Consumer Choices in the Beverage Aisle - US - April 2008

Table of Contents

• Scope and Themes
• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Television ads
• Store audits
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• They aren' t just drinks anymore
• Standing out from the "usual" in the beverage aisle
• The two big segments continue to be a sitting target for every growing brand
• Consumers want products that meet dietary requirements
• Bottled water--decelerating, but still growing
• Consumer motivations
• Specific drinks for specific settings
• Market Size
• Key points
• Consumers on an ongoing quest for convenient nutrition
• Price increases promote consumer attrition
  • Figure 1: Total U.S. sales and forecast of non-alcoholic beverages at current prices, 2002-12
  • Figure 2: Total U.S. sales and forecast of non-alcoholic beverages at inflation adjusted prices, 2002-12
• Competitive Context
• Key points
• Strong brand loyalty and product awareness necessary
  • Figure 3: U.S. new non-alcoholic beverage introductions, 2003-07
• Price sensitivity and exception for value add
• Changing consumer values
• Is this beverage natural?
• Is the packaging convenient?
• Is the packaging environmentally friendly?
• Does this brand resonate with my lifestyle?
• Brand identity and innovation
• Line extensions drive short-term growth, but create clutter in the beverage aisle
• Finding a line extension with independent positioning can drive sustainable long-term growth
• Brand extensions command instant consumer recognition but can dilute brand equity and create brand fatigue
• Segment Performance--Overview
• Key points
• Product mix should promote good health and experience
• Carry the product mix to cater to the area' s population profile
  • Figure 4: FDM* sales and forecast of non-alcoholic beverages at current prices, by segment, 2002-12
  • Figure 5: FDM* sales of non-alcoholic beverages, by segment, 2005 and 2007
• Segment Performance--Carbonated Soft Drinks
• Key points
• Consumers view soda as an unhealthy beverage
• All-natural image for soda may attract health-savvy consumers
• Attracting men may be the key to growing the diet category
  • Figure 6: FDM* sales and forecast of carbonated soft drinks, 2002-12
• Segment Performance--Fruit Juice and Juice Drinks
• Key points
• Consumers move away from fruit juices amid calorie concerns
  • Figure 7: Ocean Spray cranberry juice, TV ad, 2007
  • Figure 8: Ocean Spray 100% Juice, TV ad, 2007
• Consumers wary of artificial ingredients in fruit drinks
  • Figure 9: FDM* sales and forecast of bottled, canned, and aseptic juices, 2002-12
• Segment Performance--Bottled Water
• Key points
• Enhanced water promises future segment growth
• Communicate about water purity positioning
  • Figure 10: FDM* sales and forecast of bottled water, 2002-12
• Segment Performance--Sports and Energy Drinks
• Key points
• Targeting niche consumers essential for future growth
• Manufacturers should highlight functional platform
  • Figure 11: FDM* sales and forecast of sports and energy drinks, 2002-12
• Segment Performance--Bottled and Canned Tea
• Key points
• Tea maintains its healthy image
  • Figure 12: FDM* sales and forecast of canned and bottled tea, 2002-12
• Segment Performance--Seltzer, Tonic Water, and Club Soda
• Key points
• Positioning seltzer as a healthier option for soda may drive growth
  • Figure 13: FDM* sales and forecast of seltzer, tonic water, and club soda, 2002-12
• Retail Channels
• Key points
• Channel choice is crucial to new product launches
  • Figure 14: Retail channel choice to purchase beverages in past week, by age, February 2008
• Supermarkets lose market share to mass and other channels
• Energy drinks guarantee flow of traffic at convenience stores
  • Figure 15: U.S. sales of non-alcoholic beverages, by retail channel, 2005 and 2007
• Retail Channels--Supermarkets
• Key points
  • Figure 16: U.S. new non-alcoholic beverage introductions, 2003-07
• Need exists for more single-serve options
• Observation: Albertsons, Miami, FL
• Shelves should reflect new products trend
  • Figure 17: U.S. sales of non-alcoholic beverages at supermarkets, 2002-07
• Retail Channels--Mass and Other
• Key points
• Observation: Wal-Mart, Dallas, TX
  • Figure 18: U.S. sales of non-alcoholic beverages at mass and other channels, 2002-07
• Market Drivers
• Trend towards healthier eating influences beverage choice
  • Figure 19: Attitudes regarding healthy eating, 2003-07
• Obesity trends shape up the beverage aisle profile
  • Figure 20: Percentage of population who are overweight or obese, 20-74 years of age, 1988-2004
  • Figure 21: Attitude and opinion towards artificial sweeteners, March 2008
• Consumers weigh health news and research findings when making beverage choices
• Young adults are the key consumers in the beverage aisle
  • Figure 22: Population of adults aged 18-34, 2003-13
• Baby Boomers cut down on beverage consumption with age
  • Figure 23: Coca-Cola' s Minute Maid Enhanced Orange Juice, TV ad, 2007
• Households with children key to market growth
  • Figure 24: Households with children under age 18 present, 2001-06
  • Figure 25: U.S. child and teen population and projections, 2003-13
• Heavier consumption among Hispanics and blacks
  • Figure 26: Population by race and Hispanic origin, 2001-13
• Fastest-growing Brands--Carbonated Soft Drinks
• Key points
• Fruit-flavored products appeal to growing Hispanic population
• Opportunities exist for soda brands with pro-health and functional positioning
• Diet brands need to connect with core consumers on taste and brand identity
  • Figure 27: Top carbonated drinks brands in FDM*, 2006 and 2007
• Fastest-growing Brands--Fruit Juice and Juice Drinks
• Key points
• Brands can benefit from value-added positioning
• Consumers want products that meet dietary requirements
  • Figure 28: Top aseptic/canned/bottled fruit juice/juice drinks brands in FDM*, 2006 and 2007
• Fastest-growing Brands--Bottled Water
• Key points
• Mid-priced brands getting squeezed out by premium and private label brands
• Enhanced water niche becoming crowded
  • Figure 29: Top bottled water brands at FDM*, 2006 and 2007
• Fastest-growing Brands--Sports and Energy Drinks
• Key points
• Sports drink mixes appeal to price-conscious consumers
• Energy drinks consumers want more
  • Figure 30: Top sports and energy drinks brands in FDM*, 2006 and 2007
• Fastest-growing Brands--Canned and Bottled Tea
• Key points
• RTD should capitalize on growing interest in wider tea varieties
• Premium and organic likely to remain niche brands
  • Figure 31: Top RTD tea brands in FDM*, 2006 and 2007
• Innovation and Innovators
• New product trends
  • Figure 32: New product introductions, by drink category, 2003-08*
• Cane juice appeals as a natural sweetener
• Trend towards fruit and vegetable juice fusion
• Gatorade expands drinking occasions
• Attitudes and Motivations
• Key points
• Price, packaging and promotional factors influencing supermarket purchase
• Young adults, the key consumers, are most likely to respond favorably to packaging attributes
• In-store sampling and promotion can be a powerful tool to drive growth in the beverage aisle
  • Figure 33: Price, packaging and promotional factors influencing purchase, by age, February 2008
• Motivation for trying a new beverage
• Price the new beverage right in the retail aisles, compared to the existing alternatives
• Use viral marketing strategies to spread word about the new beverage
• In-store sampling is more effective in selling new beverages, compared to the existing beverages
• Capitalize on existing brand equity, but avoid creating brand fatigue
  • Figure 34: Motivations for trying a new drink, by age, February 2008
• Beverage attributes driving purchase
• Increase single-serve packaging in the total product mix
• All-natural and no high-fructose corn syrup could become more important in the future
  • Figure 35: Criteria considered when drinks were bought, by age, February 2008
• Potential for purchase decisions to be made in the supermarket
• Most consumers make their beverage shopping list prior to visiting the store
  • Figure 36: How often drink purchases are planned before going to the supermarket, by age, February 2008
• Specific Drinks for Specific Settings
• Key points
• Incidence of drinking certain beverages only in specific settings
  • Figure 37: Incidence of purchasing non-alcoholic beverages in special settings, by age, February 2008
  • Figure 38: Incidence of purchasing non-alcoholic beverages in special settings, by race/ethnicity, February 2008
  • Figure 39: Incidence of purchasing non-alcoholic beverages in special settings, by presence of children in the household, February 2008
• Beverages drunk only in specific settings
  • Figure 40: Beverages drunk only in specific settings, by age, February 2008
  • Figure 41: Choice of non-alcoholic beverages in special settings, by race/ethnicity, February 2008
  • Figure 42: Choice of non-alcoholic beverages in special settings, by presence of children, February 2008
• Appendix: Other Useful Consumer Tables
• Price, packaging and promotional factors influencing supermarket purchase
  • Figure 56: Price, packaging and promotional factors influencing purchase, by household income, February 2008
  • Figure 57: Price, packaging and promotional factors influencing purchase, by race/ethnicity, February 2008
  • Figure 58: Price, packaging and promotional factors influencing purchase, by household size, February 2008
• Motivation for trying a new beverage
  • Figure 59: Motivation for trying a new beverage, by race/ethnicity, February 2008
  • Figure 60: Motivation for trying a new beverage, by household income, February 2008
  • Figure 61: Beverage attributes driving purchase, by race/ethnicity, February 2008
  • Figure 62: Motivation for trying a new beverage, by presence of children in the household, February 2008
• Potential for purchase decisions to be made in the supermarket
  • Figure 63: Incidence of beverage purchase intent before entering store, by household income, February 2008
  • Figure 64: How often purchases are planned before entering store, by race/ethnicity, February 2008
• Beverage attributes driving purchase
  • Figure 65: Beverage attributes driving purchase, by household income, February 2008
• Incidence of purchasing non-alcoholic beverages for special setting
  • Figure 66: Incidence of purchasing non-alcoholic beverages in special settings, by household income, February 2008
• Choice of non-alcoholic beverages in special settings
  • Figure 67: Choice of non-alcoholic beverages in special settings, by gender, February 2008
  • Figure 68: Choice of non-alcoholic beverages in special settings, by household income, February 2008
• Choice of retail channels to purchase beverages
  • Figure 69: Where drinks were bought in past week, by gender, February 2008
  • Figure 70: Where drinks were bought in past week, by household income, February 2008
  • Figure 71: Where drinks were bought in past week, by race/ethnicity, February 2008
  • Figure 72: Where drinks were bought in past week, by presence of children in the household, February 2008
• Appendix: Trade Associations
• Beverage Aisle/Beverage World