Mid-calorie carbonates won’t check US soda fall – BMC predicts

In a recent speaking slot at InterBev 2012 in Las Vegas, Hemphill said his consultancy predicted that carbonated soft drinks (CSDs) would suffer an eighth consecutive year of volume declines in 2012, and probably also in 2013.

Hemphill noted that, looking back over a five year analysis period, people had expected diet CSDs to save the category.

“They did outperform the market. They did a little better than regular in the overall market. But they didn’t really grow, and thus help the overall market,”​ he said.

“Our thinking is that many people who were traditional diet drinkers may have simply moved out of the category to categories such as bottled water,”​ Hemphill added.

What’s America drinking?​

Glossing the reasons for the shift away from CSDs, Hemphill cited economic problems in the US over the past five years and problematic health perceptions, with people keen to avoid sugary sodas.

More variety in the marketplace, and political action – such as New York City Mayor Bloomberg’s attempts to get consumers to drink fewer full-calorie beverages and cut CSD consumption, was also hitting the category hard, Hemphill added.

Reflecting on attempts by three large CSD manufacturers to carve out a niche with mid-calorie soft drinks – in a bid to bolster the category, Hemphill said efforts had met with “mixed success”​ thus far.

“Dr. Pepper 10 seems to be doing fairly well by targeting more of a male consumer who under-indexes on the diet side of things,” ​he said.

“Pepsi NEXT – truly a mid-calorie product – has probably met with more mixed results. Coke has also tested a couple of products, but they seem to be less drawn on the concept.​

“Basically, we don’t think it’s going to have a monumental overall effect on the category – the products will probably appeal to some consumers, but it’s not going to turn around the overall fortunes of the category.”​

Tap waters rising?​

Hemphill also linked soft drink market health in general to alcohol consumption (in a year when its main engine beer was seeing a US rebound) and tap water consumption, which continued to rise.

“When tap water consumption tends to decline, I would say… we’ve fully rebounded from the weak economy,” ​he said.

But Hemphill did note that LRBs (excluding tap water) posted modest growth over the past five years, with bottled water a big share winner, followed by energy and diet; CSDs lost the most share.

“If you look at market over H1 2012: bottled water, energy drinks, RTD coffee/teas, sports drinks, value-added water were the winners, while CSDs, fruit beverages and milk declined,”​ Hemphill said.

“We’re generally seeing better performance in more niche, premium price categories – energy, bottled and canned coffee, bottled and canned teas, sports drinks – than in traditional, mainstream categories. ​

Hemphill said one reason was that higher income, better educated consumers had fared fairly well during the recession, whereas middle-income, working class, less well-educated consumers had not.