Energy drinks adding fizz to buoyant Asian beverage market

In its latest report on the Asian non-alcoholic drinks market, Canadean found that the continent’s energy drinks segment might be less than one-tenth of the size of carbonates, but at the same time Asia is responsible for two out of every five litres of energy drinks consumed worldwide—far more than both North America and Europe.

“The history of these drinks in Asia extensively pre-dates their international rise to prominence, having already achieved a position of popularity across the region well before the likes of Red Bull burst upon the global stage​,” the report’s authors explained.

“Furthermore, the Asian market for energy drinks remains resilient, with latent growth opportunities still untapped​.”

Liquid water segment​

The mainstay of Asian soft drinks consumption is packaged water, which took over the lead from carbonates in 2006 and now represents around a quarter of regional soft drinks volumes. 

China is now a key provider of demand, yet the market only really took off in the 1990s, with increased product knowledge coupled with economic development driving the category forward. Now, with the overall economy slowing, many soft drinks manufacturers have chosen packaged water to drive their volume growth. 

Meanwhile, within the market itself, natural mineral water is taking share from the dominant table water segment as Chinese consumers’ concerns about drinking ‘healthier’ beverages continue to increase, thereby enhancing market value.

Carbonates may have been toppled from their position as the region’s favourite soft drink, but consumption continues to build. 

“Volumes today are a staggering 80% larger than they were just 10 years ago,” the report said. “China again provides the main consumer base, but India has shown the greatest impetus in recent times, solidly led by a cola and lemon-lime flavour combination.” 

However, annual growth has been slowing in India, having peaked at well over 20% in 2006, but according to Canadean, it is confidently expected to remain in double figures in support of future regional expansion.

Caffeine haze​

One soft drinks category struggling to progress is iced and ready-to-drink coffee products. While Asia is the category’s main market, thanks to its uptake in Japan, Canadean sees its recent rate of development as disappointing. 

“Consumption actually confronted negative demand in 2009 and 2010, leading to a modest volume loss, as other soft drinks continued to thrive​,” said the report. 

Part of the reason for this stunted growth is Asians are far more familiar with tea than coffee. Hot tea, for instance, outsells hot coffee in the region by a factor of 8:1, according to the research. 

“Nonetheless, the experience of iced and ready-to-drink coffee products is very much atypical and recent category progress has actually been positive. Indeed, all soft drinks in Asia are currently in the ascendence, thereby providing excellent prospects for future market development​.”

Overall, the report found Asia to offer enormous opportunities for the global soft drinks industry. On a volume basis, its contribution has leapt from 18% 10 years ago to approaching 30% today. Meanwhile, the global market itself has expanded by over 50% during the same period. “In other words, the region is taking a greater slice of a much bigger pie,” said Canadean. 

Meanwhile, Asian per capita consumption is still only half of the international average, pointing to strong future potential.

Tomorrow: We report on the Australasian soft drinks market​