Non-alcoholic Beverages: A Retail Perspective - US - March 2009

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Market at a glance
Coke and Pepsi set the tone for competition in the category
Dr Pepper Snapple Group and Nestlé Waters also compete
New beverages blur segment lines, create placement challenges
Line extensions have created an explosion of choice, but at a price
Private label gaining a bit of momentum
Segment performance driven by various consumer dynamics
New product trends underscore changing segment dynamics
Beverages widely available; supermarkets still dominate
Key findings from consumer survey
INSIGHTS AND OPPORTUNITIES
Moving beyond price promotions to added-value benefits
Organizing the aisle from the standpoint of the shopper
Shopper marketing by benefit area
Wellness
Performance/functional
Flavor/enjoyment
Sustainability offers a platform for shopper engagement across all beverage segments
INSPIRE TRENDS
Trend: Big Spending Shifts
What’s it about
Evidence of trading down and retracting demand in beverages
Future implications: finding the silver lining
Trend: Giving a facelift to a global brand
What’s it about
What we have seen
… but consider the risk of giving a facelift
MARKET SIZE AND FORECAST
Key points
Figure 1: FDMx sales and forecast of non-alcoholic beverages at current prices, 2003-13
Figure 2: FDMx sales and forecast of non-alcoholic beverages at inflation-adjusted prices, 2003-13
COMPETITIVE CONTEXT
Key points
Coke and Pepsi set the tone for competition in the category
Figure 3: The Coca-Cola Company’s brand display at 2008 Olympics
Dr Pepper Snapple Group provides a counterpoint to the big two
Nestlé rides bottled water wave
New beverages blur segment lines, create placement challenges
Line extensions have created an explosion of choice, but at a price
Private label gaining a bit of momentum
Figure 4: FDMx market share of private label non-alcoholic beverages, by segment, 2005-08
SEGMENT PERFORMANCE
Key points
Divergent performance across segments over the past five years
Figure 5: FDMx* sales and forecast of non-alcoholic beverages at current prices, by segment, 2003-13
Figure 6: FDMx* sales of non-alcoholic beverages, by segment, 2006 and 2008
New product trends underscore changing segment dynamics
Figure 7: U.S. new non-alcoholic beverage introductions, 2003-08
RETAIL: AN OVERVIEW
Key points
Beverages widely available; strategies vary from channel to channel
Figure 8: FDMx sales of non-alcoholic beverages, by retail channel, 2006 and 2008
Wal-Mart sales
RETAIL CHANNELS: SUPERMARKETS
Key points
Despite declining share, supermarkets remain dominant beverage channel
Figure 9: Supermarket sales of non-alcoholic beverages at current prices, by segment, 2003-08
Figure 10: U.S. sales of non-alcoholic beverages at supermarkets, 2003-08
New product introductions in supermarkets skew to big segments
Figure 11: U.S. new non-alcoholic beverage introductions at supermarkets, 2006-08
Pro-health claims top the list of new product claims in supermarkets
Figure 12: Top claims for all beverage introductions at supermarkets, 2006-08
Kosher
All natural
No additives/preservatives
RETAIL CHANNELS—OTHER
Key points
Low prices drive share growth for mass merchants
Figure 13: U.S. sales of non-alcoholic beverages at other* channels, 2003-08
New product introductions considerably lower in mass merchandisers, compared to other channels
Figure 14: U.S. new non-alcoholic beverage introductions at mass merchandisers, 2006-08
New product trends in mass merchandisers
Figure 15: Top trends for all beverage introductions at mass merchandisers, 2006-08
Kosher
Vitamin/mineral fortified
Sugar (Low/No/Reduced)
RETAIL CHANNELS – CONVENIENCE STORES
Key points
Beverages, especially energy drinks, are c-store essentials
C-store new product intros focus on energy
Figure 16: U.S. new non-alcoholic beverage introductions at convenience stores, 2006-08
New product trends in convenience stores
Figure 17: Top claims for all beverage introductions at convenience stores, 2006-08
Vitamin/mineral fortified
Calorie (Low/No/Reduced)
Sugar (Low/No/Reduced)
 NATURAL CHANNEL/SPINS
Non-alcoholic beverage sales small but steady in natural channels
Sales of beverages in the natural channel
Figure 18: Natural product supermarket retail sales of non-alcoholic beverages, at current prices, 2006-08
Figure 19: Natural product supermarket retail sales of non-alcoholic beverages, at inflation-adjusted prices, 2006-08
Natural channel sales by segment
Figure 20: Natural product supermarket retail sales of beverages, 2006-08
MARKET DRIVERS
Key points
Trend towards eating healthily and watching diet can influence the traditional beverage aisle assortment
Figure 21: Incidence of eating healthier and watching/controlling diet, 2004 and 2008
Health focus expanding beyond weight loss to a broader, more customized view of wellness
Figure 22: Reasons for watching/controlling diet, 2004 and 2008
Increasing importance of health puts spotlight on packaging and in-aisle communication
Figure 23: Attitudes and behavior towards using packaging as an information tool, by age, December 2008
Women are likely to be the primary shopper
Figure 24: Primary household shopper, by gender, December 2008
An aging population suggests a shift in beverage retailing strategies
Figure 25: U.S. population of adults aged 18 and over, by age group, 2003-13
Hispanics offer opportunities in the beverage aisle
Figure 26: Population, by race and Hispanic origin, 2003-13
BRAND PERFORMANCE: CARBONATED DRINKS
Key points
Carbonated drinks face considerable headwinds
Refocus on flagship cola brands
Opportunities beyond big-brand colas
Figure 27: Top regular carbonated drinks brands in FDMx*, 2007 and 2008
Figure 28: Top diet carbonated drinks brands in FDMx*, 2007 and 2008
BRAND PERFORMANCE: BOTTLED, CANNED, AND ASEPTIC FRUIT JUICE AND JUICE DRINKS
Key points
Stagnant segment growth tied to health concerns
Newer fusion brands expand, blur boundaries of segment
Segment’s diversity presents placement challenge
Figure 29: Top aseptic/canned/bottled fruit juice/juice drinks brands in FDMx*, 2007 and 2008
BRAND PERFORMANCE: BOTTLED WATER
Key points
Issues converge to put a halt to growth
Enhanced water has fueled growth and crowded shelves
Environmental issues and opportunities
Figure 30: Top bottled water brands at FDMx*, 2007 and 2008
BRAND PERFORMANCE: SPORTS AND ENERGY DRINKS
Key points
Energy drinks starting to slow after fueling segment growth
Sports drinks broaden appeal, compete more directly with other segments
Figure 31: Top sports and energy drinks brands in FDMx*, 2007and 2008
BRAND PERFORMANCE: CANNED AND BOTTLED TEA/COFFEE
Key points
Tea’s healthy, wholesome image drives segment
Figure 32: Top canned and bottled tea and coffee brands in FDMx*, 2008 and 2008
BRAND QUALITIES
Key points
Brand reinventions remake category
Pepsi “refreshes” with simplified look on package and at shelf
Mountain Dew leverages packaging for creativity and engagement
Snapple upgrades product, updates package
Target’s Archer Farms an example of trend towards premium private label
ADVERTISING AND PROMOTION
 OVERVIEW
Figure 33: Media expenditure of selected gum/mint brands, 2006-07
Beverages play a role in retailer advertising
Coke and Wal-Mart combine for affordable holiday joy
Figure 34: Wal-Mart Coke holiday ad, 2008
Coke and Wal-Mart collaborate on eco-friendly promotion
Figure 35: Wal-Mart recycled Coke bottle shirts ad, 2008
Target features Dasani in Good Buy campaign
Figure 36: Target Dasani hello good buy ad, 2008
Kroger and 7-Eleven ads feature beverages in price promotions
Figure 37: Kroger football event ad, 2008
Figure 38: Kroger football event ad, 2008
INCIDENCE AND FREQUENCY OF PURCHASING BEVERAGES BY TYPES OF RETAIL CHANNELS
Choice of retail channels to purchase non-alcoholic beverage
Figure 39: Choice of retail channels to purchase non-alcoholic beverages, by age, November 2008
Varying frequency by channel reflects varying shopper motivations
Figure 40: Frequency of purchasing beverages at different retail channels, November 2008
Mean frequency of purchasing beverages at various channels, by demographics
Figure 41: Mean frequency of purchasing beverages at various retailers in a month, by key demographics, November 2008
Incidence and mean frequency of purchasing beverages by itself or with other household purchases
Figure 42: Incidence of purchasing beverages by itself or with other household purchases, November 2008
Figure 43: Mean frequency of purchasing beverages by itself or with other shopping needs in the past month, by key demographics, November 2008
Most beverage purchases decided before going to the store
Figure 44: How often beverage purchases are planned before going shopping, by age, November 2008
PURCHASE-DRIVING ATTRIBUTES AT RETAIL
Value pricing: a strong motivator across the board
Figure 45: Beverage purchase driving attributes at retail, by age, November 2008
Hispanic shoppers heavily influenced by value and in-store displays
Figure 46: Beverage purchase driving attributes at retail, by race/Hispanic origin, November 2008
CONSUMER RESPONSE TO VARIOUS PROMOTIONAL TACTICS
Beverage shoppers influenced by a variety of promotional tactics
Figure 47: Incidence of purchasing beverages, by type of promotion, November 2008
Promotional responses follow consistent demographic patterns
Incidence of purchasing beverages by using buy-one-get-free
Figure 48: Incidence of purchasing beverages on buy-one-get-one free promotion, by age, November 2008
Figure 49: Incidence of purchasing beverages on buy-one-get-one free promotion, by race/Hispanic origin, November 2008
Figure 50: Incidence of purchasing beverages on buy-one-get-one free promotion, by presence of children, November 2008
Incidence of purchasing beverages by using in-store coupon
Figure 51: Incidence of purchasing beverages by using in-store coupon next to the beverage placement, by age, November 2008
Figure 52: Incidence of purchasing beverages by using in-store coupon next to the beverage placement, by presence of children, November 2008
Incidence of purchasing beverages by using coupons clipped from weekly papers or magazine
Figure 53: Incidence of purchasing beverages by using coupons clipped from weekly papers or magazine, by age, November 2008
Incidence of purchasing beverages by using online coupon printed for store use
Figure 54: Incidence of purchasing beverages by using online coupon printed for store use, by age, November 2008
Figure 55: Incidence of purchasing beverages by using online coupon printed for store use, by presence of children, November 2008
Incidence of purchasing beverages by using special offers such as sweepstakes or online bonuses
Figure 56: Incidence of purchasing beverages by using special offers such as sweepstakes or online bonuses, by age, November 2008
Consumer attitudes and behavior in purchasing beverages
Figure 57: Attitudes and behavior in purchasing beverages, by gender, November 2008
Figure 58: Attitudes and behavior in purchasing beverages, by age, November 2008
CUSTOM CONSUMER GROUPS
Gender by age
Figure 59: Choice of retail channels to purchase non-alcoholic beverages, by age and gender, November 2008
Figure 60: Beverage purchase driving attributes at retail, by age and gender, November 2008
Figure 61: Attitude and behavior in purchasing beverages, by age and gender, November 2008
CLUSTER ANALYSIS
Planners
Who they are
Opportunity
Bargain Hunters
Who they are
Opportunity
Indulgers
Who they are
Opportunity
Cluster characteristics
Figure 62: Beverage retail clusters, November 2008
Figure 63: Choice of retail channels to purchase non-alcoholic beverages, by beverage retail clusters, November 2008
Figure 64: Incidence of purchasing beverages by itself or with other household purchases, by beverage retail clusters, November 2008
Figure 65: Beverage purchase by immediate or at-home consumption, by beverage retail clusters, November 2008
Figure 66: How often beverage purchases are planned before going shopping, by beverage retail clusters, November 2008
Figure 67: Beverage purchase driving attributes at retail, by beverage retail clusters, November 2008
Figure 68: Incidence of purchasing beverages on various types of promotions (response presented by most of the time), by beverage retail clusters, December 2008
Figure 69: Incidence of purchasing beverages on various types of promotions (response presented by rarely/never), by beverage retail clusters, November 2008
Figure 70: Attitudes and behavior in purchasing beverages, by beverage retail clusters, November 2008
Cluster demographics
Figure 71: Beverage retail clusters, by gender, November 2008
Figure 72: Beverage retail clusters, by age group, November 2008
Figure 73: Beverage retail clusters, by income group, November 2008
Figure 74: Beverage retail clusters, by race, November 2008
Figure 75: Beverage retail clusters, by Hispanic origin, December 2008
Cluster methodology
IRI/BUILDERS PANEL DATA: KEY HOUSEHOLD PURCHASE MEASURES
 CARBONATED BEVERAGES: KEY HOUSEHOLD PURCHASE MEASURES
Overview of carbonated beverages
Regular soft drinks
Consumer insights on key purchase measures – regular soft drinks
Brand map
Figure 76: Brand map, selected brands of regular soft drinks, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 77: key purchase measures for the top brands of regular soft drinks, by household penetration, 2008*
Low calorie soft drinks
Consumer insights on key purchase measures – low calorie soft drinks
Brand map
Figure 78: Brand map, selected brands of low calorie soft drinks, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 79: key purchase measures for the top brands of low calorie soft drinks, by household penetration, 2008*
 SHELF STABLE BOTTLED JUICES: KEY HOUSEHOLD PURCHASE MEASURES
Overview of shelf stable bottled juices
Shelf stable bottled fruit drink
Consumer insights on key purchase measures
Brand map
Figure 80: Brand map, selected brands of SS bottled fruit drink, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 81: Key purchase measures for the top brands of SS bottled fruit juice drinks, by household penetration, 2008*
Shelf stable bottled fruit juice blend
Consumer insights on key purchase measures
Brand map
Figure 82: Brand map, selected brands of SS bottled fruit juice blend, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 83: Key purchase measures for the top brands of SS bottled fruit juice blend, by household penetration, 2008*
 BOTTLED WATER: KEY HOUSEHOLD PURCHASE MEASURES
Overview of bottled water
Convenience/PET still water
Consumer insights on key purchase measures
Brand map
Figure 84: Brand map, selected brands of convenience/PET still water, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 85: key purchase measures for the top brands of convenience/pet still water, by household penetration, 2008*
Bulk still water
Consumer insights on key purchase measures – jug/bulk still water
Brand map
Figure 86: Brand map, selected brands of jug/bulk still water, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 87: key purchase measures for the top brands of jug/bulk still water, by household penetration, 2008*
 CANNED AND BOTTLED TEA: KEY HOUSEHOLD PURCHASE MEASURES
Canned and bottled tea
Consumer insights on key purchase measures
Brand map
Figure 88: Brand map, selected brands of canned and bottled tea, by household penetration, 2008*
Brand leader characteristics
Key purchase measures
Figure 89: key purchase measures for the top brands of canned and bottled tea, by household penetration, 2008*
APPENDIX: IRI/BUILDERS PANEL DATA DEFINITIONS
APPENDIX: TRADE ASSOCIATIONS