Consumers' Hot And Soft Drink Preferences: New Trends & Future Perspectives

Consumer's consumption of hot and soft drinks is increasing year-on-year, mainly to fulfil hydration and health demands, and partly to satisfy indulgence needs. This report identifies what is driving consumers soft and hot drink occasions and assesses which drinks categories are winning share of throat. Marketers must understand key consumer drivers to grow occasions and maintain market share.



Report Highlights
Consumers are creating new drink occasions in an effort to satisfy conflicting need states, with health a key driver of future soft and hot drink occasions. European and US consumers had on average 1,186 soft drink occasions in 2006 and this is forecast to rise to 1,331 by 2011, a growth of 2.3% Drinks categories are becoming increasingly blurred as consumers' share of throat evolves, and drinks manufacturers are facing increasing competition both from rival brands and more importantly from different drinks categories. Hot drink preferences are changing with tea becoming increasingly popular in coffee dominated markets such as the US, France and the Netherlands, due to its perception amongst consumers of being healthy. In contrast, coffee occasions are becoming increasingly indulgent with strong growth in specialty coffee through foodservice channels.


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Overview 1
Catalyst 1
Summary 1

THE FUTURE DECODED 5
INTRODUCTION 5
This report covers bottled water, carbonates, functional drinks, juices, tea, coffee and other hot drinks 5
TREND: New beverage occasions are emerging as consumers look to satisfy conflicting need states 6
Per capita frequency of soft drink occasions is higher in the US than Europe 7
German consumers' drinks choices are driven by the health trend 8
Increasing temperatures are set to drive soft drink occasion frequencies, especially in the summer months 9
The growing number of non-alcoholic drinkers in some countries is driving growth in soft drink alternatives 9
Moderated consumption of alcohol is even being seen among students 10
Aging populations are shaping the soft drinks industry 11
Carbonated drink occasions are evolving to different day parts 12
Children are drinking less carbonated drinks 12
Hot drink consumption in Western markets is heavily dependent on culture and climate 12
Coffee is becoming an indulgent drink 13
Hot drink consumption increases in colder climates 14
Key take-outs and implications: consumers are choosing beverages that best fit their needs and are willing to forego previous beverage format preferences 16
TREND: Healthier drinks are gaining 'share of consumer's throat' 17
Consumers are increasingly opting for 'better-for-you' and 'good-for-you' beverages 17
There are marked differences between European and US soft drink share of throat 18
Consumers' propensity to drink tea is growing in the US, while European consumers are drinking more coffee 19
Consumers' growing propensity to drink tea in the US is being driven by its positive health associations 20
Key take-outs and implications: health is heavily influencing consumers' hot and soft drink preferences, something which must be recognized in future NPD activity 20
TREND: The importance of instantaneous and constant hydration to consumers is growing 21
Consumers are increasingly appreciating the importance of staying hydrated 21
Women consider hydration to be more important than men 23
Older consumers find drinking water more important than younger consumers 23
Children are increasingly appreciating the importance of drinking enough water 23
Key take-outs and implications: in addition to health, indulgence and convenience needs, physical hydration needs have intensified in recent years 24
INSIGHT: Bottled water occasions are increasing, taking an increasing 'share of throat' 24
Bottled water now accounts for half of all soft drink consumption in Europe 25
There is a correlation between the type of ice or water that consumers prefer to consume at home, and the size of the bottled water market in those countries 26
There is concern over the nutritional content of flavored water, which may inhibit future growth 26
Concerns over the environment may encourage greater tap water consumption in the future 27
Key take-outs and implications: bottled water growth has been extremely strong, although there are barriers facing the category in the future 27
INSIGHT: The carbonates market is showing little growth as consumers switch to healthier beverages 28
Consumers in Europe have under half the number of carbonated drink occasions as the US 29
Growth in the carbonates market is being driven by diet variants 29
Key take-outs and implications: consumers are switching from carbonated beverages, as it is a category that is generally 'off-trend' 30
INSIGHT: Juices growth is being driven by the health and indulgence trends 30
The number of juice occasions is increasing as consumers look to increase their consumption of fresh items and 'good-for-you' nutrients 31
Consumers believe that juices are a convenient way of providing part of their five-a-day requirement 32
Consumers feel confused by juice labeling 32
Key take-outs and implications: as health becomes more important to consumers, the juices market is well placed to benefit 32
INSIGHT: Functional drink occasions are growing as consumers take a preventative and convenience driven approach to consumption 33
Europeans account for just a third of the total functional drink occasions accounted for by US consumers 33
Men are core functional drink consumers but female consumption is increasing 34
Aging populations are also changing the profile of the functional beverage consumer 34
Key take-outs and implications: consumers are slowly embracing the healthy science behind functional beverages 35
INSIGHT: Coffee is overwhelmingly the hot drink preference among Europeans and Americans 36
The number of coffee occasions is increasing 36
Tea is gaining share of throat at the expense of coffee in the US 37
Tea is capitalizing on the health trend 38
Other hot drinks represent a small but growing part of overall hot drink occasions 39
Key take-outs and implications: coffee continues to attract consumers requiring a pick-me-up and indulgence 40
ACTION POINTS 42
INTRODUCTION 42
ACTION: Recognize and react to consumers shifting 'share of throat' dynamics 42
Target alternative beverage occasions by making beverages more versatile 44
Target the student demographic with greater intensity to capitalize on their desire for sophisticated alternatives to alcoholic beverages 44
Develop multiple packaging sizes to capture new occasions 45
ACTION: Inflate the premium credentials of beverage products and services 45
Promote freshness as a core product attribute 46
Develop natural or organic products that facilitate premium pricing 47
Consider glass packaged beverages to capitalize on the demand for superior sensory satisfaction 48
ACTION: Develop and promote healthier coffee at specific occasions 48
Challenge the perception that coffee is unhealthy 49
Explore the possibilities of promoting coffee's antioxidant benefits to help fight back against teas 49
Consider developing milder strength coffee to target health conscious consumers 51
Appeal to consumers seeking functional drinks by developing energized coffee, especially by infusing existing variants with natural ingredients 52
ACTION: Emphasize the benefits that bottled water offers over tap water 53
Emphasize the origin of bottled waters to differentiate from tap water 53
Offer a value proposition to attract lower income consumers 54
Add additional nutrients to bottled water to compete with functional beverages 55
Lower sugar levels in flavored waters to combat cynicism 55
Develop recyclable packaging to counter wastage concerns 56
ACTION: Focus juice marketing efforts on both healthy and indulgent occasions 57
Promote five a day in promotional literature 57
Target parents and children with good-for-you juice brands 58
Consider altering juice formulations 58
Target different day-parts 59
Juice marketers should ensure that the origin of their products is clearly marketed 60
ACTION: Encourage everyday tea consumption 60
Promote tea as a self indulgent treat 61
ACTION: Challenge perceptions that carbonated drinks are unhealthy 62
Consider added functionality in carbonated drinks to counter the functional drink threat 63
Replace artificial flavors and additives with natural ingredients 64
Target different day-parts 64
Carbonated drinks are increasingly being consumed at breakfast time in the US 64
Consider positioning carbonated drinks as an 'indulgent treat' 65
ACTION: Target specific consumer groups with functional beverage occasions 66
Target specific health concerns with functional beverages 67
Communicate the ease that your products offer in maintaining a healthy diet 68
Ensure that attempts at gender specific functional drink positioning are targeted appropriately 68
Appendix 70
Definitions 70
Methodology 70
Further reading and references 71
Ask the analyst 71
Datamonitor consulting 72
Disclaimer 72

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Table 1: Overall and per capita consumption of soft drinks (liters, million), Europe & US, by country, 2001-2011 7
Table 2: Overall and per capita soft drink occasions, Europe & US, by country, 2001-2011 (millions) 8
Table 3: European and US consumers abstaining from alcohol by country (percentage and overall, millions), by country, 2006 10
Table 4: Overall expenditure on soft drinks split by age group, Europe & US (% expenditure) 2003-2005 12
Table 5: US away from home vs at home sales of coffee products (US$m) 2001-2011 13
Table 6: Overall and per capita consumption of hot drinks (liters, millions), Europe & US, by country, 2001-2011 14
Table 7: Overall and per capita hot drink occasions, Europe & US, by country, 2001-2011 (millions) 15
Table 8: Extent to which consumers consider soft drinks healthy, (% respondents), US & Europe, 2007 18
Table 9: Hot drinks share of throat(%), by beverage format, Europe & US, 2001-2011 20
Table 10: Proportion of European consumers who drank more water over the past year, (ranking and % of respondents), 2006 22
Table 11: Proportion of European consumers who drank more water over the past year, (ranking and % of respondents split by gender), 2006 23
Table 12: Overall and per capita bottled water occasions (millions), Europe & US, by country, 2001-2011 25
Table 13: Consumer preferences for water type, Europe & US, 2006 (%) 26
Table 14: Overall and per capita carbonate occasions (millions), Europe & US, by country, 2001-2011 28
Table 15: Overall and per capita juices occasions (millions), Europe & US, by country, 2001-2011 31
Table 16: Expenditure on functional drinks, by age group, Europe & US (% overall expenditure) 2003-2005 35
Table 17: Overall and per capita coffee occasions (millions), Europe & US, by country, 2001-2011 37
Table 18: Overall and per capita tea occasions (millions), Europe & US, by country, 2001-2011 38
Table 19: Overall and per capita other hot drink occasions, Europe & US, 2001-2011 (liters, million) 40
Table 20: Definition of terms 70


Figure 1: Packaged coffee sales in the US increase as temperatures decline 16
Figure 2: Soft drinks share of throat (%), by beverage format, Europe & US, 2001-2011 19
Figure 3: Consumers across Europe and the US increasingly consider drinking water an important factor in maintaining a healthy diet 22
Figure 4: Diet Cola will account for over 45% of total cola sales in the US by 2011 29
Figure 5: Coca Cola Zero has achieved global success by tapping into the values and beliefs of global males and giving them their own Coke 30
Figure 6: Consumers in the US are forecast to have 114 functional drinks per person per year by 2011 34
Figure 7: Soft and hot drinks share of throat by age, Europe & US, 2005 (% expenditure) - this shows how functional drink expenditure is dominated by younger consumers 43
Figure 8: The on-trade offers beverage marketers opportunity to target new soft drink occasions 44
Figure 9: Consider setting up juice bars to capture soft drink occasions away from alcohol 45
Figure 10: Ensure that you have packaging sizes to cater for different types of occasion needs 45
Figure 11: Innocent Drinks has achieved considerable success by marketing healthy products in an engaging and fun manner 47
Figure 12: Develop natural or organic products to generate premium pricing 48
Figure 13: Focus marketing on antioxidant levels in your coffee to gain consumer share of throat 50
Figure 14: Tea manufacturers have long emphasized the healthy properties of their products 51
Figure 15: Folgers Simply Smooth Coffee provides consumers with a milder strength coffee to cater for those consumers who find coffee too acidy 52
Figure 16: Appeal to consumers seeking functional drinks by developing energy coffee 53
Figure 17: Emphasize the origin of bottled waters to differentiate from tap 54
Figure 18: Develop enhanced waters to capture share of throat from functional drinks 55
Figure 19: Lower sugar levels in flavored waters to combat cynicism 56
Figure 20: Target fruit and vegetable juices to parents and children 58
Figure 21: Industry players need to alter juice formulations with 'good-for-you' and 'better-for-you' content 59
Figure 22: Encouraging 'everyday consumption' in a broad range of occasion scenarios is an effective way of boosting the versatility of beverage formats and maximizing market potential 61
Figure 23: Manufacturers must avoid category myopia and recognize that a broader range of product formats are now offering similar benefits 63
Figure 24: Consider added functionality in carbonated drinks to counter the functional drink threat 64
Figure 25: Targeting the breakfast occasion could provide a welcome boost to carbonate consumption 65
Figure 26: Consider positioning carbonates as an indulgent treat to capitalize on the desire for 'me-time' 66
Figure 27: Target specific consumer groups with functional beverage occasions 67
Figure 28: Embracing functional beverages allows industry players to target specific health concerns 68


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