Asia offers “enormous opportunities” for the global soft drinks industry, according to market researcher Canadean, with the region’s contribution to global volumes having leapt from 18% ten years ago to approaching 30% today.
In the same period, Canadean says, the global soft drinks market itself has expanded by more than 50%, meaning that the Asia region now accounts for “a greater slice of a much bigger pie”.
“Meanwhile, Asian per capita consumption is still only half of the international average, pointing to strong future potential,” the research company says.
Key factors
According to Canadean, the “mainstay” of Asian soft drinks consumption today is packaged water, which took over the lead from carbonates in 2006, and represents around a quarter of regional soft drinks volumes.
“China is now a key provider of demand, yet the market only really took off in the 1990s, with increased product knowledge coupled with economic development driving the category forward,” Canadean says in its May 2013 report.
“Now, with the overall economy slowing, many soft drinks manufacturers have chosen packaged water to drive their volume growth.”
Meanwhile, within the market itself, natural mineral water is reportedly taking share from the dominant table water segment as Chinese consumers’ concerns about drinking ‘healthier’ beverages continue to increase.
Carbonate confidence
While packaged water may have toppled carbonates from their top position as the region’s favourite soft drink, carbonates consumption continues to build.
“Volumes today are a staggering 80% larger than they were just ten years ago,” Canadean says.
China again provides the main consumer base, but India has shown “the greatest impetus” in recent times, led by a cola and lemon-lime flavour combination.
Annual growth is slowing in India, having peaked at well over 20% in 2006, but according to Canadean, it is confidently expected to remain in double figures in the context of future regional expansion.
Energy reserves
The most dynamic soft drinks category in Asia is energy drinks. While on the basis of absolute litreage it is one of the smallest sectors in Asia, being less than one tenth the size of carbonates, the region is responsible for two out of every five litres of energy drinks consumed worldwide, outranking both North America and Europe.
“The history of these drinks in Asia extensively pre-dates their international rise to prominence and they had already achieved a position of popularity across the region well before the likes of Red Bull burst upon the global stage,” says Canadean.
The Asian market for energy drinks is said to remain resilient, with “latent growth opportunities still untapped”.
Hot and cold
While showing less progress than other sectors, the iced/RTD coffee drinks sector retains a strong foothold in Asia.
Thanks largely to a decline in Japan, consumption saw a modest volume loss in 2009/10, as other soft drinks continued to thrive.
“Part of the reason for this stunted growth is that the Asian population is far more familiar with tea than coffee,” Canadean says. According to the company’s research, hot tea outsells hot coffee in the region by a factor of 8:1.
Nonetheless, the experience of iced/RTD coffee drinks is described as “very much atypical”, and recent category progress has actually been “positive”.
“Indeed, all soft drinks in Asia are currently in the ascendency, thereby providing excellent prospects for future market development,” Canadean concludes.
