As carbonate consumers across the globe move towards healthier drinks such as bottled water and juices, manufacturers are looking into other alternatives to sustain growth in carbonates. Non-cola carbonates are perceived as healthier than cola variants, and flavours sourced from local fruits have become a growth point for major manufacturers in Latin America.  Hope Lee of Euromonitor reports.

The sluggish growth of cola carbonates in Latin America may have prompted manufacturers to develop new products to target the local market, but the investment has been a natural move anyway for soft drinks manufacturers given the dominance of Coca-Cola and PepsiCo within the cola carbonates market. Add to this the consumer interest in guaraná, which has been spurred by growth in the energy and sports drinks markets, and the Amazonian red berry with caffeine-like properties becomes the obvious flavour choice for companies looking growth.

Ambev – the largest beverages producer in Brazil – has been the pioneer in guaraná -flavoured carbonates in Brazil, with its flagship brand Guaraná Antartica. The brand is particularly popular among the massive youth population in Brazil, and indeed has become the leading brand in the non-cola carbonates category. In fact the guaraná category as a whole is now the only non-cola product that competes directly against cola carbonates in the Brazilian market. This dominance is to such an extent that

“The growth in sales of guaraná carbonates has had a significant effect on sales of non-cola carbonates as a whole. “

the growth in sales of guaraná carbonates has had a significant effect on sales of non-cola carbonates as a whole.

Guaraná Antartica’s international exposure has been supported by Ambev’s sponsorship of international sporting events. In 2002, the company was the main sponsor of the Brazilian soccer team, with the Guaraná Antartica brand stamped on the jerseys worn by soccer players during the World Cup. The product is now available in Portugal and there are plans to increase availability to other European countries and the US. Ambev has also handed distribution rights to the brand to PepsiCo in Puerto Rico, and a launch followed there early last year in what is the first stage of an effort to transform the brand into a global player.

Kuat a pearl in Coca-Cola’s crown
Other multinationals have also managed to exploit the interest in guaraná flavoured drinks. The most successful of these has been Coca-Cola’s launch of its Kuat brand in Brazil. Launched in 1997, it has also been available in a diet version since 1999 and has been marketed under the Senzao name in Mexico since 2001.

The introduction of Kuat reflects Coca-Cola’s new strategy of connecting with consumers by appealing to local tastes. There are over ten other guaraná brands in Brazil but Coca-Cola has marketed aggressively using all its clout to make Kuat stand out from the crowd. In 2001, the company developed campaigns to coincide with celebrations around Brazil. At these street events, including Rio de Janeiro’s Carnivals, images of Kuat were emblazoned across buses and buildings, whilst focusing on pushing sales through cafés and bars.

The success of Coke’s marketing was evident following a series of ads that attempted to persuade consumers to ask for the brand by name instead of asking merely for “guaraná”, which is the typical request in the Brazilian on-trade. The campaign, which local celebrities asking for Kuat by name, resulted in a 14% increase in volume sales. By now, Kuat has successfully established a distinctive market position for itself in Brazil and the brand has already been rolled out on a trial base in the US in late 2002.

The success of the brand has persuaded Coca-Cola to invest in the raw material side of production. So in 2001, the company planted additional acres of guaraná to meet increased demand. In short Guaraná flavour is seen as a one of the core development areas for Coca-Cola over the next few years.

Malt carbs get the brewers’ treatment 
While the Brazilians are crazy about guaraná, Venezuela’s own non-cola success story is a carbonated malt drink. Venezuelans consume a “malta”, or malt, as an alternative to other cold beverages. Malts are considered as a nutritious and refreshing option since their main ingredients are derived from plants. Total malt carbonates brands account for more than 70% of off-trade sales of other non-cola carbonates in Venezuela.

Malt products are mainly produced by local beer producers.

“Domestic beer companies manufacture malts because they are able to produce and distribute these products with significant economies of scale “

Domestic beer companies manufacture malts because they are able to produce and distribute these products with significant economies of scale using the same umbrella brands for both their beer and malt offerings. Furthermore, as advertising of alcoholic drinks is not allowed on broadcast media such as radio and public television, beer producers tend to use malta as a way to increase recognition and awareness of their beer brands. Malta brands have similar logos to beer brands, but as they are soft drink, these can be advertised on public TV channels and on the radio.

Maltín Polar top brand in non-cola carbonates in Venezuela
Local players Empresas Polar (Venezuela’s leading beer producer) and the Cisneros Group devote significant resources to the promotion of malta. Targeting young consumer groups, malta brands often sponsor sporting events, such as baseball games.

Empresas Polar’s Maltín Polar brand is a locally produced, lightly carbonated, and very sweet malt-based drink. Interestingly, in contrast to the case of guaraná in Brazil, no major multinationals are involved in producing malt drinks and this type of beverage does not have any international competition so far. Consequently, Maltín Polar enjoys maximum consumer attention and leading status in this category.

The brand is now the third most popular soft drink in the country and it is the top brand in non-cola carbonates. Its achievement is underpinned by its successful marketing campaigns targeted at young people, and since 1951 Maltín Polar has been the sponsoring brand of Venezuelan baseball leagues.

Confident future
Flavoured non-cola carbonates are expected to continue to provide the momentum for growth in the non-cola carbonates category in the foreseeable future. Consumers will increasingly demand diversity of drinks, which will help spur sales in this category, whilst the ample supply of tropical fruits will provide a good platform for manufacturers.

Euromonitor predicts that the growth in flavoured non-cola carbonates will largely outperform the growth in carbonates as a whole in major countries in Latin America, growing by some 12% in volume terms between 2002-07, compared to just over 7% for non-cola carbonates within the same period.

Manufacturers will continue to enlarge their investment in this category to meet the increasing demand. The success of Coca-Cola’s Kuat may encourage more multinationals to make inroads into the category. As the consumer base for non-cola carbonates in Latin America is large, the incremental increases in consumption in carbonates is expected to be substantial. The development of flavoured non-cola carbonates will help to retain consumers and therefore make the carbonates business viable despite pressure from fruit juice and bottled water.