Sodas lose fizz in 2007 forecast

By Lorraine Heller

- Last updated on GMT

Related tags: Soft drinks, Carbon dioxide

Carbonated soft drinks maintain their hold over the US beverage
market, but the category experienced a steady decline last year,
and this is expected to accelerate in 2007, according to a recent
report.

"Carbonates maintain their claim to much of the US soft drinks arena but they no longer represent the driving force,"​ said the report, published by international beverage consultants Canadean. USA Soft Drinks Service Quarterly Beverage Review​, for the fourth quarter of 2006, reveals that the nation's commercial beverage market remained fairly stable during 2006 with an actual, if slight, decline in Q4 compared to the same period in 2005. According to Canadean, the most dynamic category during the year was flavored milk, with soy and rice drinks enjoying a "superb"​ last quarter. However, both beverages are considerably dwarfed in size by soft drinks. Bottled water is also a driving force in the market, particularly still water in single-serve packaging, says the report. The trend is being driven by rising sales of multi-packs, which are eating into purchases of traditional gallon jugs as well as HOD/delivered water. In contrast, carbonated soft drinks saw volumes down one percent in the fourth quarter 2006, compared with the equivalent period a year earlier. Colas - the traditional mainstay of the category - particularly suffered, said Canadean. "Clear attempts by carbonate suppliers to maintain consumer appeal by investing heavily in new packaging, flavors and brand launches were negated by cost-driven price increases introduced in Q4.All the major players suffered." ​At the same time, diet carbonates have become a growing source of concern for the industry, says the researcher. Sales during the last three months of 2006 were down by more than 3 percent, despite several years of solid growth and significant brand support, new launches, re-launches and reformulations. With an industry and consumer focus on obesity and health, the influence of low calorie carbonates is critical to the development of the category. These currently control a third of the carbonates market, but according to Canadean, "unfortunately the projection for 2007 does not bode well.""The steady decline in carbonates consumption that was evident last year is expected to accelerate slightly. A volume gain well below 1 percent is forecast for the low calorie segment and this is not considered sufficient to prevent a further contraction in overall carbonate volumes,"​ said the report. The "subdued"​ final quarter result for low calorie variants caused their annual volumes to remain practically flat, while regular carbonates also recorded a negative performance for Q4 and for 2006. The combined outcome was for the total category to report a negative result in the final three months of 2006, with a similar outcome recorded for the year as a whole, said the report.

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