The Rewards of Innovation and Diversification
A special report issued today by industry publication Beverage Digest shows that Americans spent about $2 billion more on nonalcoholic beverages in 2017, as companies like Coca-Cola continued to bring more new products to market and innovate in established core brands.
Per Beverage Digest, carbonated soft drinks (including energy drinks) and bottled water drove the lion’s share of growth, with each adding around $1 billion in retail value to the industry’s overall $135.7 billion in sales last year.
Coca-Cola North America’s top brands showed some of the strongest retail sales growth in the report, with TrademarkCoca-Cola (which includes Coca-Cola, Coke Zero Sugar, Coca-Cola Life and Diet Coke) growing 1%; Trademark Sprite (which includes Sprite and Sprite Zero) growing 6.8%; DASANI growing 2.5% and the company’s energy drink partner, Monster, growing retail sales nearly 11%.
A core part of Coke’s strategy in North Americahas been responding to evolving consumer tastes by moving from volume to value as a core metric, fueled by a focus on premium offerings, beverage innovation and smaller bottles and cans with less sugar and calories per package. Through this strategy, Coca-Cola North America grew reported revenues in its flagship market 4% last year with value growth across many key brands in its portfolio.
For instance, the retail value of Coke Zero, whichrelaunched as Coke Zero Sugar in August 2017, grew 6.1% and climbed to be the ninth-largest carbonated soft drink brand in North America by retail value, up a spot from 2016.
“This report highlights the continued momentum of our brands in North America across a wide array of beverage categories –from waters, to teas, to juices and sparkling soft drinks,” said Jim Dinkins, president, Coca-Cola North America.“We are working to build on last year’s momentum with even more exciting innovation for consumers in 2018, such as the recent relaunch of Diet Coke, the continued success of Coke Zero Sugar and the introduction of many other new products throughout our portfolio.”
According to Beverage Digest, the total U.S. beverage industry added $2.1 billion in retail value in 2017, with value up 1.6% and volume up 1.4%. The Beverage Digest annual report measures most of the country’s nonalcoholic ready-to-drink (NARTD) beverage category, but excludes some key areas such as chilled fruit juices delivered via warehouse distribution channels.
The report includes a category-by-category breakdown of retail value growth in 2017. Carbonated soft drinks (+1.3%); water (+3.8%); RTD teas (+1.5%); and RTD coffees/dairy-based and other (+11.7%) each reported healthy retail value growth. Only two categories –juice/juice drinks (-0.9%) and sports drinks (-1.8%) –posted value declines in channels measured by Beverage Digest.
“Value has become an important metric to consider when judging beverage industry health and performance during the current era of premiumization and market fragmentation,” the report noted, emphasizing that this is “especially true” when looking at the growth of carbonated soft drinks. “While volume remains an important measure of long-term consumer demand, executives have focused increasingly on dollar sales growth as they raise prices (both rate and mix) amid volume sales declines.”
In terms of volume growth, the report showed that Fanta and Sprite led Coke’s soft drink portfolio with 5% and 4% volume growth, respectively, followed closely by Coke Zero Sugar at 3.8%. Each of these brands also grew in value.