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A Glass Half Full: The Case for Soft Drinks in Western Europe

April 2014

Western Europe is sometimes unfairly characterised as a stagnant market for soft drinks, with low growth prospects for branded products. While challenges remain in Southern Europe, per capita consumption has remained high in Northern Europe. Areas of value generation are possible in wellness, functional and alternative beverage options.

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Slow but steady

Western Europe maintains stable and resilient per capita consumption of soft drinks despite economic challenges, bettering the performance of other CPG industries. While lagging behind North America in terms of overall volume, growth prospects are stronger in some high-value beverage categories.

Softer landing

North America has further to fall as people reduce soft drinks occasions and cut back on high rates of consumption. While volumes remain stable, European value sales are sustained by higher prices per litre in the off-trade channel.

“Better for you” and natural leads

New European consumers demand HW-positioned beverages. European alcoholic beverage consumption has also slipped, with “better for you” soft drinks a potential beneficiary as Europeans cut back on both volumes and expenditure on alcohol.

On-trade slumped but key to growth

On-trade sales of soft drinks remain a real weak point in Western Europe, with total value sales having declined by US$4 billion since 2008. This has impacted both Northern and Southern Europe, although the northern half of the continent retains a major advantage in retail soft drinks prospects.

Looking to RTD tea and energy drinks

Growth prospects for carbonates are flat, while RTD tea and energy drinks represent new growth areas for European brand owners. These categories (in addition to low-calorie carbonates) will see the most attention from brand owners over the forecast period.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Key Findings

Key findings

Introduction

Scope

Regional Overview

Soft drinks in Western Europe: The downside argument
Declining constant value sales in Western Europe since 2007…
…yet European soft drinks still outperform most fmcg industries
Soft drinks in Western Europe: The sky isn’t falling
Globally-high rates of per capita consumption, and growing
Stable category evolution over the decade
Higher unit prices for CSDs and bottled water than North America
“Share of throat” in a global context
Soft drinks benefit as Europeans drink less alcohol
Coca-Cola leads in European branded soft drinks
Distribution: Discounter challenge
W ellness a key value driver in European soft drinks
Reduced sugar carbonates have traction in Western Europe
Wellness a key value driver in European soft drinks
Value versus volume per capita in 2013
The North-South divide in European soft drinks
On-trade sales continue to slump
Opportunities in summary

Category Insights

Carbonates: Unit prices sustain category despite declining volumes
Europe stable cola CSD spend: North American further to fall
Coca-Cola Zero: Consistent growth in Western Europe
Stevia goes mass market in Western European carbonates
Importance of reduced sugar to sustain growth
The German hunt for a healthier carbonate
RTD tea: High consumption, but private label limits value gains
RTD tea brand profile: Arizona in Europe
Juice volumes weak, but opportunities to create value
Juice: Private label dominates
Bottled water: Generating value in branded products
Functional water capitalises on energy drink growth
Entente cordials: UK and France dominate concentrate sales
Concentrate game changers on the horizon?
Energy drinks boom continues region-wide
On-trade energy to keep category strong?
Sports drinks: Failing to find a space in the market
S easonal variables can provide a lift
Category winners and losers
Categories and trends in summary

Competitive Landscape

Winners as consumption shifts
Retailer profile: Aldi and CSD price wars in Germany
Bottler profile: CCE, Western Europe’s largest bottler
Coca-Cola stays number one overall

Regional Prospects

Growth through 2018: Slow, steady, resilient
Growth areas in mature markets
Unfavourable tax and regulatory regimes
Select country trends to watch in 2014
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