The emergence of COVID-19 forced on-trade establishments to operate under strict new guidelines including social distancing measures which reduced footfall, as consumers grew increasingly cautious about visiting crowded public spaces due to fears over contracting the virus. This had a significant impact on demand for carbonates through this channel; fast food outlets for instance, one of the most popular on-trade locations for carbonates sales, experienced a significant drop in consumer visits as news about a cluster infection at a fast food franchise spread in the media.
Carbonates experienced increasing demand through e-commerce during the pandemic, as an increasing number of consumers shifted to placing online orders instead of visiting physical retailers due to concerns about exposure to the virus. This has resulted in stronger share gain for e-commerce while the dominant distribution channel of modern grocery retailers including hypermarkets and supermarkets experienced notable declines in 2020, although local neighbourhood outlets such as convenience stores fared better, due to their smaller size and location, allowing consumers to easily reach them for quick purchases.
Coca-Cola Korea Co Ltd strengthened its overall leadership of carbonates in 2020 due to its wide product portfolio, where it dominates cola carbonates with its Coca-Cola umbrella brand which includes low calorie variants such as Coca-Cola Zero Sugar and Coca-Cola Light. 2019 had already seen the player launch a huge marketing campaign with popular K-Pop group BTS, where different photographs were printed on Coca-Cola’s aluminium can and bottle packaging, which appealed greatly to millennial consumers and has helped to strengthen its appeal amongst a younger generation.
Dining-in options through on-trade are likely to remain limited for many consumers until the end of 2020 with the virus remaining in circulation, therefore continuing to impact demand for carbonates through this channel, and supporting off-trade sales to be consumed in the home. Nevertheless, May 2020 had seen the South Korean government provide emergency funds to all citizens struggling as a direct result of the pandemic, with approximately 25% of the fund reported to have been allocated to spending through on-trade, offering further hope that consumer’ sentiment towards eating out could help boost this channel.
While food delivery apps tend to associated with on-trade in South Korea, the pandemic is expected to influence ongoing demand for carbonates deliveries sourced from popular distribution channel convenience stores. To attract consumers who avoided leaving their homes in 2020, convenience stores launched delivery services through partnerships with popular delivery apps such as Baemin and Yogiyo.
The niche of tonic water/other bitters has been recording impressive off-trade current value and volume growth within carbonates over the review period, despite being dominated by on-trade. Tonic water is a Western-style mixer for spirits which previously did not have a significant presence in South Korea as local consumers were not traditionally in the habit of mixing carbonates with alcoholic drinks.
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Understand the latest market trends and future growth opportunities for the Carbonates industry in South Korea with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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