Sugar Reduction and Soft Drinks in 2023

Delivery

This report comes in PPT.

Key findings

Reduced sugar beverages significantly outperform sugar-sweetened regular brands globally

Across the global categories of carbonates (CSDs), still RTD tea, energy drinks and sports drinks, reduced sugar products outperformed regular brands sweetened with sucrose (or other nutritive forms of sugar) over 2018-2023. Likewise, the outlook over 2023-2028 for each of these reduced sugar categories is stronger than for regular brands, led primarily by BFY no sugar products.

Sugar reduction resonates with global consumers, particularly in soft drinks

Diabetes, obesity and obesity-related illnesses remain a global public health challenge. The linkage between sugar consumption – particularly sugar consumed from beverages – resonates clearly with consumers in Euromonitor International’s Global Health and Nutrition Survey. This holds particularly true with younger age demographics, with respondents also demonstrating avoidance of artificial sweeteners.

Changing category preferences and diversifying portfolios contribute to sugar declines

Over the last decade, several markets have introduced sugar-sweetened beverage taxes and other restrictions on sugary drinks. Suppliers have intensified reformulation efforts, with the introduction of zero calorie alternative brands and incremental sugar reduction in core brands. However, the rising preference for packaged water, along with functional beverage options, has been the most significant driver of slowing – or declining – sugar volume within the industry.

A lower volume, higher value growth model long-term, with GLP-1 drugs creating uncertainty

In developed markets, global soft drinks suppliers seem fixed to a model of growth that sacrifices growth in volume consumption for higher value, more premium transactions. Smaller package sizes and margin-friendly mini-cans contribute to reducing topline sugar consumption. Long-term, it remains to be seen how the popularisation of Wegovy, Ozempic and other GLP-1 weight loss drugs will impact sugar-sweetened and zero calorie beverage categories.