Flavourable market conditions
By Soft Drinks International | 4 January 2006
The desire of soft drinks companies to set themselves apart in a competitive marketplace and an apparently inexhaustible consumer thirst for new flavour concepts means today's soft drinks market is constantly being enlivened with new flavour ideas. Euromonitor International analyst Catherine Mars examines current flavour trends.
A quick look at supermarket shelves confirms that there is a plethora of soft drink flavours available to consumers. In today's highly competitive environment, soft drinks manufacturers are introducing new and more sophisticated flavour extensions as they attempt to maintain their share of the market and differentiate themselves from the competition, while consumers are always on the lookout for something new and different.
The majority of flavour innovations within the carbonates sector have been in the non-cola subsector as non-cola carbonates, especially juice-based carbonates, are perceived as healthier than cola variants. While lemon/lime and orange continue to dominate, non-cola carbonates are now available in almost every imaginable fruit flavour including blackcurrant, blueberry, cherry, grape, grapefruit, guarana, lychee, melon, peach, pineapple, plum and strawberry. Mixed fruit flavours are also increasing in popularity.
More unusual flavours have also been used to keep consumers interested in the carbonates category. The world's first ice cream carbonate, Fanta Spider, was introduced as a limited-time offer in Australia, where fizzy ice cream drinks are a favourite.
In fact, limited edition flavours are usually well received because they offer something new and give the brand a fresh image. Following the success of Fanta Spider, Coca-Cola Australia launched Fanta Sours in sour apple and sour watermelon flavours as another 'limited edition' offering, while in August, Pepsi-Cola North America introduced a limited edition sour brand extension - Mountain Dew Pitch Black II. Another trend which Euromonitor International has observed, particularly in Asian countries, is the introduction of mint flavoured soft drinks such as Sprite Ice.
Despite the fact that consumer tastes have become increasingly diversified in recent years, orange remains the most popular juice flavour worldwide. Orange is also increasingly used as the core flavour in mixed-flavour juices in many markets. According to Euromonitor International, the US, UK, Germany, Canada, Japan, Russia, France, China, Australia and Spain collectively account for two-thirds of the total global 100% juice market. In most of these markets, orange and apple are dominant flavours accounting for the vast majority of 100% juice volumes. Orange is however losing share, while grapefruit juice is gaining popularity, as are tropical fruit juices such as mango and pineapple. Apple, pineapple and peach are other examples of juices that are gaining foothold in these countries.
As with 100% juice, orange and apple are the most popular nectar flavours (25-99% juice content). Apple nectar is still gaining share in Asia-Pacific countries but is declining in Western Europe. Orange nectar appears to have reached its saturation point across most countries and is losing share to tropical fruits, such as mango and pineapple, as well as to tropical and other fruit blend nectars.
While not as popular as orange, apple juice drinks are also declining in Western and Eastern Europe but are still gaining share in some countries in Africa and the Middle East. As with other juices, tropical fruit flavours and fruit blends are driving growth of juice drinks. Berry flavoured juice drinks are also gaining momentum in various countries including the UK and USA.
Concern over excessive sugar intake and related health problems, such as diabetes and obesity, has prompted a product switch from carbonates to flavoured bottled water in both developed and developing markets. Following flavour trends in the juice sector, bottled water is available in various fruit flavours including lemon, lime, strawberry, raspberry and blackberry. In some countries, flavoured bottled water is available in other non-fruit flavours such as mint or tea. Euromonitor International's research shows that berry flavoured water is becoming more popular while lemon and lime flavours are declining.
In the growing functional drinks category, it is not always easy to pinpoint individual flavour trends. For example, how does one describe the flavour of energy drinks such as V and Red Bull or sports drinks such as Powerade Black Ice and Powerade Forest Force? However, other functional drinks come in fruit flavours including grapefruit and lemon, orange, tropical fruit, watermelon and kiwi, blueberry, green apple, mixed fruit, guarana and passion fruit. Among fruit-flavoured functional drinks, apple, berry and multi-fruit blend flavours are gaining share at the expense of more traditional orange and lemon flavours.
RTD tea is one of the most dynamic products across the global soft drinks market, benefiting from the positive publicity in recent years regarding the health benefits of drinking tea. As a result of this growth, new and more exotic products containing green tea, tropical and citrus flavours, ginseng and guarana have been introduced mirroring trends in hot tea and the health and wellness trends.
As people become more aware of its health benefits, green tea is also becoming more popular in the RTD tea category. Rooibos tea offers similar benefits and it is likely we will see more RTD rooibos teas introduced in the future.
RTD tea flavours do in general reflect regional tastes. In Asian countries for instance, regular (unflavoured, unsweetened) RTD tea is dominant, accounting for 50% of RTD tea volume in China, and 90% in Japan. However, as these countries become increasingly westernised, other flavours, such as lemon, are being introduced.
In Western countries, consumers favour sweetened, flavoured RTD tea. After the introduction of peach flavour, which has become a standard flavour together with the traditional lemon flavour, more exotic varieties have been launched on the market including raspberry, orange and mango.
RTD coffee remains a niche product in the global soft drinks market. Demand for the drink continues to be limited in most markets due to deep-rooted drinking habits and cultural factors which have hindered the penetration of RTD coffee. In Japan (which accounts for over 80% of global total RTD coffee volumes according to Euromonitor International's research), regular RTD coffee accounts for 98% of volume sales through retail channels. Germany is a much smaller market accounting for less than 0.5% of global total RTD coffee volume sales but it has one of the widest ranges of RTD coffee flavours including white, chocolate, vanilla, cappuccino, caramel and regular.
As we have seen, consumers across all soft drinks sectors are becoming increasingly sophisticated in terms of taste. They demand not only healthy products but also products with a pleasing taste. The increased availability of a wide variety of flavours has benefited from the improvement in global trade in fresh fruit and concentrated juices, which has enabled manufacturers to develop and produce a cornucopia of flavours including fruit blends which appeal to consumers' increasingly eclectic tastes.
A trend towards tropical and exotic fruit flavours such as mango and pineapple is evident across all soft drinks categories (with the exception of RTD coffee). Euromonitor International expects to see stronger growth of these flavours in the future, and to see the growth of more tropical fruit flavours including guava, lychee, passionfruit, papaya and banana as well as fruit blends which offer unusual, refreshing flavours. It is also likely that soft drinks manufacturers will look to new countries and continents for more unusual fruit flavours. Examples of possible new flavours in the pipeline would be the Brazilian acai berry and the South African marula. The idea of a lemon and mint flavoured bottled water and or the inclusion of mint in a fruit blend also seems feasible.
However, the crucial question is how sustainable are these new flavour introductions, and to what extent can they truly expand the market. The worry is that if they appeal to consumers only because they offer something new and different, each new flavour to a large degree will cannibalise the sales of the previous development.
On the other hand, the introduction of new, exciting flavours may be necessary in today's market simply to maintain consumer interest. In cola carbonates the introduction of a new flavour can help rejuvenate a brand. For example, if Coca-Cola were to launch Raspberry Coke, lapsed Coke drinkers may be encouraged to try the new variant. In less developed sectors such as RTD tea, new flavours may interest consumers to try the brand or product for the first time.
Source: Soft Drinks International
For further information on Soft Drinks International, go to www.softdrinksjournal.com
Sectors: Soft drinks
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