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Soft Drinks Market 2020In the Footsteps of Panic ShoppersUnsurprisingly, carbonated soft drinks (CSDs) sales peaked during mid-March 2020 as many consumers considered them essential grocery items during the pandemic panic-buying period; however, sales quickly returned to more normal levels during late March.For the week ending 3/29/20, regular and low-calorie soft drinks sales were still increasing, as sales for CSDs’ “nemesis,” bottled water, decreased by double digits, or -11.5%.Despite the spike in CSDs sales, most classic brands have limited innovative opportunities while consumers’ tastes are becoming more sophisticated, especially those of higher incomes, who are opting for bottle water and craft beverages with natural ingredients.Carbonated Soft Drinks’ Sales Performance, March 2020Week EndingRegularLow-CalMarch 8, 2020+1.8%+10.1%March 15, 2020+19.5%+33.9%March 22, 2020+19.5%+28.1%March 29, 2020+1.2%+4.7%Beverage Industry (IRI), April 2020Coca-Cola’s Response Reveals Market ChallengesCoca-Cola’s global volume decreased approximately 25% from the beginning of April 2020, because approximately half of its revenues are generated at restaurants, bars, etc., which were closed. The significant increase at food outlets couldn’t offset the volume loss.Although new beverage trends are challenging Coca-Cola and other major CSD brands, Coca-Cola thinks consumers will be more likely to return to known brands. This may be true for those in financial peril from the pandemic, but less likely for those with higher incomes.Coca-Cola is also responding to rapidly changing consumer behaviors by eliminating various underperforming brands and focusing on its core brands and the e-commerce channel.Carbonated Soft Drink Sales*, By Variety, 2019CategorySalesChangeCategorySalesChangeCola$11.49 B+2.2%Red$131.7 M+0.7%Citrus$4.21 B-0.1%Cherry$102.2 M+6.7%Pepper$2.97 B+4.7%Ginger Beer$101.2 M+8.7%Lemon Lime$2.53 B-0.5%Punch$67.6 M-3.5%Ginger Ale$1.23 B+5.8%Assorted flavors$50.1 M+14.6%Cherry Cola$854.3 M+8.0%Other fruit flavors$615.0 M+3.4%Orange$851.8 M+0.2%Other cola flavors$434.4 M+54.0%Root Beer$760.6 M+1.4%Other flavors$246.7 M+41.5%Cream Soda$182.0 M-0.8%Total soft drinks$26.97 B+2.9%Grape$145.8 M-4.7%Beverage Industry (Nielsen), April 2020 *for the 52 weeks ending 12/28/192019 Continued Long-Term TrendsAccording to the Beverage Marketing Corporation (BMC), 2019 US liquid refreshment beverage market sales increased 3.5% to $186.26 billion and volume +1.4% to 34.33 billion gallons; however, CSDs’ volume decreased 1.1%, while retail dollars increased 2.5%.Value-added water (+10.6% retail sales; +8.5% volume) and energy drinks (+8.7% and +8.3%, respectively), topped BMC’s segment list, with CSDs 6th in both sales and volume.Bottled water has been taking market share from CSDs for many years, with per capita consumption increasing for bottled water from 2010 through 2019 (43.7 gallons), while CSD per capita consumption decreased every year during the period, to 36.8 gallons for 2019. Top 10 Liquid Refreshment Brands, by Gallons and Volume Share, 2019BrandGallonsPercent ChangeVolume ShareBrandGallonsPercent ChangeVolume ShareCoke3.95 B+0.3%11.5%Sprite970.7 M+1.3%2.8%Pepsi1.67 B-2.2%4.9%Nestlé Pure Life924.9 M-10.5%2.7%Mountain Dew1.20 B-4.1%3.5%Poland Spring827.2 M-2.2%2.4%Dr. Pepper1.18 B+0.8%3.4%Dasani689.9 M-4.8%2.0%Gatorade1.18 B+2.0%3.4%Aquafina588.4 M-1.4%1.7%Beverage Marketing Corporation, June 2020 Healthier Lifestyles Challenge Sugar ConsumptionAccording to the International Food Information Council’s 2020 Food & Health Survey, 74% of respondents to its mid-April 2020 survey said they were trying to limit or avoid sugars.The largest percentage (60%) said their primary action to limit/reduce sugars was “drinking water instead of caloric beverages” while the smallest percentage (19%) said they were “switching from full-calorie beverages to low- and no-calorie options.”Of all survey respondents, 37% said the amount of added sugars they consumed had a major impact on their health, compared to 18% who said the major health impact originated with the amount of naturally-occurring sugars they consumed.Major Reasons Consumers Said They Weren’t Using Sugar, April 2020ReasonPercentReasonPercentAvoiding extra calories46%Prefer taste of low- or no-calorie sweeteners24%Sugar is unhealthy42%Manage diabetes/control blood sugar23%Helps to lose/maintain weight40%Improve/Maintain dental health23%Don’t need to add sweetness37%Healthcare professional’s advice20%To reduce carbs36%Diet that forbids sugar15%Don’t add more sugar to packaged products28%Don’t like taste of sugar8%International Food Information Council, June 2020 Consumer Consumption InsightsAccording to The Media Audit’s Winter 2020 survey for Salt Lake City, UT, 74.2% of all adults 18+ consumed 1+ CSDs during the past week. Half (57.1%) were adults 18–44 and 50% had an income in the range of $25K–$75K.Change the target to adults 18+ who consumed 15+ CSDs during the past week and 65.3% were adults 18–44. Another revealing insight is 26.6% of these adults had incomes of less than $15K–$25K, compared to 17.3% of those consuming 1+ CSDs.The same change occurred with education. Of those adults 18+ who consumed 1+ CSDs, 30.8% were either a high school graduate (26.9%) or high school or less (3.9%), but those who consumed 15+ were 44% (high school graduate 36.7%; high school or less 7.7%).Type of CSD Purchased by Adults, Winter 2020Type of CSDAdults 18–34Adults 35–49Adults 50+PercentIndexPercentIndexPercentIndexRegular37.2%10240.5%11132.8%90Diet/Sugar-free12.1%5616.9%7934.7%162Caffeinated29.1%11231.6%12118.8%72Caffeine-free3.6%688.5%1604.8%90Flavored16.9%13117.3%1345.4%42Non-flavored0.7%1211.3%206**No preference8.6%1655.7%1101.2%23Based on The Media Audit’s Winter 2020 Salt Lake City, UT Survey*insufficient dataMore Consumer Consumption InsightsThe Media Audit’s Spring 2020 Detroit, MI survey reveals 63.4% of adults 18+ consumed 1+ CSDs during the past week, compared to 74.2% in Salt Lake City.In Salt Lake City, 46.7% of this consumption target had incomes of $75K or less, compared to 34.9% in Detroit. Conversely, 53.1% of Detroit adults had incomes of $50K–$150K, compared to 46.5% of Salt Lake City adults. An educational comparison finds 30.8% of adults who consumed 1+ CSDs were high school graduates or less and 34.4% had a college or advanced degree while, in Detroit, 19.3% were high school graduates or less and 49.6% had a college or advanced 10 Fast Food Restaurants* at Which Adults 18+ Ate and Who Also Consumed 1+ CSD?, April 2020RestaurantPercentIndexRestaurantPercentIndexMcDonald’s29.5%117Wendy’s9.0%100Taco Bell16.1%123Domino’s Pizza7.6%117Arby’s13.3%127Subway7.1%115Burger King12.2%114KFC6.2%116Little Caesar’s Pizza10.6%124Chick-Fil-A5.9%112Based on The Media Audit’s Spring 2020 Detroit, MI Survey*during past 4 weeks?during past weekMore Valuable InsightsAccording to the CSP State of the Industry 2020 report for the convenience stores market, CSDs generated the second largest average dollar beverage sales per store per month during 2019, or $6,583, with energy drinks first at $9,614 and bottled water third at $4,971.Although CSDs were second, they were last in gross margin percentage of monthly gross profit dollars per store. Gross Profit Data by Packaged Beverage Subcategories Per Convenience Store Per Month, 2019SubcategoryAvg. Gross Profit DollarsGross MarginEnergy drinks$4,36545.4%CSDs$2,39036.3%Bottled water$2,85857.5%RTD iced tea$1,47349.6%Sports drinks$1,42549.2%Juice/Juice drinks$1,26550.3%Enhanced water$32844.4%Other package beverages$42939.8%Total$13,72643.8%CSP, June 2020CSDs were also second by share of dollar sales, but the subcategory’s dollar sales were flat and unit sales decreased compared to 2018.Gross Profit Data by Packaged Beverage Subcategories Per Convenience Store Per Month, 2019SubcategoryDollar Sales ShareDollar Sales ChangeUnit Sales ChangeEnergy drinks31.0%+8.3%+4.2%CSDs26.8%0.0%-5.7%Sports drinks 9.9%+6.0%-0.7%Bottled water 9.4%-1.4%-4.4%Juice/Juice drinks6.6%-2.6%-4.6%Other package beverages6.5%+4.6%+2.4%RTD iced tea5.0%-3.9%-6.3%Enhanced water4.8%+10.9%+9.0%CSP, June 2020Sources: Beverage Industry Website, 7/20; Beverage Daily Website, 7/20; Beverage Marketing Corporation Website, 7/20; International Food Information Council Website, 7/20; The Media Audit Website, 7/20; CSP Website, 7/20.Updated: July 2020? 2020 Media Group Online, Inc. 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