The soft drink manufacturing industry is dominated by carbonated beverages such as colas, but energy and sports drinks are the fastest growing segments, fuelled by consumers’ increasingly active lifestyles and effective marketing campaigns.
Energy and sports drinks
Growth in the energy and sports drink sectors, as well as new product developments such as non-sugar soft drinks, have led to a revenue increase of approximately 7.2% from last year, amounting to $3187 million in 2006-07.
In a market where sales of traditional soft drinks remain stable, product innovation in new segments is vital for market growth.
Both energy and sports drinks have achieved a growth of approximately 20% per year as a result of packaging redesign, flavour innovation and marketing campaigns which have created new sub-segments within the category.
The market for sports drinks has broadened as they are increasingly promoted as a rehydration beverage for anyone feeling run down, not just sportsmen and sportswomen.
Competition from new categories such as sports water has also lead to sports drinks being reformulated to be low in sugar, appealing to health-conscious consumers.
IBISWorld has predicted that in the next five years industry sales revenue will increase at an average annual rate of 3.5%, amounting to $3.93 billion in 2012-13.
While increased consumption of bottled water and fruit juice will impact negatively on the soft drinks sector, a rise in consumers’ disposable income and growth in take-away and restaurant dining will see consumption patterns include more carbonated beverages, energy drinks and sports drinks.
Fruit juice and Fruit-flavoured drinks
Fruit-flavoured drinks and flavoured ice teas are also expected to rise as consumers opt for healthier beverages.
Fruit juice drinks containing less than 50% fruit juice have been losing market share to pure juice over the last few years due to consumers’ increasing health awareness.
This has also lead to an increase in the premium juice category within the chilled juice segment, as these juices are preservative and additive free.
However, during 2006-07 an increase in the price of fruit as a result of crop damage by Cyclone Larry in Queensland and frost in the Victorian Goulburn Valley led to a rise in chilled juice prices and, subsequently, growth in ambient juice sales despite their higher sugar and preservative content.
Single-serve premium fresh juices are expected to continue to represent a growing niche market in the future.
Supermarket house brands have become increasingly common and in demand across the beverage sector, making price an important basis of competition.
In the juice sector particularly, house brands have gained market share over the last year due to lower pricing, despite perceived lower quality.
In 2006-07, IBISWorld has estimated that fruit juice manufacturing industry revenue increased by 3%, to $955 million.
Growth within the juice sector is expected to continue at an average annual rate of 3.2%, amounting to $984 million in 2007-08.
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