Soft Drinks Quarterly Briefing Q4 2017

Global soft drinks growth stable in Q4

The global soft drinks industry remains close to baseline forecasts in terms of overall CAGR, as positive growth in Europe and emerging Asia offsets weakness in the Middle East, Nigeria and Latin America. M&A activity takes the form of manufacturer investments in smaller, high growth emerging brands in RTD coffee and mineral water.

India is an innovation focus in 2018

Economic prospects in India continue to improve, leading to upgrades in 5-year forecasts across beverage categories. Global soft drinks leader Coca-Cola reported strong Indian volume growth this quarter, and announced plans for more incorporation of locally produced fruits and flavours in future Indian brand launches.

Downgrades in Mexico may be understated

Weaker income (GDP per capita) growth in Mexico has a corresponding impact on the outlook for soft drinks in Mexico, although major manufacturers, including PepsiCo and Dr Pepper Snapple Group, report deeper disruptions caused by the aftermath of Hurricane Katia and two major earthquakes.

A German recovery benefits premium brands

The German economy continues to outperform other major developed economies, leading to upgrades in the outlook for the soft drinks industry. Income sensitive categories in premium, healthier drinks (brewed beverages and super-premium juices) are likely to emerge as the main winners.

The Saudi soda tax comes down hard

A steep tax on carbonated soft drinks and energy drinks darkens the growth prospects for the Saudi beverage market, compounding the effects of a weaker consumer economy since the baseline January forecast.

E-commerce driving a rosier Chinese outlook

The Chinese economy continues to improve after some uncertainty earlier in the year. PepsiCo and other beverage leaders report recent strong channel growth in internet retailing of drinks, and are targeting new product launches for m-commerce.