Australia might be seen as a land of sun and surf - ideal conditions for increasing sales of soft drinks - but consumption of carbonates, water and other non-alcoholic beverages is set to fall there this year for the first time in several years.
A new report from market analysts Canadean predicts that per capita sales will fall by 0.2 per cent and volumes climb by less than one per cent during 2003, with carbonate sales actually likely to fall over the year.
The category should, however, continue to increase its share of the total drinks market which, owing to its increasing maturity, has experienced negative per capita growth in four of the last six years, Canadean added.
Carbonates, which account for more than half of Australia's soft drinks volume, have seen static sales for the last two years, and this year's likely decline in sales will be due to rising sales of other soft drinks categories and products outside the sector, including flavoured milk.
But carbonates are not the only products suffering, according to the report. Squash/syrups have long occupied the position of second largest sector owing to their role as an inexpensive alternative to many soft drinks. However, they have slipped into third place at the beginning of the new century and are expected to shed in excess of one per cent of volume for the third year running.
Meanwhile, juice and nectars, although now the second largest sector, seems to have settled down at around the 35 litres per capita mark. Heavy discounting by supermarkets may increase the amount consumer's purchase at any one time but it has done little to increase overall sales say Canadean.
Volume growth of packaged water, which was in double digits at the turn of the century, fell to six per cent in 2002 and is expected to be even lower this year. It is a similar tale for sports drinks, which emerged as a distinct sector during the 1990s and achieved rapid acceptance, with consumption peaking in 2000. Sales have since faltered, due partly to the maturity of the market and partly to the conflicting claims of a proliferation of brands which has caused confusion among consumers.
While consumption may be relatively static the major producers have remained active - particularly in the all-important packaged water sector. Last year Coca-Cola Amatil, the sub-continent's largest soft drinks company and the local licensee for Coca-Cola, launched two new packaged water brands and in June 2003 acquired Peats Ridge Spring, thus doubling its water bottling capacity at a stroke.
Cadbury Schweppes has also made its presence felt among the leading packaged water players, both through the promotion of its own brands and sales of Propel, which it manages along with the other Pepsi interests in Australia.
The long term situation is not one to relish, either. Canadean claims that the diminishing proportion of children and young adults in the population has potentially huge implications for beverage producers and marketers in Australia. One way out of the present 'low or no growth' scenario may be to cater for the increasing number of older consumers by developing more adult drinks, the report concludes.
For details of Canadean's range of beverage reports, click here.