Carbonates in Hong Kong, China

PROSPECTS

Leisure drinkers boost sales of tonic water/other bitters

Tonic water/other bitters was one of the few areas to record current value growth in 2018, albeit from a low base. These products are typically used as a mixer with alcoholic drinks and there was a growing focus towards the end of the review period on the quality of the tonic water used when preparing a gin and tonic.

Leading players turn their attention to non-cola carbonates

While cola carbonates continued to decline in off-trade value and volume terms in 2018 due to the negative perception of these products, non-cola carbonates staged somewhat of a recovery. With cola carbonates suffering from bad publicity due to the reported negative impact of these products on health, players have switched their focus to non-cola carbonates, offering products with a lower sugar content or other nutritional benefits, like a high vitamin C content in the case of Ribena.

Companies invest in reduced sugar options

Consumers in Hong Kong are a big market for reduced sugar carbonates, with the health and wellness trend only strengthening this demand, especially with a voluntary food labelling scheme being introduced in 2017 to indicate if a product is low in sugar or has no sugar. Nevertheless, some reduced sugar versions of popular carbonates have struggled with consumers preferring the taste of standard products.

COMPETITIVE LANDSCAPE

Swire Coca-Cola Hong Kong Ltd controls carbonates

Swire Coca-Cola has maintained a dominant position in carbonates in Hong Kong for such a long time that it acts as a barrier to entry for smaller players. The company has a broad portfolio with lemonade/lime being the only category of carbonates that it does not hold a value share greater than 50% (although it still leads this area).

Ribena flourishes thanks to digital marketing and healthier image

Suntory Beverage & Food Hong Kong Ltd was one of the only players to register growth in 2018 within carbonates, with its Ribena brand benefiting from catchy online marketing. The company’s lightly sparkling Ribena is promoted for its refreshing qualities and vitamin C content, with it also benefiting from the brand awareness and familiarity with its concentrates and juice products.

Grapefruit squeezes out a profit for AS Watson Group

AS Watson Group is ranked a distant second in carbonates behind Swire Coca-Cola with its Sunkist and Watson’s brands. Its Watson’s brand of tonic water/other bitters registered a value decline in 2018 due to growing competition from smaller players.

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