Global Outlook

August 1, 2005
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Global Outlook
Health and wellness lead beverage trends
The key trend in the non-alcohol drinks industry, according to the research analyst firm Euromonitor International, is consumer health and wellness products. Healthy drinking trends are expected to not only drive bottled water sales in the future, particularly functional/enhanced and flavored variants, but will also have an impact on such healthy alternatives as functional drinks.
Threat of obesity
Obesity poses a major risk for serious diet-related non-communicable diseases, including diabetes mellitus, cardiovascular disease, hypertension and stroke, and certain forms of cancer. Consumers also are continually bombarded with images of the “ideal” body and unrealistic goals. Standard carbonates, high-sugar fruit/vegetable juice, and functional drinks face competition and cannibalization from diet-based counterparts. According to Euromonitor, this health trend will create consumer demand for functional soft drinks. Older consumers will seek drinks with ingredients that claim to lower cholesterol and the risks of heart disease, cancer and obesity.  
Low-sugar, high-profits
The carbonates downturn can be blamed on growing demand for lower sugar drinks. 2005 has seen considerable focus on alternative sweeteners such as Splenda, and non-cola carbonates outperformed cola in developed and developing markets in 2004. Juice-based drinks, which are perceived as healthier than cola, have also seen improved demand.  
Of non-cola carbonates, lemon/lime and orange dominate, with exotic flavors also becoming increasingly popular in most regions. Diet extensions of new products such as Diet Mountain Dew, Diet Vanilla Coke and Diet Pepsi Twist have all performed better than full calorie counterparts. This suggests taste is still important to the consumer but health is now a factor in beverage preference. Coca-Cola addressed the health trend with the unsuccessful C2 and the yet-to-be determined Coca-Cola Zero. Non-cola carbonates have also had to reformulate, with Cadbury Schweppes extending 7 UP with 7 UP Plus, claiming lower sugar content and increased functional properties.  
Eat your fruits and vegetables
Global off-trade volume sales of fruit/vegetable juice experienced an increase of 4.7 percent in 2004 over 2003 according to Euromonitor International. Volume growth in sales of fruit/vegetable juice has benefited from the general consumer trend toward healthier lifestyles, particularly in mature markets such as North America and Western Europe. Parents and young children have become the target consumers for fortified juices, with product development focused on ACE (vitamin A, C and E) juice drinks boosting volume sales of the category.
Aging populations in developed markets also will offer good opportunities for manufacturers to market products to older age groups. Britvic in the United Kingdom launched the adult-targeted J20 nectar in 2002, and was a major success following heavy promotion in 2004. Value sales almost doubled vs. 2003.
International health concerns
The rapid development of economies in developing regions is creating similar health and wellness product demand in countries as diverse as China, Romania, Indonesia, Brazil and Russia. In addition to enhanced bottled water, fortified fruit juice, functional drinks and conventional bottled water are set to drive volume sales of non-alcohol drinks as consumers in developing regions and in developed markets lose confidence in the municipal water supply.
How safe is the water?
Euromonitor found globally that the consumption of bottled water is gaining on carbonates, and in 2006 is expected to overtake carbonates and become the largest sector of the non-alcohol beverage market. The growing health trend and concern over the quality of tap water both are helping growth in volume sales.
Japan remains the world’s largest and most developed market for functional bottled water, and modest growth in 2004 suggests that signs of consumer fatigue with amino acid products have started to set in.
Function and enhancement
Functionality and enhancement are becoming key components of product innovation and extension in the soft drinks market. The infusion of health properties in premium products such as enhanced/ functional flavored bottled waters, and fortified fruit juices will continue to be a key feature especially in developed markets. These types of products have the potential to become cash generators for the long term.
The greatest trend in bottled water is functional/enhanced and flavored products. A number of beverage companies have introduced new functional waters with “nutraceutical” enhancements in a bid to attract health conscious consumers. Not only did Energy Multi-Vitamin Water Corp’s Energy Multi-Vitamin Enhanced Water boast 125 percent of the U.S. recommended daily allowance of vitamin C and 40 percent of the RDA for vitamins A, E, B2, B3, B5, B6 and B12, but it also had only 13 grams of carbohydrates in each serving.  
Touch of taste
Flavored bottled waters have benefited greatly from growing consumer interest in weight-loss programs and low-carbohydrate diets. Although flavored bottled water is still a small category, global off-trade sales doubled during Euromonitor’s 1997 to 2004 review period, and rose some 25 percent in 2004 alone.
In the United Kingdom, the world’s largest market for flavored bottled water, sales have been driven by the number of big brands, such as Volvic Touch of Fruit, that have given consumers an alternative to sugar-laden and carbonated alternatives. In 2004, Argentina emerged from nowhere to become the world’s fourth-largest off-trade market for flavored bottled water, recording volume growth of almost 400 percent in 2004 alone. BI
Jeanette Bengtsson is non-alcohol drinks account manager for Euromonitor International. Euromonitor is a leading provider of global business intelligence and strategic market analysis, and has more than 30 years experience of publishing market reports, business reference books, online databases and bespoke consulting projects. Euromonitor International is headquartered in London, with regional offices in Chicago, Singapore, Shanghai and Vilnius.

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