Carbonates in the US

2021 DEVELOPMENTS

2021 a breakout year for functional carbonates

Carbonated soft drinks containing prebiotic fibre and alternative zero-calorie sweeteners gained mainstream attention in 2021, moving beyond niche e-commerce availability, expanding their distribution into national retailers like Whole Foods and other national grocery chains. These products – often lightly sweetened (in many cases featuring natural sweeteners like stevia, monkfruit or allulose) with various functional benefit claims – straddle the line between carbonated water, soft drink and functional tonic.

Flavour innovation brings attention back to the category

Soda manufacturers are working hard to retain existing soda consumers and sustain interest by more rapidly introducing new flavours, with a much faster rate of new product introductions. This has been a successful model for Coca-Cola, beginning in the US with the launch of Diet Coke exclusive fruit flavours in 2018 (mirroring the creative flavour SKUs of the seltzer category).

Further reduced sugar changes in 2021

Innovations in zero-calorie sweeteners are helping to renew interest in reduced-sugar carbonates. In 2021, Coca-Cola reformulated and repackaged its Coca-Cola Zero Sugar brand in the US and Canada.

PROSPECTS AND OPPORTUNITIES

Price inflation expected to raise carbonates RSP in 2022

Significant unit price inflation is expected to impact the carbonates category in 2022, as rising input costs for packaging, sweeteners and transport costs are passed on to consumers. Euromonitor International expects unit price per litre in the carbonates category in the US to grow by 5% in current value terms (2% at constant 2021 prices) in 2022, although price increases for individual SKUs and channels are likely to be much higher.

Growing role for independent brands in consolidated category

Carbonates is one of the most consolidated large consumer goods categories in the US, with the top three producers (Coca-Cola, PepsiCo and Keurig Dr Pepper) accounting for more than 80% of retail value and volume in 2021. However, the shift to online distribution channels is one factor eroding the traditional advantage enjoyed by the large producers in terms of shelf presence and visibility.

Carbonates category leads the way in reducing packaging waste

According to Euromonitor International’s Packaging database, retail sales of carbonates account a fifth of all PET plastic beverage bottle units in the US, second only to bottled water. The category also accounts for a disproportionate share of aluminium can units.