The world's largest carbonated soft drinks company Coca-Cola is counting on growth from its still drinks business to drive sales in the European market over the coming years.
Energy drinks, ice tea and other non-carbonated products are likely to prove more popular than the fizzy drinks for which the company is best known by 2007, according to Sandy Allan, head of the Atlanta-based group's European operations.
Speaking at a consumer conference broadcast via the Internet, Allan said that profits from non-carbonated products were expected to surpass those of carbonated brands in less than three years, confirming the trend which has seen not only Coke but also rivals such as PepsiCo and Cadbury Schweppes move increasingly towards juice, water and so-called 'adult' soft drinks in recent years.
Allan is head of the Europe, Eurasia and Middle East operating unit at Coca-Cola, which recently reported a 9 per cent in case volumes for the third quarter of the year, led by strong growth in France, Spain, the UK and Italy. Non-carbonated beverages saw a 9 per cent increase in quarter, led by the Powerade sports drink, whose sales volumes rose 71 per cent. Juices and juice drinks grew 21 per cent and energy drinks increased 84 per cent.
In his presentation to the Morgan Stanley consumer conference in New York yesterday, Allen said that Coca-Cola expected to see strong demand for its non-carbonated drinks in Europe, although volume improvements would not necessarily be matched by turnover growth because of the impact of the euro/dollar exchange rates.
This year's third quarter figures were helped by the weakness of the dollar against the euro, and by the heat wave which affected most of western Europe in July and August. Both factors were clearly unlikely to be repeated in coming years, Allan said, although he still expected to see significant sales growth from the European market.
Allan's predictions are supported by a recent analysis of the UK market by Canadean, which showed that consumption of still drinks in that market alone had increased by 9 per cent in 2002, driven by a perception that they are somehow healthier than sugary carbonates.
But impressive as this growth was, Canadean's data did not include bottled water, which has been the star performer in the UK non-carbonated market in recent years, with volumes rising threefold to 2 billion litres between 1998 and 2002, according to Mintel.
Both market research companies agree that this growth will continue, with Canadean expecting to see growth in UK still drinks sales of around 3 per cent this year and Mintel predicting that British bottled water sales will reach 4 billion litres by 2007.