The Q3 update to global soft drinks forecasts is largely consistent with published baseline (October) 2020 projections, with a small upgrade to our Q2 outlook relative to May 2021. While the rise of COVID-19 variants provides cause for uncertainty, brighter prospects for consumer mobility and on-trade performance have contributed to an improved performance for the industry in recent trading updates.
Both the 2020/2021 projections and 5-year outlook for the global soft drinks industry published in Q3 are consistent with the initial researched outlook from October/November 2020. Upgrades in the US and several Western European markets offset downgrades in India, Thailand, New Zealand and smaller markets facing renewed pandemic restrictions. Coca-Cola, PepsiCo, Danone and other beverage brand owners report improving away-from-home sales, although commodity price inflation is a growing concern in recent trading updates.
In line with Q2 revisions, the removal or reduction of national and local restrictions on consumer mobility (in the form of enforced closures, capacity restrictions, curfews and other ordinances) will have a direct impact on on-trade volume recovery in the second half of 2021. However, the Delta variant and other COVID-19 “variants of concern” represent a setback that forced authorities in Asia, New Zealand and parts of the US to re-instate controls over the late summer, creating uncertainty in terms of full-year projections.
In August 2021, PepsiCo – the second largest soft drinks brand owner by value and volume – announced the sale of its Tropicana fruit juice and Naked juice/smoothie brands to private equity firm PAI Partners. This is a key development for the industry, since Tropicana is the largest global brand in 100% juice and the second largest in global juice overall. The proposed transaction is the largest in a series of sales, divestments and discontinuations that have impacted the industry over the last year, with PepsiCo’s rival Coca-Cola finishing a programme of SKU rationalisation in late 2020.
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