Sports Drinks in the United Arab Emirates

PROSPECTS

Sports drinks consumption declines due to high taxes and health concerns

Over 2017-2018, excise tax of 100% and VAT of 5% were levied on sports drinks in the United Arab Emirates. The resultant price hikes caused off-trade volume sales to decline sharply, and the downward trend continued in 2019.

Investment in innovation and marketing activities expected to remain low

Sports drinks face growing competition from other product types that offer comparable functionality in terms of hydration, replenishment of electrolytes etc, but have a much healthier image. Examples include bottled water, coconut water and various protein-based beverages.

Companies likely to focus on improving distribution via specialist channels

In line with rising health-consciousness, more people in the United Arab Emirates are now regularly playing sports or partaking in other forms of exercise in an effort to improve physical fitness and general wellbeing. Over the forecast period, this should continue to encourage sports drinks companies to look beyond mainstream grocery retailers channels and focus on improving distribution of their products via gyms and fitness centres.

COMPETITIVE LANDSCAPE

Otsuka Holdings Co maintains strong lead despite increasing competition

Otsuka Holdings Co remained the clear leader in sports drinks in 2019 thanks to the combined strength of its Pocari Sweat and Isostar brands. Pepsi-Cola, which offers the Gatorade brand, finished second, followed by National Trading & Development Est (NTDE) with the Sports Water brand and GlaxoSmithKline Plc with Lucozade.

Imported brands set to remain dominant

Imported brands continued to dominate sports drinks in the United Arab Emirates in 2019. This dominance looks set to remain unchallenged over the forecast period, as the high rate of excise tax and declining consumer interest in the category mean the entry of new local producers is unlikely.

Health and wellness expected to be a focal point for new product development

While the level of new product development activity looks set to remain low overall, it is expected the health and wellness trend will be the chief inspiration for most innovation that does take place in sports drinks over the forecast period. Some players are likely to respond to rising health-consciousness among consumers by reformulating established brands to reduce their sugar and sodium content, or by launching completely new products that contain lower quantities of these ingredients.

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