Market for carbonated beverages strong in developing nations

by Keith Nunes
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BASINGSTOKE, ENGLAND — Despite a spate of bad press, carbonated beverages, the leading global soft drink category, is anticipated to grow by approximately 2% in 2005, according to a recently released study from Canadean Ltd. Consumers around the world will have guzzled 51 billion gallons of carbonated beverages in 2005, the equivalent of approximately 8 gallons per person. Unfortunately, it is not all good news for carbonated beverage makers, with the compound annual growth rate for the market set to fall from the 1.9% to 1.2% during 2006 to 2008.

The debate about sugar content is impacting sales in more affluent regions of the world, but it is the developing regions that are driving demand. Eastern Europe leads the way with a 7% surge in demand for carbonated soft drinks between 2004 and 2005, while Asia, Central & South America, the Middle East, North Africa and the rest of Africa all clocked up growth of 3% or 4%.

In contrast, North American sales slipped by 1% as did Australasia. Western European sales edged upward marginally.

Concerns over diet are fueling the rise in the low calorie segment, which now represents as much as 14% of all sales. The level of low calorie penetration in the developed world reflects the changing lifestyle of consumers, reaching 30% in the key North American market, and 18% in the No. 2 volume region, Western Europe.

In North America, the emergence of sucralose as a third intense sweetener alongside aspartame and acesulfame k has been a factor in the rising popularity of diet drinks. The improvement in the taste of low calorie products will be critical in determining the future prospects for the category, particularly in diet sensitive segments of the global village.

Interest in diet drinks is generally related to the economic well being of a region, and areas like Asia and the Middle East and North Africa register a low calorie share of just 2% or 3% of sales. Consumption of diet drinks in these regions may be traced to more prosperous pockets of society. Demand is rising and there is certainly evidence that young women in China are becoming increasingly calorie conscious.

The success of "diet" variants in North America and Western Europe will not be enough to prevent the loss of consumers to other fast-developing categories like packaged water and non-carbonated beverages. As a result, these regions are seeing their share of total sales gradually eroded.

North America and Western Europe still account for 44% of global volume, but in 1999 the regions had been responsible for nearly half of all carbonated beverage sales, a figure that now is expected to fall to 42% by the end of 2008. Global operators will increasingly look to invest in the developing world to drive future carbonated soft drink sales, a policy that is currently yielding results.

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