Asia holds the most promise for non-carbonated beverages

by Keith Nunes
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BASINGSTOKE, ENGLAND — The non-carbonated beverage category has often been depicted as being made up of value-priced, low quality drinks targeting children. Today, the image is rapidly being shed with the emergence of premium brands from a plethora of small companies and the focus of bigger players like Coca-Cola, PepsiCo, Schweppes, Danone and Nestle on the segment.

With brands like Snapple, Oasis, Minute Maid and many smaller local brands, it is the non-carbonated beverage category that appears to have the most to gain from the slowing demand for carbonated soft drinks (see Food Business News of Feb. 7, Page 16). This past year saw an impressive 5.5% jump in global non-carbonated beverage sales, to take the market to a size of nearly 8.5 billion gallons. Growth now has averaged 5% over the past six years and the market is expected to expand by more than 1 billion gallons by the end of 2008, according to a new report from beverage industry analysts, Canadean.

In contrast, the carbonated beverage category has been more sluggish, averaging just 2% growth between 1999 and 2005, with a compound average growth rate of just 1% expected by the end of 2008.

In size however, the two categories do not compare, with carbonated beverages accounting for a massive 51 billion gallons, six times that of the non-carbonated beverage market.

With the exception of the tiny Australasian region, Asia is the fastest growing and the largest volume region for non-carbonated beverages, growing at 8% in 2005, and being responsible for more than 40% of the world's non-carbonated beverage sales. Average consumption is limited to approximately .8 gallons per person, about half that of carbonated beverages. The region is being helped by the huge Chinese market, which is registering annual growth well in excess of 10% and has been recently buoyed by the success of vitamin drinks.

North Americans drink the most non-carbonated beverages per person, drinking 6 gallons per person; double that of the next biggest consumers, Western Europeans. The United States is the biggest individual volume market for non-carbonated beverages, but does appear to be showing some of the signs of maturing. Maturity has come well before the category has reached the stage of being able to challenge the dominance of carbonated beverages, according to the Canadean report, perhaps an indicator that there is a cap on the long-term potential of the non-carbonated category.

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