Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- 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
Insights and Opportunities
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- Consumers are becoming wary of “added sugar” in beverages; find ways to reduce beverage sugar content
- High-fructose corn syrup or natural beet/cane sugar, which sweetener will find popular acceptance in future?
- Price is important to consumers; therefore, create value-added proposition
- Create brand extensions without creating brand fatigue and dilution
- Communicate brand’s “carbon offsets” strategy with consumers
- All natural; dispel consumer fear of artificial ingredients
Fast Forward Trends
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- Transparency
- Consumers become amateur sleuths to fulfill their quest for “healthy” and “good-for-you”
- Consumers demand brand transparency to keep their conscience healthy
- Transparency equates to creating trust with consumers
- Death of the middle ground
- Growth in private labels at the expanse of mid-priced brands
- Consumers justify premium and super-premium beverage purchase for value-added perception
Market Size and Forecast
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- 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
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- 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
Competitive Context
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- Key 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
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- Key points
- Consumers move away from soda to healthier and functional non-carbonated beverages
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- 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
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- 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
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- 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
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- Figure 6: U.S. sales and forecast of milk, 2002-12
Segment Performance—Carbonated Drinks
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- 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
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- Figure 7: U.S. sales and forecast of carbonated drinks, 2002-12
Segment Performance—Juice and Juice Drinks
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- Key points
- Juice not considered a healthy beverage; connect recent research with 100% juices to create pro-health positioning
- Create value-added perception
- Continued pricing pressure would challenge the future growth
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- Figure 8: U.S. sales and forecast of juice and juice drinks, 2002-12
Segment Performance—Bottled Water
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- Key points
- Enhanced water grows sales
- Bottled water backlash; communicate brand’s pro-environment strategy
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- Figure 9: U.S. sales and forecast of bottled water, 2002-12
Segment Performance—Sports and Energy Drinks
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- 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
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- Figure 10: U.S. sales and forecast of sports and energy drinks, 2002-12
Segment Performance—Coffee and RTD Coffee
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- Key points
- Coffee renaissance grows sales
- RTD coffee would continue to grow
- Increased competition threatens sales
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- Figure 11: U.S. sales and forecast of coffee, 2002-12
Segment Performance—Tea and RTD Tea
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- Key points
- Tea’s health benefits team up with convenience
- Hybrid teas offer even more benefits/options
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- Figure 12: U.S. sales and forecast of tea, 2002-12
Retail Channels
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- Key points
- Supermarkets lose market share to mass and other channel
- Proliferation of energy drinks at convenience stores has built traffic in this channel
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- Figure 13: U.S. sales of non-alcoholic beverages, by retail channel, 2005 and 2007
Retail Channels—Supermarkets
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- 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
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- Figure 14: U.S. sales of non-alcoholic beverages at supermarkets, 2002-07
Retail Channels—Mass and Other Channels
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- Key points
- Wal-Mart PL targets branded CSDs
- C-store develops own energy drink
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- Figure 15: U.S. sales of non-alcoholic beverages at mass and other channels*, 2002-07
Market Drivers
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- Health concerns drive consumer preferences
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- 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
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- 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
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- Figure 19: Prevalence of obesity among children aged 6-19, by age, 1971-2002
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- 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
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- Figure 21: Incidence of drinking energy drinks—adults, 2002-06
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- Figure 22: Incidence of drinking energy drinks—adults and teens, January-October 2006
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- Figure 23: Incidence of drinking RTD NCBs in the past seven days, by age, January-October 2006
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- 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
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- Figure 25: Population, by race and Hispanic origin, 2003-13
Leading Companies
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- 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
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- Figure 26: FDMx sales of leading non-alcoholic beverage companies, 2006 and 2007
Brand Share—Carbonated Drinks
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- 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
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- 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
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- Key points
- Private label as a tool for supermarket chains
- Milk brands that offer extra fare best
- Manufacturer and brand shares
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- Figure 29: FDMx brand sales of milk in the U.S., 2006 and 2007
Brand Share—Juice and Juice Drinks
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- 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
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- Figure 30: FDMx brand sales of juice and juice drinks in the U.S., 2006 and 2007
Brand Share—Bottled Water
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- Key points
- Vitaminwater changes market
- Nestlé still tops, stands on plain water
- Manufacturer and brand shares
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- Figure 31: FDMx brand sales of convenience/PET bottled water in the U.S., 2006 and 2007
Brand Share—Coffee
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- 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
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- Figure 32: FDMx brand sales of coffee in the U.S., 2006 and 2007
Brand Share—Sports/Energy Drinks
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- 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
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- Figure 33: FDMx brand sales of sports/energy drinks in the U.S., 2006 and 2007
Brand Share—Tea
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- 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
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- Figure 34: FDMx brand sales of tea in the U.S., 2006 and 2007
Brand Qualities
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- Energy drinks brands incorporate multi-dimensional differentiation platform to retain consumer interest
Innovation and Innovators
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- New product trends
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- 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
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- Overview
- Ad dollars flow to diet soft drinks and sports drinks
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- 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
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- Figure 37: 7-Up television ad, 2007
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- Figure 38: Diet 7-Up television ad, 2007
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- Figure 39: Diet Coke Plus television ad, 2007
- Figure 40: Diet Coke Plus television ad #2, 2007
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- Figure 41: Coca-Cola television ad, 2007
- Figure 42: Diet Coke television ad, 2007
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- Figure 43: Diet Pepsi Max television ad, 2007
- Juice and juice drinks
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- Figure 44: Florida orange juice television ad #1, 2007
- Figure 45: Florida orange juice television ad #2, 2007
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- Figure 46: Juicy Juice television ad, 2007
- Figure 47: Nestlé Juicy Juice television ad, 2007
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- Figure 48: Ocean Spray television ad, 2007
- Figure 49: Ocean Spray diet television ad, 2007
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- Figure 50: Sunsweet television ad, 2007
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- Figure 51: Sunny Delight television ad, 2007
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- Figure 52: V8 V-Fusion television ad, 2007
- Bottled water
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- Figure 53: Aquapod television ad, 2007
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- Figure 54: Fruit2O television ad, 2007
- Figure 55: Propel television ad, 2007
- Energy drinks
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- Figure 56: Joint Juice television ad, 2007
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- Figure 57: Extreme Energy television ad, 2007
- Tea
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- Figure 58: Snapple television ad, 2007
IRI/Builders Panel Data
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- Consumer insights—non-alcoholic beverages
- Carbonated beverages
- Regular soft drinks
- Purchase measures—Regular CSD
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- Figure 59: Key purchase measures for regular soft drinks, sector and major brands, 2007*
- Low-calorie soft drinks
- Purchase measures—Low-calorie CSD
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- Figure 60: Key purchase measures for low-calorie soft drinks, sector and major brands, 2007*
- Bottled water
- Convenience packs—still water
- Jug/bulk—still water
- Sparkling/mineral water
- Purchase measures—bottled water
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- Figure 61: Key purchase measures for bottled water, sector and major brands, 2007*
- Tea
- Bagged and loose tea
- Ready-to-drink tea
- Purchase measures—tea
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- Figure 62: Key purchase measures for bagged, loose and RTD teas, sector and major brands, 2007*
- Refrigerated orange juice and bottled cranberry cocktails and juices
- Purchase measures—orange juice
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- Figure 63: Key purchase measures for RFG orange juice, sector and major brands, 2007*
- Bottled cranberry juices and drinks
- Bottled cranberry juice
- Purchase measures—cranberry cocktails, juice drinks, cranberry juice/blends
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- Figure 64: Key purchase measures for cranberry cocktails, juice drinks, cranberry juice/blends, sector and major brands, 2007*
- Sports and energy drinks
- Sports drinks
- Energy drinks
- Purchase measures—energy and sports drinks
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- Figure 65: Key purchase measures for energy and sports drinks, sector and major brands, 2007*
Appendix: Acquisition and Alliances
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- Acquisitions
- Alliances
Appendix: Studies on Fruit Juice
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- Studies linking negative influence of drinking fruit juice for children
- Studies linking fruit juice with positive health benefits
Appendix: Innovation and Innovators
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- Hybridization of drinks
- Superfruits beyond pomegranate in many drink types
- Functional claims expand
Appendix: IRI/Builders Panel Data Definitions
Appendix: Trade Associations
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