07 May 2013
Asia offers enormous opportunities for the global soft drinks industry. On a volume basis, its contribution has leapt from 18% ten years ago to approaching 30% today. Meanwhile, according to Canadean, the global market itself has expanded by over 50% over the same time span. In other words, the region is taking a greater slice of a much bigger pie. Meanwhile, Asian per capita consumption is still only half of the international average, pointing to strong future potential.
The mainstay of Asian soft drinks consumption today is packaged water, which took over the lead from carbonates in 2006. It represents around a quarter of regional soft drinks volumes. China is now a key provider of demand, yet the market only really took off in the 1990s. Increased product knowledge coupled with economic development drove the category forward. Now, with the overall economy slowing, many soft drinks manufacturers have chosen packaged water to drive their volume growth. Meanwhile, within the market itself, natural mineral water is taking share from the dominant table water segment as Chinese consumers’ concerns about drinking ‘healthier’ beverages continue to increase, thereby enhancing market value.
Carbonates may have been toppled from their pole position as the region’s favorite soft drink, but consumption continues to build. Volumes today are a staggering 80% bigger than they were just ten years ago. China again provides the main consumer base but India has shown the greatest impetus in recent times, solidly led by a cola and lemon-lime flavor combination. Annual growth is slowing in India, having peaked at well over 20% in 2006, but according to Canadean, it is confidently expected to remain in double figures in support of future regional expansion.
The most dynamic soft drinks category in Asia is energy drinks, though on an absolute literage basis it is one of the smallest, being less than one tenth the size of carbonates. That said, the region is, in fact, responsible for two out of every five liters of energy drinks consumed worldwide, outranking both North America and Europe. The history of these drinks in Asia extensively pre-date their international rise to prominence and they had already achieved a position of popularity across the region well before the likes of Red Bull burst upon the global stage. Furthermore, the Asian market for energy drinks remains resilient, with latent growth opportunities still untapped.
One soft drinks category that is struggling to progress is iced/rtd coffee drinks. Whilst Asia is the product’s main market, thanks to Japan, its recent rate of development has been disappointing. Consumption actually confronted negative demand in 2009 and 2010, leading to a modest volume loss, as other soft drinks continued to thrive. Part of the reason for this stunted growth is that the Asian population is far more familiar with tea than coffee. Hot tea, for instance, outsells hot coffee in the region by a factor of 8:1, according to Canadean research. Nonetheless, the experience of iced/rtd coffee drinks is very much atypical and recent category progress has actually been positive. Indeed, all soft drinks in Asia are currently in the ascent thereby providing excellent prospects for future market development.