Carbonated Soft Drinks - US - June 2016

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
The issues
Diet carbonated soft drinks struggle, overall category sales flat
Figure 1: Total US retail sales and forecast of carbonated soft drinks, by segment, at current prices, 2011-21
High cross-consumption with sparkling waters
Figure 2: CSD consumption – Any consumption, by CSD consumption – Flavored sparkling water, April 2016
Slight declines in volume consumption, steeper consumer exit rate
Figure 3: Carbonated soft drink consumption, trended 2011-15
The opportunities
Majority drinks more than one type of CSD
Figure 4: Repertoire of CSD consumption, April 2016
Rise of natural carbonated soft drinks
Figure 5: CSD consumption – Stevia-sweetened/natural/craft, March 2015 and April 2016
73% of consumers want added functional/health benefits
Figure 6: Ideal CSD creation – Functions/benefits, April 2016
Ideal carbonated beverage is refreshing
Figure 7: Ideal CSD classification, April 2016
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Category sales plateau
Regular carbonated soft drinks keep category afloat
Majority of CSD drinkers consume flavored sparkling waters
Health a key driver in CSD category evolution
MARKET SIZE AND FORECAST
Category sales growth forecast to remain flat
Figure 8: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2011-21
Figure 9: Total US sales and forecast of carbonated soft drinks, at current prices, 2011-21
Figure 10: Total US sales and forecast of carbonated soft drinks, at inflation-adjusted prices, 2011-21
MARKET BREAKDOWN
Regular carbonated soft drinks keep category afloat
Figure 11: Total US retail sales and forecast of carbonated soft drinks, by segment, at current prices, 2011-21
Regular CSD segment growth remains flat through 2021
Figure 12: Total US retail sales and forecast of carbonated soft drinks, by segment, at percent change of current prices, 2011-21
“Other” retail channel posts only positive growth from 2014-16
Figure 13: Total US retail sales of carbonated soft drinks, by channel, at current prices, 2014 and 2016
Carbonated soft drink natural channel sales grow 3.6% from 2015-16
Figure 14: Natural supermarket sales of carbonated soft drinks, at current prices, rolling 52-weeks March 2014-16
Sugar-sweetened sodas dominate sales at natural channels
Figure 15: Natural supermarket sales of carbonated soft drinks, by type of sweetener, at current prices, March 2016
MARKET PERSPECTIVE
Majority of CSD drinkers consume flavored sparkling waters
Figure 16: CSD consumption – Any consumption, by CSD consumption – Flavored sparkling water, April 2016
Bottled water disrupts growth of natural sodas
Figure 17: Beverage Tracker – Natural soda/diet drinks/drinks with natural sweeteners, at-home consumption, June 2014-April 2016
MARKET FACTORS
Health concerns remain top-of-mind with consumers
Figure 18: Important to achieve good health – Any top three rank, May 2015
Millennial population has positive growth
Figure 19: Population by generation, percentage change, 2011-21
Hispanic population growing
Figure 20: Population by Hispanic origin, percent change, 2011-21
Declining household income challenges some soft drink segments
Figure 21: Median household income, in inflation-adjusted dollars, 2004-14
Overlap between Millennials, acculturated Hispanics, and parents
Millennials as parents
Figure 22: Households with own children, by age of householder, 2013
Hispanics as parents
Figure 23: Households with own children, by Hispanic origin of householder, 2013
Hispanics as Millennials
Figure 24: Generations, by Hispanic origin, 2016
KEY PLAYERS – WHAT YOU NEED TO KNOW
Leading companies’ MULO sales flat, losses cancel out growth
Regular soft drinks post positive growth at MULO channels
Diet struggles at MULO channels, battle continues against sugary drinks
Premiumization, functionality, hard sodas grab consumer interest
MANUFACTURER SALES OF CARBONATED SOFT DRINKS
Leading companies’ MULO sales flat, launch new/extended campaigns
Figure 25: MULO sales of carbonated soft drinks, by leading companies, rolling 52-weeks 2015 and 2016
Manufacturer sales of carbonated soft drinks
Figure 26: MULO sales of carbonated soft drinks, by leading companies, rolling 52-weeks 2015 and 2016
WHAT’S WORKING?
Regular soft drinks post positive growth at MULO channels
Figure 27: MULO sales of regular soft drinks, by leading companies and brands, rolling 52-weeks 2015 and 2016
Ginger ales continue to perform well
Leading companies’ cherry-flavored offerings see growth
Throwbacks, limited editions generate renewed product interest
Natural soft drinks trend
Craft continues to gain exposure
WHAT’S STRUGGLING?
Soda bans complicate positive category messaging
Diet struggles to recover at MULO channels
Figure 28: MULO sales of diet soft drinks, by leading companies and brands, rolling 52-weeks 2015 and 2016
WHAT’S NEXT?
Premium carbonated soft drinks not limited to craft
Not soda, but sparkling beverages
Functionality under-tapped, but desired
Hard soda launches explode
THE CONSUMER – WHAT YOU NEED TO KNOW
Volume consumption only slightly declines among drinkers
Regular carbonated soft drinks dominate consumer preference
Natural carbonated soft drinks generate interest
Total craft soda consumption only slightly up
Taste, refreshment, all-natural important to CSD selection
Greater concern about sugar content than artificial ingredients
Afternoon, evening most popular dayparts for consumption
Consumers drink on-the-go rather than at work/school
Consumers prefer CSDs with meals
Cola preferred flavor in ideal carbonated beverage creation
Consumers want cane sugar
Vitamins and minerals, caffeine preferred soft drink functions
Bottles preferred carbonated beverage packaging
Most described their creation as a soda
VOLUME CONSUMPTION VERSUS CONSUMER BASE
Volume consumption only slightly declines among drinkers
Figure 29: Carbonated soft drink consumption, trended 2011-15
Figure 30: Carbonated soft drink consumption – Average number of drinks in the last seven days, trended 2011-15
CLASSIC CARBONATED SOFT DRINK CONSUMER
Regular carbonated soft drinks dominate consumer preference
Figure 31: CSD consumption – Regular/diet/low – or mid-calorie, April 2016
Older Millennials lead carbonated soft drink consumption
Figure 32: CSD consumption – Regular/diet/low- or mid-calorie, by generation, April 2016
Figure 33: Repertoire of CSD consumption, April 2016
Hispanics lead consumption, possible opportunity with Asians
Figure 34: CSD consumption – Regular/diet/low – or mid-calorie, by race and Hispanic origin, April 2016
Low/mid-calorie, diet consumption increases with income level
Figure 35: CSD consumption – Regular/diet/low – or mid-calorie, by household income, April 2016
NATURAL CARBONATED SOFT DRINK CONSUMER
Natural carbonated soft drinks generate interest
Figure 36: CSD consumption – Stevia-sweetened/natural, April 2016
Older Millennials core natural CSD consumer
Figure 37: CSD consumption – Stevia-sweetened/natural, by generation, April 2016
Hispanics stand out with their natural soft drink consumption
Figure 38: CSD consumption – Stevia-sweetened/natural, by race and Hispanic origin, April 2016
Natural soft drink consumption rises with income level
Figure 39: CSD consumption – Stevia-sweetened/natural, by household income, April 2016
CRAFT CARBONATED SOFT DRINK CONSUMER
Total craft soda consumption only slightly up
Figure 40: CSD consumption – Craft, April 2016
Older Millennials heaviest craft soda consumers
Figure 41: CSD consumption – Craft, by generation, April 2016
IMPACT OF TASTE, REFRESHMENT, HEALTH
Taste, refreshment attributes important CSD drivers
Consumers take note of all-natural ingredient
Figure 42: Attitudes toward CSDs, April 2016
Millennials drink for reasons beyond taste
Figure 43: Attitudes toward CSDs, by generation, April 2016
REPLACEMENT, CONCERNS
Greater concern about sugar content than artificial ingredients
Figure 44: Attitudes toward CSDs, April 2016
Younger Millennials, iGeneration, Boomers concerned about sugar
Figure 45: Attitudes toward CSDs, by generation, April 2016
Some concern with brands going natural
DAYPART
Afternoon, evening most popular dayparts for consumption
Figure 46: Drinking occasions – Daypart, April 2016
Figure 47: April 2016 ideal CSD creation – Function, by drinking occasions – Daypart, April 2016
ACTIVITY
Consumers drink on-the-go rather than at work/school
Figure 48: Drinking occasions – Activity, April 2016
Opportunity to connect with mothers through on-the-go use
Figure 49: Drinking occasions – Activity, April 2016
USAGE WITH MEALS, AS MIXERS
Core consumers under index for consumption with meals
Figure 50: Drinking occasions – Usage, April 2016
Carbonated soft drinks as alcoholic mixers
IDEAL FLAVOR
Cola preferred flavor in ideal carbonated beverage creation
Figure 51: Ideal CSD creation – Flavor, April 2016
Millennials drive interest in unique flavors
Figure 52: Ideal CSD creation – Flavor, by generations, April 2016
Blacks stand out for ginger ale, fruit flavors
Figure 53: Ideal CSD creation – Flavor, by race and Hispanic origin, April 2016
IDEAL SUGAR/SWEETENER
Consumers want cane sugar
Figure 54: Ideal CSD creation – Sugar/sweetener, April 2016
Generations stand out for specific sugar types
Figure 55: Ideal CSD creation – Sugar/sweetener, by generation, April 2016
IDEAL FUNCTIONS/BENEFITS
Vitamins and minerals, caffeine preferred functions
Figure 56: Ideal CSD creation – Function, April 2016
Millennials, iGeneration want functionality
Figure 57: Ideal CSD creation – Function, by generation, April 2016
Ideal drink contains vitamins, miners, caffeine, and zero calories
Figure 58: TURF analysis – Ideal CSD creation – Other add-ins, April 2016
IDEAL PACKAGING
Bottles preferred carbonated beverage packaging
Figure 59: Ideal CSD creation – Packaging, April 2016
Women want resealable packaging
Figure 60: Ideal CSD creation – Packaging, by gender, April 2016
iGeneration disinterested in classic aluminium can, wants reusable
Figure 61: Ideal CSD creation – Packaging, April 2016
IDEAL CARBONATED SOFT DRINK CREATION
Most described their creation as a soda
Figure 62: Ideal CSD classification – Drink type, April 2016
Older Millennials make a natural soda
Figure 63: Ideal CSD classification – Drink type, by generation, April 2016
Consumers want refreshing
Figure 64: Ideal CSD classification – Drink qualities, April 2016
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
TURF methodology
Abbreviations and terms
Abbreviations
Terms
APPENDIX – MARKET
Figure 65: Total US retail sales and forecast of regular carbonated soft drinks, at current prices, 2011-21
Figure 66: Total US retail sales and forecast of regular carbonated soft drinks, at inflation-adjusted prices, 2011-21
Figure 67: Total US retail sales and forecast of diet carbonated soft drinks, at current prices, 2011-21
Figure 68: Total US retail sales and forecast of diet carbonated soft drinks, at inflation-adjusted prices, 2011-21
Figure 69: US supermarket sales of carbonated soft drinks, at current prices, 2011-16
Figure 70: US convenience store sales of carbonated soft drinks, at current prices, 2011-16
Figure 71: US sales of carbonated soft drinks through other retail channels, at current prices, 2011-16
APPENDIX – KEY PLAYERS
Figure 72: MULO sales of regular soft drinks, by leading companies and brands, rolling 52-weeks 2015 and 2016
Figure 73: MULO sales of diet soft drinks, by leading companies and brands, rolling 52-weeks 2015 and 2016
APPENDIX – CONSUMER
Figure 74: Carbonated soft drink consumption – Average number of drinks in the last seven days, December 2015