This report examines the competitive strategies of the major brand owners within global soft drinks as they navigate the recovery from on-trade collapse in 2020. Competitive activity over the past year is profiled, with a focus on the strategic direction of each major producer - from energy drinks M&A to action on sustainability.
Global soft drinks producers faced a two-track performance in 2020, with a significant “channel shifting” effect lifting off-trade volumes during the pandemic, particularly in large-format grocery, traditional retail and other future consumption channels. At the same time, on-trade volume collapsed with tight restrictions on away-from-home consumer behaviour, with negative consequences for industry profitability leading into 2021.
Product development was reduced over the last year, with major producers seeking to reduce SKUs and focus activities around successful, existing brand properties. However, energy drinks and other functional beverages (particularly in the area of gut health, digestive health and immune support) were a rare area of opportunity. In particular, PepsiCo increased its presence across energy drinks and enhanced functional drinks over the last 12 months.
The long-term outlook for the industry remains strong and will be fuelled by recovery in the on-trade channel in the short term, and a push to increase transaction value in the mature markets of North America and Western Europe, which Euromonitor International’s macro model suggests are poised to recover faster in 2021. In emerging and developing regions of Asia, the Middle East and Latin America, industry leaders face a growing threat from value-positioned brands, which are taking industry share, particularly as consumers move from core sparkling categories into packaged water, coffee, tea and functional drinks.
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