Global Juice and nectar sales slow
March 15, 2006
by Keith Nunes
Stat: Per capita consumption of 8.3 gallons per year might suggest the U.S. market is already approaching saturation.
BASINGSTOKE, ENGLAND – By the end of 2008 global juice and nectar consumption will have reached 10.3 billion gallons, the equivalent of almost 1.6 gallons for each person around the world. This represents a compound annual growth rate since 2005 of 2.8%, slowing down from the 4.2% enjoyed by the category between 1999 and 2005. Despite its strong associations with the vogue attributes of health and wellness, growth in the juice and nectars category can only be described as modest, according to a new report from beverage industry analysts at Canadean.
The poor performance of some of the leading markets may be at the heart of the slowdown. By far and away the largest volume market for juice and nectars is the United States, which accounts for more than a quarter of global sales. Per capita consumption of 8.3 gallons might suggest the U.S. market is already approaching saturation, however perceptions of the healthfulness of juice in the United States have become ambivalent, a factor that is behind the poor performances of the category.
The carbohydrate content of juice prompted the juice category to record one of its worst years on record in 2004, reflecting the popularity of low carbohydrate diets. Some American drinkers have switched to the nectars category but this has not compensated for the overall loss.
To a lesser extent, the German market, which accounts for less than 10% of global juice and nectar sales, is also contributing to the category's weaker showings. In Germany, it is the nectar category that has been dragging the category down; nectars have been losing out to the buoyant noncarbonated drink category for a few years now. In a very health-sensitive German market, noncarbonated drinks may have lower juice content but they do have a high ratio of added vitamins, minerals and other substances that boost the products’ health attributes.
The growth in noncarbonated drinks in general has undoubtedly played a part in taking the shine of the juice and nectars performance, according to Canadean. The noncarbonated drinks category may be attracting consumers leaving the carbonates category but there is little doubt the noncarbonated drinks category is also poaching drinkers from the juice and nectars segment.
In volume terms the juice and nectars category is expected to expand by a little over 0.8 billion gallons between 2005 and 2009, while during the same period, the market for noncarbonated drinks will expand by more than 1.1 billion gallons. The more refreshing qualities of noncarbonated drinks gives them advantages over juice and nectars during the key consumption occasions away from the juice and nectar stronghold of breakfast.
The two cola giants have maintained their faith in the category and 2005 has seen Coca-Cola and PepsiCo strengthen their presence in the global juice and nectar marketplace. Last year saw the Coca-Cola Hellenic Bottling Company and the Atlanta-based Coca-Cola Company agree to buy 100% of Multon, a big Russian juice producer. This move was followed by the announcement that Coca-Cola Brasil was to purchase Sucos Mais, a major Brazilian juice operator.
Meanwhile PepsiCo snapped up the founder of the United Kingdom Smoothie market; PJ Smoothies and the German based fruit drink brand Punica from Sunny Delight Beverages.
Currently, the juice and nectars category faces a new threat in the form of price rises brought on by poor orange and apple harvests in some parts of the world. These are anticipated to have implications in the short term.