Carbonates in Spain

2020 IMPACT

COVID-19 hits both on-trade and off-trade sales

While soft drinks categories such as bottled water and juice have seen off-trade channels absorb some of the demand that has been denied access to foodservice outlets during the COVID-19 pandemic, carbonates has seen sales fall in both on-trade and off-trade. As in other categories, on-trade sales have been dramatically impacted by the closure of foodservice outlets at the height of the pandemic and subsequent restrictions on their operations in order to maintain social distancing even as they have reopened.

Authorities and consumers display increasingly negative attitude to sugar

While the sugar tax approved in Catalonia in 2017 was subsequently declared null and void by a judge because of an insufficient consultation process, the introduction of the tax and rumours that it could foreshadow a similar nationwide policy have both raised consumer awareness of the potential health issues relating to sugar consumption and encouraged manufacturers to focus on carbonates with a lower sugar content. Consequently, during 2019 and 2020, new brands and manufacturers emerged in the Spanish competitive landscape with an emphasis on low-sugar products.

Cía Servicios de Bebidas Refrescantes remains dominant but sees lead cut

The Coca-Cola Co’s Cía Servicios de Bebidas Refrescantes remains dominant in carbonates in Spain, with its brands benefiting from high levels of consumer recognition, extensive distribution, strong marketing and a reputation for quality. Moreover, the company has maintained its position by responding quickly to changing consumer needs, including significantly reducing the sugar content of its products in order to meet the growing demand for lower-sugar carbonates.

RECOVERY AND OPPORTUNITIES

Health and wellness trend poses considerable challenge for carbonates

While carbonates is forecast to see a positive performance in both volume and value terms in 2021, as the resumption of more normal lifestyles creates demand through both retail and foodservice channels, retail volume and constant value sales are expected to stagnate over the forecast period as a whole. The category faces a significant challenge from the rise in consumer health-consciousness, and particularly growing concerns about the impact of sugar consumption on health.

Economic impact of pandemic set to undermine demand

The measures introduced to limit the spread of COVID-19 are set to have a deep and enduring economic impact, with job losses and reduced incomes leading consumers to focus spending on essential items. This is likely to have a negative impact on sales of carbonates as consumers cut back on visiting foodservice outlets and organising large gatherings.

Opportunities for private label

The increasingly price-sensitive environment resulting from efforts to contain COVID-19 is likely to provide opportunities for the further development of the private label segment during the forecast period. Moreover, the private label segment’s capacity to compete with brand manufacturers has been bolstered by its investment in reduced sugar carbonates in response to the rising demand for such products.