Soft Drinks: Quarterly Statement Q3 2020

Delivery

This report comes in PPT.

Key Findings

Income-led downgrades in Q3 as global recession intensifies the effects of spring and summer lockdowns

From the August 2020 data update, total soft drinks volumes are predicted to decline by 4% in 2020, with a 12% decline in sales value. The collapse in on-trade soft drinks demand is the main source of volume decline since the original November 2019 baseline forecast, with many markets expected to see annual volume declines of 30-50% in soft drinks volume in the on-trade.

Baseline scenario assumes modest improvement in the second half of 2020

The baseline macroeconomic scenario assumes a pandemic peak during the summer of 2020, leading to a global GDP contraction of 4.7%. The baseline considers only isolated and localised “second wave” conditions in the second half of 2020, with a strong economic rebound in 2021, led by China and the US.

Channel shifting, closures and changes in consumer traffic away-from-home remain volatile

On-trade decline and diminished traffic in forecourt convenience store channels is expected for the rest of 2020. European markets encountered a deeper initial decline over the summer than North America, where national lockdowns were not consistently applied on a national basis. Away-from-home traffic in Western European markets can be expected to accelerate heading into the autumn.

Affordability and revenue management are the top priority for producers moving into Q4

The most profitable business segments for beverage producers are the on-trade and the impulse (immediate consumption), single-serve component of retail. Declines in these areas have placed brand owners and bottlers under pressure to improve profitability in the near term. Innovation in terms of package mix and package size can be expected as soft drinks brands adjust to more take-home package occasions.