What's coming up in soft drinks in 2017? - Predictions for the Year Ahead - Comment

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just-drinks' preview of the year ahead continues. As our category commentators give us their views on what 2017 has in store, Richard Corbett chips in with his predictions for the soft drinks sector.

What does 2017 have in store for the soft drinks category?

What does 2017 have in store for the soft drinks category?

Forecasting is a challenging art. Invariably, a year later, you find yourself explaining why you were wrong. 2016 was the year of the unpredictable and will not have given forecasters much confidence. Certainly, there weren't many pundits that took the bookmakers 6/1 on the UK's decision to quit the European Union, and only a handful that invested in a Trump victory in November. The soft drinks market should be more straightforward to predict. Says the man who said the Keurig Kold machine could change the way the world consumes soft drinks.

  • More Soft Drinks will be Sold This Year than Last

I will pass the buck on my first prediction and refer to Canadean's latest projections for the global soft drink market this year. The research company anticipates that the global market will expand by around 3% in 2017 to reach 670bn litres. The trends take a familiar theme, with Asia, Africa and the Middle East driving growth, while North America and West Europe remain at the bottom of the class with their drinks markets only just going in the right direction. Packaged waters will be responsible for 6 in every 10 litres of the global growth and will grow to account for well over a third of the world's soft drinks. The overall soft drinks growth is to be welcomed, but the cheapest soft drinks are growing in the parts of the world where they are sold at the lowest price. Value prospects for the market are not nearly as upbeat as the volume ones.

  • Soft Drinks Remains the Villain

The average prices of many soft drinks are likely to increase in some markets. This extra money is not destined to go back into the industry, however, but into government coffers. Soft drinks will continue to face the scrutiny of the health lobby and tax will be the favoured tool some governments use to respond to that negative publicity. India had been identified as having pronounced potential and it will be a considerable blow that the Indian Government last year classified CSDs as being luxury items. It is not just governments but retailers that are putting the pressure on soft drink suppliers, and I would expect that to continue this year.

Are soft drinks staring into an Indian abyss? - Click here for a just-drinks comment

Cutting the calorie content of drinks will be an important focus for players. PepsiCo has demonstrated this by announcing that it will reduce the calorie content in two-thirds of its drinks by 2025. Other operators too have set similarly ambitious targets, as they look to appease the powerful lobby that confronts them. It will not just be the calorie content that is tweaked: We are likely to see our favourite brands sold in smaller pack sizes. The 33cl can and the 2-litre PET bottle, once the standard formats for soft drinks, will increasingly be replaced by 25cl cans and 1-litre bottles.

  • You Are What You Drink

Soft drinks are not always vilified. Products with positive health associations will continue to offer opportunities for the category. On a larger scale, this is illustrated by the launch last month of Cranberry +Health by Ocean Spray, a product that specifically targets the US healthcare market. On a smaller scale, we are seeing the emergence of a plethora of small producers who may be viewed as 'craft' style producers making products with strong associations with healthy living. The flavours that look set to gain an increasingly-visible presence on the shelves of our shops and Horeca outlets are beetroot, ginger, mint, rhubarb and the rather unappealing spinach and kale (which must be very good for you for people to drink them). These flavours have certainly been featuring in many new products unveiled last year and look like they will do so again this year.

New Product Development in the Global Drinks Industry - Click here for just-drinks' coverage

  • Amazon enters the fray

Where we buy our refreshment could be set to evolve further this year. In 2016, we saw plenty of evidence that online retailer Amazon harbours ambitions to expand into new sectors around the world, one of which will be food & drink. This progression is already more advanced in the US, although, last summer, Amazon brought its 'Prime Now' service, which includes 240 drinks products, to Paris. Delivery to the consumer within the hour costs EUR5.90 or free within two hours from the company's depot in the centre of the city. This type of channel has the potential to seriously upset the dynamics of the off-premise retail environment and represents a sizeable threat to the traditional supermarkets. Amazon has the financial muscle to deliver on this threat and, as delivery times shorten, so too will its appeal to consumers. From a soft drinks perspective, Amazon could give the more modest -sized producers the chance to gain listings that they would not normally gain with the limitations of supermarket shelf space. It could dramatically widen the soft drinks choice to drinkers, and that could make this year even more interesting.

  • Monster and Fever-Tree to flourish

The negative noise surrounding many categories conceals the fact that there will be plenty of good news stories for soft drink businesses this year. I can see 2017 being a prosperous period for Monster Beverage Corp. The scene was set at the end of last year, when the group announced plans to enter the massive Chinese market. And, through its minority stake in Monster, The Coca-Cola Co will give the brand exposure to a plethora of new sales channels. Only Coca-Cola could have enabled Monster to be trialled in fast food giant McDonalds in the US.

How has The Coca-Cola Co helped Monster Beverage Corp's global presence? - Click here for a just-drinks focus

Could this be the year that somebody moves in to buy Fever-Tree? Founders Charles Rolls and Tim Warrillow cashed in around US$25m-worth of shares last year, yet the brand still remains very much in its growth stage. Premium spirits are in vogue and it makes perfect sense that if you fork out for an expensive spirits brand then you will want to combine it with a superior mixer. With the exception of some innovation from Schweppes, which has brought out some high-end alternatives of its own, no high-profile rivals have yet emerged. The move into a can will accelerate sales further. My hope is that they don't get too distracted by colas and other regular soft drinks: People will pay a premium for the mixer but not for an ordinary soft drink.

Sectors: Soft drinks, Water

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