Juices and nectars to tap health-conscious trend
Population growth in developing markets and the overall demand for healthier products are key factors offering growth for the juices and nectars category, according to a report recently published by just-drinks.com
Like all mass markets, the demand for juice and nectar is subject to a number of major influences. There is a clear correlation between population and the size of any national market, illustrated by the fact that the US, China, Germany, Russia and Japan are the top five largest markets in the world. Even where demand for juice and nectar appears to be static or declining slowly, as in the case of Japan, a country's large population maintains its position as a major market.
Demand in the more developed markets of North America and Western Europe is growing rather slowly. Certainly, in these regions, growth is well below the global average. In the less developed or emerging economies of Eastern Europe and Asia Pacific, demand for juice and nectar is very dynamic with annual growth rates well above average. While African countries do have large populations, some have populations that are actually declining due to the ravages of disease, notably HIV, as well as periodic famine. Like North America and Western Europe, demand growth rate in Australasia is below average, but these two countries have relatively small populations in any case and their respective juice and nectar markets are also small.
Given the correlation between population size and market size for juice and nectar, it is possible to look at the likely global pattern over the next few decades. The UN forecasts that the world's population will grow by 52.3% between 2000 and 2050 to 9.3bn, with the growth occurring in the less developed countries. By 2050, less developed countries will account for over 88% of the total world population, while the population of the developed countries is forecast to fall by 7.3% by 2050, to 1.1bn people.
On the basis of these population projections, it seems very likely that growth in demand for juice and nectar in Asia Pacific and Eastern Europe is likely to continue to be rapid, while North America and Europe will see well below average growth.
Trends in the global economy also impact on global markets, and the juice and nectar market is no exception. Mass-market products such as juice and nectar may not be affected immediately by a sharp downturn in the global economy. This is because they have relatively low unit price, compared with more expensive products such as upmarket wines and spirits. However, such an economic event does eventually have an adverse effect on sales because it reduces consumers' disposable income. During the early years of the 21st century, the global economy was depressed by events such as the financial crisis in Asian countries, the terrorist attack on New York and the SARS outbreak in China. The impact of these events has since diminished, with Reuters reporting that the global economy recorded its best growth rate in decades in 2004, at 5.1%. That rate is expected to ease to 4.3% this year but it is the developing markets which are driving growth, according to the IMF.
Consumer demand for juices and nectars
Health and product quality appear to be key factors influencing consumer demand for fruits and nectars. Coca-Cola says that "taste, health, naturalness/purity are the key attributes that drive consumer choice worldwide," while Cadbury Schweppes maintains that factors such as "health, convenience, and high quality juice, do not vary by region".
The industry's concern with making juice and nectar acceptable as healthy consumer products is understandable. It is a clear response to the real health concerns of consumers worldwide, as well as the concerns of their governments.
The European Association of Agricultural Economists (EAAE) held a seminar in April this year, entitled "The Economics and Policy of Diet and Health". In the Background section to the document given to attendees at the seminar, the EAAE pointed out the current dietary trend is a major public health problem. They go on to say: "A growing concern with diet-health relationships reflects the enormous and mounting economic and social costs of cancer, diabetes, cardio-and cerbro-vascular diseases and recognition that their incidence is related to diet. Increasing prevalence of such diet-related diseases is predicted to result in unsustainable demands on surgical and drugs treatments."
The document points out the need to understand the causes of consumers' poor nutritional diet. It highlights the influence of such factors as the impact of television viewing and advertising on food preferences and consumption levels and the influence of lifestyle trends. Other influences mentioned are the availability of convenience foods, which are high in sodium and saturated fat, and the increasing incidence of eating out. These, they say, are but a few of the many factors that influence consumers' diets. The EAAE referred to an estimate made by the World Health Organisation (WHO) in 2000, "that the total cost of obesity alone represents 2% to 7% of national health expenditures worldwide" and this is drawing attention to the impact of such a dietary trend on public health.
It is understandable that the industry believes consumers are motivated by health concerns. In response to these concerns, manufacturers have added nutrients and vitamins to many of their lines and, at the same time, emphasised the purity and freshness of their products.
An industry spokeswoman for the American Beverage Association, in response to research showing that energy intake from sweetened soft drinks and fruit drinks in the US increased by 135% between 1997 and 2001, said: "Soft drinks manufacturers understand that many people are struggling to keep the calories down and manage their weight, and we've introduced an array of no-cal and low-cal soft drinks, teas and juice drinks to help them do that."
The just-drinks.com Global Market Review of Juices and Nectars, written and researched by Michael Mayers, covers not only global and regional markets for juices and nectars, but also includes forecasts for the market to 2011. To order, go to /store/
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