Carbonates in Costa Rica

PROSPECTS

Despite rising health awareness, carbonates maintains stable demand

As a broader base of mid- and low-income consumers continues to search for additional savings on a regular basis, demand for carbonates relied on more aggressive promotions and discounts to maintain stable volume sales figures, despite the rising health awareness trends in relation to food and drink with high sugar content, where carbonates remains one of the leading negative references. This scenario continued to illustrate the economic situation in Costa Rica at the end of the review period, particularly affecting the less privileged economic segments of the population, where health and wellness trends often remain abstract aspirational concepts that have little influence in comparison to regular budgeting and consumption traditions developed in relation to carbonates.

Priced-based competition and reduced sugar claims anticipated to gain momentum by 2023

As Costa Rica’s macroeconomic scenario continues to be threatened by multiple cautious warnings over the forecast period, local consumers’ confidence and purchasing capacity will continue to be affected. They will suffer the anticipated effects of higher inflation and unemployment rates, which will have a greater impact on lower-income consumers.

COMPETITIVE LANDSCAPE

International players remain ahead in volume and value sales

Benefitting from consolidated brands’ positioning and large economies of scale in terms of manufacturing, marketing and distribution, major global players such as Coca-Cola and PepsiCo Inc continued to take advantage of their broad base of regular consumers across the country. Despite government efforts to restrain carbonates consumption amongst teenagers and children (through legislation which forbids products with high sugar content to be sold in public school cafeterias), the ability to promote the demand for larger packaging sizes capable of incentivising home family consumption continued to protect sales of carbonates in comparison to perceived healthier soft drinks, which tend to focus on smaller impulse presentations with higher unit prices.

Recognised global brands expected to maintain competitive edge

Despite the rising availability of low-priced generic carbonates that are anticipated to continue emerging over the forecast period (both domestic and imported products), the leading players are expected to increase their competitive advantage by opting to continue improving their logistics and operational savings to provide the most attractive value to consumers. Global players such as Coca-Cola and PepsiCo (the latter benefitting from the distribution partnership with leading local beverage player Florida Bebidas) are expected to continue basing their competitive strategies on their core cola brands, in addition to displaying a broader range of complementary non-cola alternatives where they can make use of more aggressive unit prices (and even promote natural ingredients content to improve their image), without compromising the quality perception of their leading brands.

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