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Beverages 2016

Liquid Assets

• According to the latest data from the Beverage Marketing Corporation (BMC), total volume for the US liquid refreshment beverage market increased 2.2% during 2014 to 30.876 billion gallons, the best performance during the 6-year period from 2009.

• Following ready-to-drink coffee, first of all BMC categories (see below), bottled water (+7.3%) and energy drinks (+6.4%) exceeded their 2013 gains. Total volumes for value-added water, carbonated soft drinks and fruit beverages decreased – again.

Top 10 Global Beverage Companies by 2014 Revenues

|Company |Location |2014 Sales |

|Anheuser-Busch Inbev |Leuven, Belgium |$47.1 billion |

|The Coca-Cola Co. |Atlanta, GA |$46.0 billion |

|PepsiCo Inc. |Purchase, NY |$31.3 billion |

|Nestlé SA |Vevey, Switzerland |$27.0 billion |

|Heineken N.V. |Amsterdam, The Netherlands |$23.3 billion |

|Sabmiller Plc. |London, UK |$22.3 billion |

|Diageo |London, UK |$21.8 billion |

|Starbucks Corp. |Seattle, WA |$12.7 billion |

|Pernod Ricard |Paris, France |$9.6 billion |

|Suntory Holdings Ltd. |Tokyo, Japan |$7.5 billion |

Beverage Industry, 2015

Brewing a Winner

• Ready-to-drink (RTD) coffee has been the clear winner, with total volume increasing 10.7% during 2014, following a 6.3% increase during 2013.

• RTD coffee continued its surging sales into 2015, with the refrigerated sub-category increasing 7.1% for the 52 weeks ending May 17, 2015. Total sales for single-cup coffees increased 19.7% during the same period.

• RTD coffees’ gains came at the expense of ground and whole-bean coffee. Ground coffee sales decreased 3.5%, ground decaffeinated decreased 7.3% and whole-bean coffee decreased 3.7% for the same 52-week period.

Top Single-Cup Coffee Brands, 2015*

|Brand |Sales |% Change |Market Share |% Change |

|Keurig Green Mountain |$498.9 million |+3.5% |14.8% |-2.3% |

|Starbucks |$477.6 million |+24.0% |14.2% |+0.5% |

|Private label |$398.7 million |+54.2% |11.9% |+2.7% |

|Folgers Gourmet Selections |$339.8 million |+8.9% |10.1% |-1.0% |

|Keurig Eight O’Clock |$177.2 million |+28.2% |5.3% |+0.4% |

|Category total: all brands |$3.36 billion |+19.7% |100% |--- |

Beverage Industry, 2015 * for the 52 weeks ending May 17, 2015

Broader Market for Sports/Protein Drinks

• In a February 2015 report, Packaged Facts revealed that the number of high-volume sports drinks users had decreased and 34% of the consumers it surveyed for the report were consuming sports drinks during other than workouts and other physical activities.

• According to data from Mintel, total 2014 sales for sports and protein drinks were $11.5 billion. With the growing popularity of these beverages among a larger audience, Mintel expects sales to increase 26% through 2019.

• An ethnically-diverse audience of sports and protein drink consumers is also driving this increase, with Latino American and African American adults accounting for a 45% share; European Americans, 34%; and Asian Americans, 31%.

Top 10 Non-Aseptic Sports Drinks, 2015*

|Brand |Sales |% Change |Market Share |% Change |

|Gatorade Perform |$3.23 billion |+2.4% |54.8% |-1.5% |

|Powerade Ion4 |$766.6 million |-7.5% |13.0% |-1.8% |

|Gatorade Frost |$458.7 million |+7.9% |7.8% |+0.2% |

|Gatorade G2 Perform |$368.5 million |-18.9% |6.2% |-1.9% |

|Gatorade |$274.4 million |+60.3% |4.7% |+1.6% |

|Gatorade Fierce |$224.0 million |+306.9% |3.8% |+2.8% |

|Powerade |$212.0 million |+28.0% |3.6% |+0.6% |

|Powerade Zero |$192.4 million |-1.0% |3.3% |-0.2% |

|Gatorade G2 |$45.6 million |+8.2% |0.8% |0.0% |

|Gatorade X Factor |$31.3 million |+23.5% |0.5% |+0.1% |

|Category total: all brands |$5.99 billion |+5.3% |100% |--- |

Beverage Industry, 2015 * for the 52 weeks ending May 17, 2015

Sugar Content Squeezes Juice Sales

• Although studies show that adults understand the health value of drinking fruit and vegetable juices, total volume decreased 1.8% during 2014 because many consumers don’t want the added sugar and artificial ingredients in drinks that are not 100% juice.

• This has resulted in a 13.5% decrease in the consumption of fruit juice and juice drinks since 2010, from 61.4% for that year to 53.1% for 2015. During the same period, consumption of vegetable-blended and fruit-blended juices has increased.

Top Shelf-Stable Bottled Tomato/Vegetable Juice/Cocktail, 2015*

|Brand |Sales |% Change |Market Share |% Change |

|V8 |$276.9 million |+9.6% |59.6% |+1.5% |

|Mott’s Clamato |$92.9 million |+7.5% |20.0% |+0.1% |

|Private label |$43.8 million |-7.5% |9.4% |-1.5% |

|Campbell’s |$29.5 million |-0.5% |0.9% |-0.5% |

|V8 Splash |$4.27 million |+116% |0.6% |+0.5% |

|Category total: all brands |$464.6 million |+6.9% |100% |--- |

Beverage Industry, 2016 * for the 52 weeks ending November 1, 2015

Packaged Beverages Top at Convenient Stores

• According to the 2016 Convenience Store News Industry Forecast Study, non-alcoholic packaged beverages are forecast to be #1 in dollar sales per store at 6.5% and third in unit volume at 5.0%.

• Of the convenience store retailers surveyed, 67.6% expect an increase in non-alcoholic packaged beverage sales during 2016, with 27.0% saying sales will be the same as 2015 and only 5.4% predicting a decline in sales.

• According to Information Resources Inc. (IRI) data, beverage sales at convenience stores represent 20% of all sales. The top categories are coffee, tea, bottled water, sports and energy drinks, with bottled water responsible for 50% of all beverage sales.

Comparison of Packaged Beverages Sales at Convenience Stores, 2014–2016

|Sales Metric |2014 (Actual) |2015 (Estimate) |2016 (Forecast) |

|Unit volume per store |4.6% |4.0% |5.0% |

|Dollar sales per store |6.6% |6.3% |6.5% |

|Industry dollar sales |7.9% |7.2% |7.5% |

Convenience Store News, January 2016 Issue

Driving Us to Drink

• With the growth in the popularity of spicy foods and a more ethnically diverse population with bold flavors in their food cultures, chili peppers, wasabi, Thai chili and curry are being added to many beverage brands, and in combination with citrus flavors.

• Dairy alternatives have increased their market share from 14.5% for 2010 to 20% during 2014, and sales are forecast to increase from $23.8 billion for 2014 to $31.5 billion by 2019.

Consumers’ Preferences in Beverage Attributes, 2015

|Attribute |Low Interest |Moderate Interest |High Interest |Latest Trend |

|Organic |-10% |+26% |+26% |+38% |

|Natural |-4% |+14% |+48% |+34% |

|Low sugar |-14% |+24% |+36% |+26% |

|Healthy |-14% |+12% |+54% |+20% |

|Low calorie |-14% |+26% |+42% |+18% |

|Country-of-origin labeling |-34% |+28% |+24% |+14% |

|Energy boosting |-22% |+46% |+18% |+14% |

|Ethnic |-38% |+32% |+16% |+14% |

|Convenience |-4% |+18% |+66% |+12% |

|Cognitive health |-34% |+32% |+22% |+12% |

Beverage Industry (BNP Media New Product Development Outlook 2015 Study), January 2016

Additional Analysis

Recent research suggests that consumers’ preference for beverages with natural and/or certified organic ingredients could prove to be a challenge for energy drink companies, especially the two largest, makers of Red Bull and Monster. Nonetheless, the energy drink category increased sales 8.4% for the 52 weeks ending May 17, 2015, to a total of $9.77 billion.

Red Bull’s revenues for that period increased 7.4% to $3.83 billion, but it lost -0.4% in market share, but its market share was almost 3 times more than Monster Energy, at 39.3% and 14.3%, respectively. Of the 6 Monster products among the top 10 energy drinks, 3 experienced a sales decrease from the previous year and 4 lost market share.

Energy shots face a different challenge: market maturation. The products, especially 5-Hour Energy, are found in almost all retail locations and consumer awareness is very high. The trend is also evident in the sales data for the 52 weeks ending May 17, 2015.

Top 10 Energy Shots, 2015*

|Brand |Sales |% Change |Market Share |% Change |

|5-Hour Energy |$1.05 billion |-2.5% |91.7% |+0.5% |

|Stacker 2 Xtra |$17.0 million |-1.1% |1.5% |0.0% |

|Private label |$10.1 million |-30.1% |0.9% |-03% |

|Stacker 2 |$9.71 million |+10.3% |0.8% |+0.1% |

|Street King |$8.86 million |+44.3% |0.8% |+0.3% |

|Tweaker |$8.79 million |+26.0% |0.8% |+0.2% |

|Stacker 2 6-Hour Power |$7.73 million |-35.8% |0.7% |-0.3% |

|Stacker 2 Extreme |$4.90 million |-1.9% |0.4% |0.0% |

|Rhino Rush |$4.57 million |+212.7% |0.4% |+0.3% |

|Fuel in a Bottle |$3.67 million |+24.5% |0.3% |+0.1% |

|Category total: all brands |$1.15 billion |-3.0% |100% |--- |

Beverage Industry, 2015 * for the 52 weeks ending May 17, 2015

Sources: PR Newswire Website, 1/16; Beverage Industry Website, 1/16; Beverage Marketing Corporation Website, 1/16; Convenience Store News Website, 1/16.

Updated: January 2016

(Soft drinks, bottled water, beer and wine and spirits are detailed in separate Profilers from THE MEDIACENTER.)

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