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Channel Review in Soft Drinks

July 2018

This report examines the changing distribution environment for global soft drinks, identifying the fastest growth channels across store-based, traditional, modern grocery, non-store and on-trade. As consumer category preferences continue to evolve, how can beverage producers master a new omnichannel environment for non-alcoholic drinks?

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Overall stability despite a shift to traditional and immediate channels

Channel distribution within soft drinks has remained broadly stable, even as longer-term shifts occur at the category level, with consumers moving towards packaged bottled water and healthier beverage options at the expense of added sugar drinks, across both take-home, immediate and foodservice points of sale.

Traditional retailing gains as emerging markets drive volume

As emerging consumer markets in Asia, Latin America and the Middle East and Africa dominate volume (litre) growth opportunities in global beverages, the main retail beneficiaries are fragmented, independent traditional grocers at the global level (even as modern, chained grocery outlets slowly take share in each of these individual markets).

Retailer-led health and wellness initiatives and private label push place pressure on brands

Leading grocery and convenience-store retailers have faced pressure to accentuate healthier, lower sugar options on the shelf, reducing the space available to high sugar products (particularly those marketed towards children). The strong growth in packaged water also provides opportunities for store-brand products, with private label performing strongest in the bottled water category.

Grocery e-commerce forces impulse reinvention

While the growth in grocery e-commerce will benefit beverage categories overall (coffee and packaged water perform well in some online channels), the decline in in-store trips could simultaneously threaten lucrative, high-margin immediate consumption occasions unless brands are able to build impulse “moments” into the e-commerce routine.

Optimise for smaller channels and non-store commerce

Beverage brands must prepare for a channel environment that generally prioritises smaller format stores in urban environments, premium foodservice occasions outside the home and e-commerce of all kinds (subscription, delivery and click & collect).

Introduction

Scope
Key findings

Industry Snapshot

Volumes remain steady while value growth dips amid shift to water
Packaged water leads global volume sales growth
Growth shifts: mixed results in terms of slowdown and recovery

Channel Shifts

Packaged beverage sales remain largely store-based
Direct-to-consumer bulk water is the largest non-store channel
On-trade sales have improved, with stronger growth expected

Store-Based Channels

Traditional retail maintains a large share of global beverage volume
Maximising efficiency is key as distribution landscape fragments
Ajegroup is traditional retail specialist in emerging markets
Convenience stores represent thriving innovation channel for NPD
C-stores innovate in product selection and payment options
OXXO: the union of bottling operations and convenience retail
Growing package mix and H&W trends pressure supermarkets
Retailers seek healthier shelves in the beverages aisle
Bottled water is the private label opportunity as juice and CSDs decline
Private label enjoys highest penetration in Western Europe
Can private label push into added-value packaged water?

Non-Store Channels

Revitalising soft drinks vending in Japan through technology
Choice and convenience drives consumers to internet retailing
Shopping reinvented: sustaining immediate consumption drinks
Bottled water excels online
Nestlé Waters moves towards added-value home delivery
Soft drinks e-commerce mirrors grocery internet retailing growth
Amazon and Alibaba become vital test markets for new products
Identifying on-trade growth opportunities in beverages
Identifying alternative and emerging channels and new occasions
Foodservice experiences can build retail beverage categories

Future Developments

2022: growth shifts to Asia, the MEA and Latin America
Channel breakdown in 2022: three takeaways

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