Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- Sales fall in 2016 and little growth forecast through 2021
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- Figure 1: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2011-21
- The issues
- CSD users often also enjoy BFY drinks, and report increasing BFY consumption
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- Figure 2: Consumption of carbonated drinks, by amount compared to a year ago, December 2016
- BFY drinks, concerns with sugar and additives drive down CSD usage
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- Figure 3: Top reasons for CSD attrition, December 2016
- The opportunities
- Younger generations, parents, Hispanics show robust category engagement
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- Figure 4: Any or more consumption of carbonated soft drinks compared to a year ago, for iGeneration, Millennials, parents, and Hispanics, December 2016
- Hispanic Millennials stand out as very active in the CSD market
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- Figure 5: Any or more consumption of select carbonated soft drinks compared to a year ago, for Millennials, by Hispanic origin, December 2016
- Consumer interest in category innovation is high
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- Figure 6: Carbonated soft drink innovation, for iGeneration, Millennials, parents, and Hispanics, December 2016
- Beverage blurring creates opportunity, potential competition, and confusion
- What it means
The Market – What You Need to Know
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- Consumer preference for BFY drinks dampens CSD market growth
- Regular carbonated soft drinks are the largest, most stable segment
- Obesity rates, sugar taxes and BFY drinks compound challenges
- Positive market factors include high penetration and demographic trends
Market Size and Forecast
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- Growth dips in 2016 and forecast shows flat sales through 2021
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- Figure 7: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2011-21
- Figure 8: Total US retail sales and forecast of carbonated soft drinks, at current prices, 2011-21
Market Breakdown
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- Regular soft drinks are the largest, fastest-growing segment
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- Figure 9: Market share of carbonated soft drinks, 2016
- Figure 10: Total US retail sales of carbonated soft drinks, by segment, at current prices, 2014 and 2016
- Modest growth projected for regular CSD segment through 2021
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- Figure 11: Total US retail sales and forecast of carbonated soft drinks by segment, at current prices, 2016
- Drug stores and “other” retail channels grow share from 2014-16
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- Figure 12: Total US retail sales of carbonated soft drinks, by channel, at current prices, 2014 and 2016
Market Perspective
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- Bottled water market soars, reflecting consumer quest for BFY drinks
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- Figure 13: Total US retail sales and forecast of bottled water, at current prices, 2011-16
- Sparkling water and CSDs – Not necessarily an either/or proposition
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- Figure 14: Consumption of CSDs and sparkling water, compared to a year ago, December 2016
- Juices, coffee, and tea compete with CSDs
- Hybrid drinks offer opportunity, plus competition and potential confusion
Market Factors
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- Obesity epidemic creates challenging landscape for CSDs
- Macroeconomic factors shape household budgets and CSD choices
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- Figure 15: Consumption of CSDs compared to a year ago, by household income, December 2016
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- Figure 16: Consumer confidence and unemployment, 2000-September 2016
- Engagement among iGeneration and Millennials is key to growth
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- Figure 17: Any or more consumption of select CSDs compared to a year ago, by generation, December 2016
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- Figure 18: US population aged 18+, by generation, 2012-22
- Diverse young consumers and parents key to market
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- Figure 19: Population by race and Hispanic origin, 2012-22
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- Figure 20: Hispanic share of population, by generation, 2017
- Figure 21: Any, more, or less consumption of CSDs compared to a year ago, for Hispanics and Hispanic Millennials, December 2016
Key Players – What You Need to Know
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- Only one of the three largest suppliers grew MULO sales in 2016
- Category leaders pull out stops, still struggle
- Diet struggles as consumers turn to BFY alternatives
- Private label sales fall, while niche suppliers grow via innovations
Manufacturer Sales of Carbonated Soft Drinks
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- The three largest players command over 90% of MULO sales
- Private label sales fall, as small suppliers build share from modest base
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- Figure 22: Manufacturer sales of carbonated soft drinks, by leading companies, 2015 and 2016
What’s Working?
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- On-point, diverse marketing strategies support lead position
- Aspirational qualities: themes of play, connection, and romance
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- Figure 23: Coke subway TV ad, March 2017
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- Figure 24: Coke elevator TV ad, March 2017
- Sponsorship of sports events and celebration of community
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- Figure 25: Coke March Madness and work ad, March 2017
- Pairing food and soda
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- Figure 26: Coke “Love Story” ad, September 2016
- Figure 27: Coke “Moments Made Yummier” video, September 2016
- Seasonal promotions: tradition, nostalgia, and family
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- Figure 28: Coke 2016 Christmas ad, December 2016
- Sprite and Fanta, with fruit-flavored CSDs and playful, hip campaigns
- Sprite rolls out special editions, benefits from LeBron James endorsements
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- Figure 29: Sprite’s LeBron James and Lil Yachty ad, February 2017
- Fanta ads showcase fruit-flavored CSDs spurring social, fun, playful dance numbers
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- Figure 30: Fanta Bring the Bold to the movie theater, July 2016
- Dr Pepper Company, with growth in Dr Pepper and Canada Dry
- Quirky ads for unique cravings for Dr Pepper
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- Figure 31: Crave Rider ad for Dr Pepper, March 2017
- An emphasis on relaxation and natural ingredients from Canada Dry
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- Figure 32: Canada Dry, The Root of Relaxation, May 2016
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- Figure 33: Canada Dry, Relax Harder, January 2016
- Brands known in Latin America, craftier, retro feel grow base
What’s Struggling?
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- Diet sodas continue to struggle, with few bright spots
- PepsiCo – while still a leading supplier – sees continued loss of share
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- Figure 34: Pepsi Max, We Know How Much It Means, March 2017
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- Figure 35: Pepsi Uncle Drew clip, March 2017
What’s Next?
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- Natural ingredients, “free from” drinks and more varied, original flavors
- More sophisticated sodas, including those designed for food pairing
- Sodas with natural caffeine, health benefits, and a hybrid nature
The Consumer – What You Need to Know
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- CSD usage is high, though many also enjoy other carbonated drinks
- iGeneration and Millennials among strongly engaged CSD users
- Increasing BFY drinks and cutting back sugar propel CSD cutbacks
- Younger users cut CSD usage to try new flavors, formulations
- CSDs are especially popular with meals, in restaurant deals
- “Healthy” and “all natural” innovation most widely sought
Consumption of Carbonated Soft Drinks
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- Vast majority of those surveyed enjoy a range of CSDs
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- Figure 36: Consumption of carbonated drinks, compared to a year ago, December 2016
- While penetration is high, more are cutting back than increasing usage
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- Figure 37: Consumption of CSDs compared to a year ago, by type of CSD, December 2016
- iGeneration and Millennials stand out as key CSD consumers
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- Figure 38: Consumption of carbonated drinks compared to a year ago, by generation, December 2016
- Many younger consumers drinking more CSDs, as older users cut back
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- Figure 39: Consumption of carbonated drinks compared to a year ago, by generation, December 2016
- Figure 40: Consumption of CSDs compared to a year ago, by generation and type of CSD, December 2016
- More-affluent HHs show preference for low-calorie, natural CSDs
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- Figure 41: Consumption of CSDs compared to a year ago, for household income, December 2016
- Parents consume a wider range of CSDs
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- Figure 42: Consumption of carbonated drinks compared to a year ago, by parental status, December 2016
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- Figure 43: Consumption of CSDs compared to a year ago, by parental status and type of CSD, calorie content, December 2016
- Figure 44: Consumption of CSDs compared to a year ago, by parental status and type of CSD, December 2016
- Hispanics – and especially Hispanic Millennials – key to future growth
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- Figure 45: Consumption of carbonated drinks compared to a year ago, by Hispanic origin and Millennial generation, December 2016
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- Figure 46: Consumption of CSDs compared to a year ago, for Hispanic Millennials, Part I, December 2016
- Figure 47: Consumption of CSDs compared to a year ago, for Hispanic Millennials, Part II, December 2016
Reasons for Attrition
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- Healthful alternatives and sugar concerns are core reasons for attrition
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- Figure 48: Reasons for attrition, December 2016
- A quest for new drinks, flavors propels iGeneration users to cut back
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- Figure 49: Reasons for attrition, by generation, December 2016
- Healthful, low-sugar options luring upper-income CSD users
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- Figure 50: Reasons for attrition, by household income, December 2016
- Hispanics, while concerned with CSD sugar, also want variety and flavor
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- Figure 51: Reasons for attrition, by Hispanic origin, December 2016
Replacement Beverages
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- Water is top replacement beverage, followed by tea, juice, and coffee
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- Figure 52: Replacement beverages, December 2016
- Millennials replace CSDs with wide range of alternatives
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- Figure 53: Replacement beverages, by generation, December 2016
- When seeking CSD alternatives, Parents embrace a wide variety
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- Figure 54: Replacement beverages, by parental status, December 2016
- Hispanics often drink more water to cut back on sugar and caffeine
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- Figure 55: Replacement beverages, by Hispanic origin and Millennials, December 2016
Consumption Occasion
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- CSDs are popular meals, but also associated with snacks and gatherings
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- Figure 56: Occasion for carbonated soft drink consumption, December 2016
- Younger users enjoy CSDs at meals, Millennials exhibit broader usage
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- Figure 57: Occasion for carbonated soft drink consumption, by generation, December 2016
- Parents often enjoy CSDs at meals – and throughout the day
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- Figure 58: Occasion for carbonated soft drink consumption, by parental status, December 2016
- Hispanics – especially Millennials – consume CSDs on many occasions
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- Figure 59: Occasion for carbonated soft drink consumption, by Hispanic origin and for Millennials, December 2016
Attitudes toward Carbonated Soft Drinks
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- Opportunities lie in capitalizing on regular meals, growing daily usage
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- Figure 60: Attitudes toward carbonated soft drinks, December 2016
- Foodservice deals may be key to rolling out CSDs to iGeneration
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- Figure 61: Attitudes toward carbonated soft drinks, by generation, December 2016
- Parents keep on hand for guests and special occasions
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- Figure 62: Attitudes toward carbonated soft drinks, by parental status, December 2016
- Hispanics likely to enjoy CSDs at many occasions, as well as beyond home
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- Figure 63: Attitudes toward carbonated soft drinks, by Hispanic origin, December 2016
Carbonated Soft Drink Innovation
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- “Healthy options” are a priority, but consumers eager for other benefits
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- Figure 64: Carbonated soft drink innovation, December 2016
- Younger consumers show the high interest in innovations
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- Figure 65: Carbonated soft drink innovation, by generation, December 2016
- Parents also very open to added benefits and supplements
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- Figure 66: Carbonated soft drink innovation, by parental status, December 2016
- Hispanics seek CSDs with greater range of benefits
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- Figure 67: Carbonated soft drink innovation, by Hispanic origin and for Millennials, December 2016
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Fan chart forecast
- Consumer survey data
- Direct marketing creative
- Abbreviations
Appendix – Market
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- Figure 68: Total US sales and forecast of carbonated soft drinks, at inflation-adjusted prices, 2011-21
- Figure 69: Total US sales and forecast of regular soft drinks, at inflation-adjusted prices, 2011-21
- Figure 70: Total US sales and forecast of diet soft drinks, at inflation-adjusted prices, 2011-21
- Figure 71: Total US retail sales of carbonated soft drinks, by retail channel, at current prices, 2010-20
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- Figure 72: Average household size, by race and Hispanic origin, 2016
- Figure 73: Distribution of generations, by race and Hispanic origin, 2017
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- Figure 74: Median household income, by race and Hispanic origin of householder, 2015
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Appendix – Key Players
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- Figure 75: MULO sales of regular soft drinks by leading companies and brands, rolling 52 weeks 2015 and 2016
- Figure 76: MULO sales of diet soft drinks by leading companies and brands, rolling 52 weeks 2015 and 2016
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