During the first several years of the 21st century, newer beverage categories have been principally responsible for what growth has occurred in the non-alcoholic marketplace. [image-nocss] Carbonated soft drinks accounted for close to half of total liquid refreshment beverage volume. However, their market share eroded slightly, as it has for several years, according to BMC.
Although the marketplace as a whole lost volume in 2008, energy drinks, enhanced bottled waters and ready-to-drink coffee grew. While conventional carbonated soft drinks remain the most popular category on a volume basis, innovative and functional beverages altered the industry landscape in recent years, BMC reported.
Carbonated soft drinks held five of the top 10 positions in the rankings of trademarks by volume. Those were joined by three bottled-water trademarks, including Nestl a Pure Life in the Nestl a Waters North America brand's debut on the list of leading brands. The biggest sports beverage in the United States ranks as the fifth biggest liquid-refreshment-beverage trademark. The sole fruit-beverage trademark in the group stood in seventh place in terms of volume.
Although bottled water had three trademarks among the top 10 in 2008, up from two the previous year, the category also registered an unprecedented decline in volume. Looking for ways to reduce spending, some consumers may have refilled water bottles with tap water instead of buying new ones, BMC suggested.
The performances of the leading companies' liquid-refreshment-beverage portfolios reflected the downward tendency characterizing the marketplace as a whole. Coca-Cola's total volume dipped by 2% in 2008, while Pepsi's was off by 5% compared to the previous year. However, even in the hard hit carbonated-soft-drink category, some brands had strong showings. The Coke Zero trademark grew by 25%, for instance, and Pepsi Max enlarged by 45% in 2008.
"In today's uncertain climate, consumers seek value," said Michael C. Bellas, chairman and CEO of Beverage Marketing Corp., New York. "Responsive beverage companies are looking for ways to give it to them."
Some smaller categories, especially those emphasizing functional benefits, saw solid growth in 2008. Energy drinks volume increased by 9.0%. Flavored and enhanced water grew by 8.3%. The ready-to-drink coffee segment also advanced. However, none of these categories has a brand big enough to stand among the top 10.
The volume drop is due to the slow economy and increases in pricing, along with some continued interest in alternative beverages such as enhanced waters, John Sicher, editor and publisher of Beverage Digest told the Wall Street Journal. In the past few years, energy drinks have been a bright spot for Coca-Cola and PepsiCo, but sales of those products have slowed, too, as they tend to be relatively expensive.
The gloomy news raised the specter of whether the big players are doing enough to reinvigorate their core brands in the $72.7 billion U.S. soft-drink market, according to the newspaper report. "Unless and until the major companies can get the soda business at least back to flattish, it's going to continue to be a drag on the entire industry and their businesses," Sicher said.
Coke spokesman Dan Schafer said the company expects its soft-drink volume to grow again, though he wouldn't say when. "We believe it will and we're committed to making that happen," he told the newspaper. The company cited new advertising and new packaging, such as 99-cent 14-ounce bottles being rolled out now, as evidence of its attention to core soft-drink brands. Atlanta-based Coke also benefited from a 36% jump in sales last year of Coke-Cola Zero, he said.
Purchase, N.Y.-based Pepsi spokesman Larry Jabbonsky said the company expects soft-drink volume to grow again, at least in line with population growth. "We've said we're out to 'refresh everything,' and we mean it," Jabbonsky said, referring to revamped marketing and packaging for key beverages such as Pepsi and Gatorade.
Among the top 10 soda brands, only Diet Mountain Dew, marketed by PepsiCo, and Diet Dr Pepper, marketed by Dr Pepper Snapple, posted volume growth.
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