Soft Drinks: Half-Year Update H1 2022

July 2022

Euromonitor International updated the Soft Drinks Forecast Model in April 2022, applying the latest macroeconomic consensus to review 2022-2026 category projections. This report reviews top line changes to this outlook, indicating the main challenges faced by the soft drinks industry, examining the impact of price inflation on category performance, and reviewing the recent reporting on industry leaders from public trading updates.

USD 1,325
Request More Information

Key Findings

Price increases are resulting in significant quarterly revenue increases for soft drinks producers

The consensus view of leading soft drinks producers in Q4 2021 through Q2 2022 is that substantial price rises (in the form of reduced promotional intensity and margin-friendly changes to product mix, as well as direct price increases to retailers) have been achieved with a minimal impact on volume sales to-date. Pricing action has largely been successful, driving strong revenue growth for leading brand owners and bottlers through Q2 2022.

In the second half of 2022, volume sales are likely to soften as the prospect of stagflation looms

However, the tolerance of consumers may be tested in the second half of the year. Soft drinks producers have moved faster than peers within consumer packaged goods in passing on price increases, utilising a much broader package mix and other revenue growth management options available. But further planned increases may test the resilience of consumers, particularly as the prospect of slowing output and “stagflation” (inflation plus a recession) increases.

Rising sugar and corn prices may force changes in innovation strategies and reformulation

Soft drinks producers have seen input costs rise in a variety of areas. High energy prices, tighter labour markets and higher commodity prices for aluminium, plastic resin, cardboard and other packaging materials have all had a significant impact on margins. In 2022, Russia’s war with Ukraine has contributed to an increase in corn prices (a key ingredient in artificial sweeteners), sugar and other food commodities, complicating product innovation and formulation decisions for producers.

Price increases and a resurgence of public health challenges could complicate on-trade beverage recovery

While retail bears the brunt of inflation, an environment of rising prices threatens the recovery of the on-premise beverage sector in North America and Western Europe in 2022, while ongoing public health challenges are restricting mobility in China and other parts of Asia. A significant resurgence of infections and subsequent restrictions on travel and mobility remains a key risk to the industry, even as attention shifts to the challenges posed by high inflation.

Introduction

Scope
About this briefing
Key findings

H1 soft drinks update

Global inflation leading to record nominal growth in soft drinks
Despite consumer resilience, volume growth slows across soft drinks as prices rise
Downside risk of “stagflation” as income growth outlook slows and recession looms
The many drivers of inflation within soft drinks
Energy costs remain at record highs, while sugar and corn prices rise in Q2
Production and transport costs are the highest concerns among industry leaders
Industry leaders are accepting lower margins and cutting promotional spending
Refillable packaging units will allow Coca-Cola to maintain affordability as prices increase
Price increases for PepsiCo in North America and internationally, as Bang deal expires
Anticipating price increases across the energy category in H2 2022

h1 2022 Macroeconomic Update

Slower economic growth and substantial inflation increases amid rising uncertainty
Supply chain problems and rising energy prices drive producer price growth
Real GDP annual growth forecasts and revisions from last quarter

About our industry forecast model

Data and reporting timeline

Soft Drinks

This is the aggregation of the following categories; Carbonates, Fruit/vegetable juice, Bottled water, Functional drinks, Concentrates, RTD tea, RTD coffee and Asian speciality drinks.

See All of Our Definitions
Share:

NEW REPORT GUARANTEE

If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE! Home Page