But what’s changing in the industry and what brands are getting it right?
The war on sugar
With the media spotlight turned firmly on sugar, following the implementation of a government tax in many countries across the world – such as Saudi Arabia where they imposed a 50% tax on sugary drinks in June - many consumers around the world are seeking healthier alternatives.
Energy drink Red Bull, in position 16 of this year’s Kantar Worldpanel Brand Footprint ranking with a consumer reachpoint increase of 2.9%, is changing its focus as health-conscious millennials turn to zero-calorie variants.
The brand launched a range of exotic zero-sugar flavors via Instagram and bespoke messages on trains, cycle routes and in fitness clubs to capture the attention of young consumers.
PepsiCo is also responding to changing consumer needs with Naked Juice – well on its way to becoming the company’s next billion-dollar brand –and introduced Naked Cold Pressed in 2016.
Tropicana launched its Essentials Probiotics line, becoming the first brand to bring probiotics to mainstream juice products. Its popular drink Pepsi Max – which has zero sugar – was rebranded to Pepsi Zero Sugar in the US, in line with the ongoing drive for sugarless drinks.
The number one brand in our ranking, Coca Cola, introduced Coca-Cola Zero Sugar—a reformulated and rebranded version of Coke Zero—in Belgium, France, Ireland, the Netherlands and the UK.
But health is not the only factor impacting consumption. In China, fewer hot days in 2016 led to lower demand for cooling carbonated drinks. Purchase frequency for urban households fell by 7.6% in the 12 months to the end of June 2016, a decrease of 1.7 times per household.
Increased environmental awareness
As consumers become more concerned about the environment around them, the demand for products with minimal packaging has grown.
Brands are increasingly taking an ethical – rather than solely profit-driven – stance towards product development and packaging.
Coca-Cola and PepsiCo, manufacturers of the two biggest beverage brands in our ranking, recently united to discuss downsizing their products and cutting back on cut-price deals in stores. This is congruent with a growing demand for more sustainable packaging and production.
Adjusting package sizes has a secondary effect: differentiation. In 2015, Coca-Cola launched a 1.25-litre bottle as an alternative to the 2-litre bottle, and a 7.5 ounce can as an alternative to the traditional 12-ounce can, resulting in a spike in sales of 9% in the US.
The health agenda
Research shows more people are living alone than at any other time in recorded history. There are rising concerns about shifting – specifically, ageing – demographics.
People are increasingly worried about their wellness. Previously-held anxieties around air pollution and environmental issues are fast becoming global panics. They want products to make them healthier.
As well as removing things from products, brands have started adding functional benefits to drinks not previously associated with health.
Tea producers in the UK have added functional ingredients such as matcha and vitamins C and B12 to boost sales amongst health-conscious consumers.
T-plus, a new entrant into the UK’s healthy drinks market, has blended green, herbal and fruit teas with vitamins to deliver 50% of the recommended daily allowance of nine essential vitamins per teabag. The move is attracting new buyers at pace, and demanding a premium price.
Heinz, meanwhile, has entered the beverage category in India with Power Sprouts, a multigrain malt drink with 31 added vitamins, aimed at children. Coca Cola launched Fanta Lemon +C in Japan, containing a level of vitamin C equal to 80 lemons.
The increase in the importance of health, along with the rise of ‘mocktail’ bars and drink awareness campaigns; is also having a negative effect on alcohol consumption—younger people especially are choosing healthier alternatives, even when socialising.
The number of teetotal 16-24-year-olds in Britain rose by more than 40% between 2005 and 2013— similar trends have been noted in other parts of Europe and the US.
Upon opening the refrigerator, this demographic is as likely to quench their thirst with a soft drink or water than a beer or glass of wine. Thus, brands often no longer compete within their own categories; instead they must battle to be chosen based on the occasion.
The world in which brands operate in 2017 is no less changeable than 2016: developments such as staff-less supermarkets and the continued growth of ecommerce will continue to impact how and when they can reach consumers.
Against this backdrop, there’s one profound thing our research over the past five years has confirmed. No matter how chaotic the world appears to be, the most agile and adaptive brands continue to find ways to grow.'
Kasia Kossakowska and Tom Pattinson, are both global directors, at Kantar Worldpanel.