Non-alcoholic Beverages: The Market - US - April 2008

Published by: Mintel International Group Ltd.

Published: Apr. 1, 2008 - 85 Pages

Table of Contents

SCOPE AND THEMES

What you need to know

Definition

Data sources

Sales data

Abbreviations and terms

Abbreviations

CES

Terms

EXECUTIVE SUMMARY

Market at a glance

Diverse market with internal competition

Segment performance

Health concerns drive consumer preferences

Demographic influences have mixed implications for the future growth

Acquisitions and distribution agreements benefit large and small companies

Crowded energy drink images begin to blend

Innovation blends the best qualities of two existing products

Increase in digital media targets younger adults

Cultivating a healthy image for soda, juice, and enhanced waters

MARKET SIZE AND FORECAST

Key points

Beverages with functional and pro-health positioning will drive future growth

Continued price volatility in fruit juice and milk would inhibit the total market growth

Hispanics and blacks to drive growth

Figure 1: Total U.S. sales and forecast of non-alcoholic beverages, at current prices, 2002-12

Figure 2: Total U.S. sales and forecast of non-alcoholic beverages, at inflation-adjusted prices, 2002-12

OMPETITIVE CONTEXT

ey points

Continued competition from within will stall future market growth

Alliances and acquisitions set stage for growth

The market would continue to face pricing pressures in fruit juice and milk, impairing the future growth

SEGMENT PERFORMANCE

Key points

Consumers move away from soda to healthier and functional non-carbonated beverages

Figure 3: U.S. sales and forecast of non-alcoholic beverages, at current prices, by segment, 2002-12

Top three segment experiences declining demand; bottled water, RTD tea, sports drinks, and energy drinks to grow in future

Figure 4: U.S. sales of non-alcoholic beverages, by segment, 2005 and 2007

Figure 5: U.S. volume sales of non-alcoholic beverages at FDMx, by segment, 2005 and 2007

SEGMENT PERFORMANCE—MILK

Key points

Future milk sales likely to be flat, price volatility to continue due to price increase in gasoline and corn

Growth opportunities through functional, organic and hormone-free milk

Single-serve milk presents growth opportunities beyond traditional channels

Figure 6: U.S. sales and forecast of milk, 2002-12

SEGMENT PERFORMANCE—CARBONATED DRINKS

Key points

Mature segment; growth opportunities among niche consumer groups

Diet soda unable to attract consumers due to the fear of health risks and aftertaste; attracting men to diet soda could spur growth

Figure 7: U.S. sales and forecast of carbonated drinks, 2002-12

SEGMENT PERFORMANCE—JUICE AND JUICE DRINKS

Key points

Juice not considered a healthy beverage; connect recent research with 100% juices to create prohealth positioning

Create value-added perception

Continued pricing pressure would challenge the future growth

Figure 8: U.S. sales and forecast of juice and juice drinks, 2002-12

SEGMENT PERFORMANCE—BOTTLED WATER

Key points

Enhanced water grows sales

Bottled water backlash; communicate brand’s pro-environment strategy

Figure 9: U.S. sales and forecast of bottled water, 2002-12

SEGMENT PERFORMANCE—SPORTS AND ENERGY DRINKS

Key points

Energy drinks enjoy growth through their infancy status

Declining consumer interest in sports drinks; fierce competition with enhanced water may challenge future growth

Figure 10: U.S. sales and forecast of sports and energy drinks, 2002-12

SEGMENT PERFORMANCE—COFFEE AND RTD COFFEE

Key points

Coffee renaissance grows sales

RTD coffee would continue to grow

Increased competition threatens sales

Figure 11: U.S. sales and forecast of coffee, 2002-12

SEGMENT PERFORMANCE—TEA AND RTD TEA

Key points

Tea’s health benefits team up with convenience

Hybrid teas offer even more benefits/options

Figure 12: U.S. sales and forecast of tea, 2002-12

RETAIL CHANNELS

Key points

Supermarkets lose market share to mass and other channel

Proliferation of energy drinks at convenience stores has built traffic in this channel

Figure 13: U.S. sales of non-alcoholic beverages, by retail channel, 2005 and 2007

RETAIL CHANNELS—SUPERMARKETS

Key points

Increasing single-serve packaging in the total product mix can help drive growth in this channel

Supermarkets grow on multipacks and premium juices

Figure 14: U.S. sales of non-alcoholic beverages at supermarkets, 2002-07

RETAIL CHANNELS—MASS AND OTHER CHANNELS

Key points

Wal-Mart PL targets branded CSDs

C-store develops own energy drink

Figure 15: U.S. sales of non-alcoholic beverages at mass and other channels, 2002-07

MARKET DRIVERS

Health concerns drive consumer preferences

Figure 16: Percentage of population who are overweight or obese, 20-74 years of age, 1988-2004

Figure 17: Reasons for drinking less regular soda today than a year ago, February 2007

Figure 18: U.S. per capita consumption of carbonated soft drinks, bottled water, and sports drinks, 2001-06

Schools contribute to children’s available beverage choices

Figure 19: Prevalence of obesity among children aged 6-19, by age, 1971-2002

Figure 20: Incidence of soda and RTD NCB consumption among children aged 6-11, 2002-06

Government and media drive consumers toward NCBs

Teens and young adults migrate to energy drinks

Figure 21: Incidence of drinking energy drinks—adults, 2002-06

Figure 22: Incidence of drinking energy drinks—adults and teens, January-October 2006

Figure 23: Incidence of drinking RTD NCBs in the past seven days, by age, January-October 2006

Figure 24: U.S. population of teens and young adults aged 12-24, by age, 2003-13

Blacks and Hispanics drive growth of energy, sports, and juice drinks

Figure 25: Population, by race and Hispanic origin, 2003-13

LEADING COMPANIES

Key points

Major carbonated drinks companies would find growth in expanding non-carbonated beverage portfolio

Price-sensitive consumers would continue to drive growth in private labels

Figure 26: FDMx sales of leading non-alcoholic beverage companies, 2006 and 2007

BRAND SHARE—CARBONATED DRINKS

Key points

Non-cola flavors and Hispanic tastes

Coke Zero sales climb, but not all “zeros” succeed

Diet colas growing among men

Manufacturer and brand shares

Figure 27: FDMx brand sales of regular carbonated drinks in the U.S., 2006 and 2007

Figure 28: FDM brand sales of diet/reduced calorie carbonated drinks in the U.S., 2006 and 2007

BRAND SHARE—MILK

Key points

Private label as a tool for supermarket chains

Milk brands that offer extra fare best

Manufacturer and brand shares

Figure 29: FDMx brand sales of milk in the U.S., 2006 and 2007

BRAND SHARE—JUICE AND JUICE DRINKS

Key points

All natural, no-sugar-added favored positioning

Refrigerated blends of fruit juice expand orange juice

Functional juices grow

Getting fruits and vegetables in one juice; a future growth-driving innovation

Private label remains significant challenge

Manufacturer and brand shares

Figure 30: FDMx brand sales of juice and juice drinks in the U.S., 2006 and 2007

BRAND SHARE—BOTTLED WATER

Key points

Vitaminwater changes market

Nestlé still tops, stands on plain water

Manufacturer and brand shares

Figure 31: FDMx brand sales of convenience/PET bottled water in the U.S., 2006 and 2007

BRAND SHARE—COFFEE

Key points

Traditional ground coffee suppliers still leaders

Refrigerated RTD coffee grows

Cappuccino/iced coffee continues growth and new entrants follow

Manufacturer and brand shares

Figure 32: FDMx brand sales of coffee in the U.S., 2006 and 2007

BRAND SHARE—SPORTS/ENERGY DRINKS

Key points

Energy drinks taking over sports and energy drinks aisle

Expanded distribution benefits suppliers of energy drinks

Coca-Cola and Pepsi have little success as teens look for edgy drinks

Gatorade looks to expand sports drinks off the court

Manufacturer and brand shares

Figure 33: FDMx brand sales of sports/energy drinks in the U.S., 2006 and 2007

BRAND SHARE—TEA

Key points

RTD tea builds on healthy beverage trend

AriZona slips against new products from Lipton and Nestea

Small suppliers with added-value products grow well

Manufacturer and brand shares

Figure 34: FDMx brand sales of tea in the U.S., 2006 and 2007

BRAND QUALITIES

Energy drinks brands incorporate multi-dimensional differentiation platform to retain consumer interest

INNOVATION AND INNOVATORS

New product trends

Figure 35: Trends in numbers of new product introductions in the non-alcoholic beverage market, 2003-08

Innovations by segment

Carbonated beverages

Juice and juice drinks

Milk

Coffee/RTD coffee

Tea

Bottled water

Sports/energy drinks

Other innovative trends

ADVERTISING AND PROMOTION

OVERVIEW

Ad dollars flow to diet soft drinks and sports drinks

Figure 36: Media spending and lead agencies for selected non-alcoholic beverages, 2005 and 2006

Increase in digital media targets younger adults

Sports drink becomes “lifestyle beverage”

Carbonated soft drinks

Figure 37: 7-Up television ad, 2007

Figure 38: Diet 7-Up television ad, 2007

Figure 39: Diet Coke Plus television ad, 2007

Figure 40: Diet Coke Plus television ad #2, 2007

Figure 41: Coca-Cola television ad, 2007

Figure 42: Diet Coke television ad, 2007

Figure 43: Diet Pepsi Max television ad, 2007

Juice and juice drinks

Figure 44: Florida orange juice television ad #1, 2007

Figure 45: Florida orange juice television ad #2, 2007

Figure 46: Juicy Juice television ad, 2007

Figure 47: Nestlé Juicy Juice television ad, 2007

Figure 48: Ocean Spray television ad, 2007

Figure 49: Ocean Spray diet television ad, 2007

Figure 50: Sunsweet television ad, 2007

Figure 51: Sunny Delight television ad, 2007

Figure 52: V8 V-Fusion television ad, 2007

Bottled water

igure 53: Aquapod television ad, 2007

Figure 54: Fruit2O television ad, 2007

Figure 55: Propel television ad, 2007

Energy drinks

Figure 56: Joint Juice television ad, 2007

Figure 57: Extreme Energy television ad, 2007

Tea

Figure 58: Snapple television ad, 2007

APPENDIX: ACQUISITION AND ALLIANCES

Acquisitions

Alliances

APPENDIX: STUDIES ON FRUIT JUICE

Studies linking negative influence of drinking fruit juice for children

Studies linking fruit juice with positive health benefits

APPENDIX: INNOVATION AND INNOVATORS

Hybridization of drinks

Superfruits beyond pomegranate in many drink types

Functional claims expand

APPENDIX: TRADE ASSOCIATIONS

Abstract

• " How consumer lifestyle trends have driven sales and marketing of non-carbonated beverages
• " Which demographic groups have helped to drive growth and innovation of new age beverages and how future population changes may affect these beverages
• " Why raw materials' pricing disproportionately affects some segments resulting in higher overall sales but lower consumption
• " How manufacturers and marketers are dealing with growing negative perceptions of beverages formerly considered to be healthy
• " Why hybrids are driving growth and why all hybrids may not resonate with consumers
• " Do school vending rules really influence beverage choices
• " How the market polarization between value and premium has influenced the mid-priced brands
• " Which racial/ethnic groups will influence beverages and how
• " How men are proving to be a new demographic for diet soft drinks
• " How distribution agreements and acquisitions are helping CSD giants and small players alike

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