Diversity in Strategies For Leading Soft Drinks Companies, Southeast Asia

June 2021

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.

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Key Findings

The diversity of consumers in Southeast Asian markets requires varying strategies from different players

Southeast Asia has varying consumer profiles that require companies to adopt different strategies in order to maintain strength in domestic markets or expand to new markets. While local companies’ strategies are typically more tailored towards the consumer segments in each market, global companies’ strategies are often shaped by global initiatives, with varying success across various markets.

Reformulation has been a focus area for global companies in recent years

For global companies, such as Coca-Cola and PepsiCo, reformulating their products, as well as introducing new products with low or no sugar, has been a focus in recent years. In addition to aligning with global strategies, rising health consciousness among consumers and the implementation of sugar tax in several countries has led to local companies reformulating their products too.

Focusing on the affordability of products is still important for local companies

A focus on affordable products remains a common strategy in order to address a large population in Southeast Asia with relatively low disposable incomes. This strategy has enabled some local companies to maintain their leadership, particularly in markets like Indonesia, often against global companies which have good penetration and strong brand equity.

E-commerce is gaining ground in soft drinks in the region

As the COVID-19 situation in Southeast Asia remains uncertain, the opportunity for e-commerce in Southeast Asia remains high. While the share of e-commerce in soft drinks distribution is currently still quite small, more players are pushing for a greater presence in this channel.

Opportunities for retail to bring flavours commonly found in foodservice

While recovery in the foodservice is expected, it remains a distant prospect.

As such, bringing flavours that are typically found in foodservice to retail, particularly tea, could be an opportunity for players to regain some lost ground.

Introduction

Scope
Key findings

Industry Overview

Coca-Cola retains global leadership in retail soft drinks
Stable share picture in soft drinks despite challenges of the past year
On-trade exposure shapes company prospects in 2021
Core trademark brands still dominate for “big soda”
Nestlé sells off its North American regional water business
Shifting from volume-led growth to profitable transactions in Europe/US
Energy drinks producers rising in the wider soft drinks top 10
Value-focused local and regional producers take share across soft drinks
Major M&A activity across soft drinks, despite challenging conditions
Considering soft drinks competitive performance for the rest of 2021

Key Players

Strategic priorities for Coca-Cola, the industry’s largest brand owner
Coca-Cola’s restructuring enables greater focus on master brands
Coca-Cola places greater focus on home consumption to drive sales
Smaller, sustainable, higher margin packaging launches feature in Q1
Functional drinks to energise during the day and relax at night
PepsiCo catching up in energy drinks category through acquisitions
Growing energy drinks share in the US and Russia is vital for Pepsi
Red Bull continues its activity around sports to promote core brands…
…while expanding healthier, fruitier and mocktail -inspired beverages
Suntory innovates for a “new normal” at home and health management
Danone’s sustainability agenda and its resonance with consumers’ values
Environmental and sustainability commitments differentiate Danone
In China, domestic players make major gains in carbonates
Chinese domestic brands differentiate through ingredients and packaging
More soft drinks occasions in the home could lift countertop commerce
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