their disposable income on soft drinks. Click to tweet! Eastern European households only spent at half the rate, 2% of household income on soft drinks.
The affinity for soft drinks in Latin America is demonstrated more by the value of the products they purchase than the volume. Latin America is not the fastest growing region by volume (both Asia Pacific and Middle East Africa have a higher volume growth rate) but it is the fastest growing region by value.
Latin America is the only region to consistently grow value at a faster rate than volume. Significantly, the pace of the value growth has accelerated. In 2010-2011 value grew at almost twice the rate of volume, 8.0% for value vs 4.3% for volume. The pace of value growth accelerated in 2011 over 2010, although volume grew at a slightly slower pace.
Energy drinks, RTD tea and sports drinks are the most expensive categories based on price per litre in Latin America and also the fastest growing. Click to tweet! These categories may have once been small niches but they are rapidly becoming mainstream and are expected to maintain strong growth. From 2011 to 2016 Latin America is expected to have the highest growth rate of any region in all three categories.
The willingness of Latin Americans to spend money on soft drinks is attracting the attention of manufacturers. We expect to see more value added innovation specifically geared toward the Latin American market as manufacturers compete for the money people are willing to devote to soft drinks.
Obesity is becoming as much of an issue in Latin America as it is in developed markets. We are likely to see reduced calorie nectars sweetened with stevia in flavours common to Latin America. There is also likely to be a greater variety of more healthful offerings of soft drinks available on trade, such as RTD tea.