FOOD INDUSTRY MARKET: BEVERAGES
BEVERAGES: NON-ALCOHOLIC BEVERAGES
Non-alcoholic Beverages Introduction:
The first category of Beverages Market consists of non-alcoholic beverages like coffees, teas, bottled water, fruit juices, soft drinks (beverage syrups with carbon dioxide added) in liquid and dry powdered forms, energy drinks and sports drinks. Gatorade was the first sports drink, and was invented at Florida University (Gators is the mascot) in 1965 to replace electrolytes and carbohydrates lost in athletic competitions.
The fastest growing niche in the overall beverage market for the past decade is caffeinated energy drinks with 80 milligrams of caffeine or more. There is much speculation and controversy surrounding caffeinated energy drinks and their long term use in the human body.
Many professionals say we have not yet seen the negative effects from long term use by students and young adults. The beverage market has grown in recent years due to much interest in nutritional beverages which add vitamins, herbs or supplements to the beverage to enhance health or medical conditions in a positive manner.
Non-alcoholic Beverages: Soft Drinks
Soft Drinks (a.k.a. sodas, pop, soda pop) began as cures for ailments in the late 1800’s and were produced at local pharmacies. Dr. Pepper was invented in 1885 by Dr. Alerton in Waco, Texas; Coca-Cola was invented by Dr. Pemberton in 1886 in Atlanta, GA; and Pepsi-Cola was invented in 1893 by Dr. Bradum. These three manufacturers represent the dominant players in the soft drink industry to this day.
2014 : Carbonated Beverages Market Update
15 billion gallons of soft drinks are consumed in the USA every year (over 50 gallons per person). In 2007 Coke had 43% market share; Pepsi had a 31% market share; Dr. Pepper/Snapple had an 18% market share and Jones Soda had 3% of the total soft drink market. 2013 Top three company carbonated diet soft drinks volume declined by 7% (Nielsen “xAOC” – “Extended All Outlet Coverage” includes all stores except convenience stores) in unit sales by Coca-Cola (-5.1%), Pepsi (-8.3%) and Dr. Pepper/Snapple Group (-7.6%). If this trend continues Wells Fargo Analysts predict a 15%-20% drop in carbonated soft drink sales volumes.
Full sugar carbonates unit sales were relatively flat, with Coca-Cola (+0.3%), Pepsi (-3.3%) and Dr. Pepper/Snapple Group (-1.7%). This displays a continuing trend since 2011 away from artificial sweeteners used in diet drinks due to recent studies at Purdue University (and others) linking regular consumption of diet sodas with multiple health problems. Consumers are purchasing beverages based on functionality and health instead of past branding themes identifying brands with a lifestyle or personal image.
Research & Development will continue to focus on natural sweeteners to replace artificial sweeteners, used in combination with taste masking ingredients to hide some of the bitter and non-complimentary aftertaste characteristics. We will cover the basic production process for carbonated soft drinks in the following section. The only difference would be the volumes that each producer manufactures in a given period of time.
September 2015 : Carbonated Beverages Market Update
Carbonated Soft Drinks (CSD): 2015 Wells Fargo Securities Report.
Sales of carbonated soft drinks (CSD) sales volume continues on a steep declining trajectory due to Consumer’s association with negative health concerns and despite efforts to pass on price increases. Year-over-year CSD sales quantity volume (Nielsen’s AOC – All Outlets Combined) fell 4.9 % and sales dollars decreased 1 percent thru 9/5/2015, even though manufacturers increased prices by 4.1 %. Manufacturers continue to tread water with the addition of new beverage products to maintain their projected forecast numbers.
— Coca-Cola Company:
is the largest CSD manufacturer in the world and has operations all around the world. Coca-Cola Co. recorded a 1.2 % decrease in CSD sales dollars YTD. Coca-Cola’s portfolio reflects a 2.2 % increase in sales dollars due to sales growth from its juice, water, and tea brands to offset losses in CSD. 2015 Hoovers.
They recorded gross revenues in 2014 of $45.998 Bn USD and Gross Profit of $28.433 Bn USD. Coca-Cola markets, manufactures and sells hundreds of beverage products: beverage concentrates sometimes referred to as “beverage bases,” and syrups, including fountain syrups. Their “finished product business” or “finished product operations” sells finished sparkling and still beverages. Coca-Cola Company 2015 SEC 10-K.
Coca-Cola beverages trademark names include:
— “Trademark Coca-Cola Beverages” or “Trademark Coca-Cola” means beverages bearing the trademark Coca-Cola or any trademark that includes Coca-Cola or Coke (i.e. Coca-Cola, Diet Coke and Coca-Cola Zero and all their variations and line extensions, including Coca-Cola Light, caffeine free Diet Coke, Cherry Coke, etc.).
— “Trademark” with other beverage products such as “Trademark Fanta,” “Trademark Sprite” or “Trademark Simply”, beverages bearing the indicated trademark (Fanta, Sprite or Simply) and line extensions (“Trademark Fanta” includes Fanta Orange, Fanta Zero Orange, Fanta Apple, etc.; “Trademark Sprite” includes Sprite, Diet Sprite, Sprite Zero, Sprite Light, etc.; and “Trademark Simply” includes Simply Orange, Simply Apple, Simply Grapefruit, etc.) sparkling waters such as Dasani. Coca-Cola Company 2015 SEC 10-K.
— PepsiCo Company:
is the second largest carbonated beverage company with overall portfolio up 0.9 percent and was buoyed by rising sales of its water, sports drink and shelf-stable juice products. PepsiCo’s CSD fell 2.3% on a 4.9 % loss of sales dollars and a loss of 6.6 % sales quantity volume.
PepsiCo is organized into four business units, as follows:
I. PepsiCo Americas Foods, which includes Frito-Lay North America (FLNA), Quaker Foods North America (QFNA) and all of our Latin American food and snack businesses (LAF).
II. PepsiCo Americas Beverages (PAB), which includes all of our North American and Latin American beverage businesses.
III. PepsiCo Europe (Europe), which includes all beverage, food and snack businesses in Europe and South Africa.
IV. PepsiCo Asia, Middle East and Africa (AMEA), which includes all beverage, food and snack businesses in AMEA, excluding South Africa. PepsiCo 2015 SEC 10-K.
PepsiCo Americas Beverages either independently or in conjunction with third parties, makes, markets, sells and distributes beverage concentrates, fountain syrups and finished goods under various beverage brands including Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, 7UP (outside the U.S.), Diet Mountain Dew, Tropicana Pure Premium, Sierra Mist and Mirinda.
PAB also, either independently or in conjunction with third parties, makes, markets and sells ready-to-drink tea and coffee products through joint ventures with Unilever (under the Lipton brand name) and Starbucks. Further, PAB manufactures and distributes certain brands licensed from Dr Pepper Snapple Group, Inc. (DPSG), including Dr Pepper, Crush and Schweppes, and certain juice brands licensed from Dole Food Company, Inc. (Dole) and Ocean Spray Cranberries, Inc. (Ocean Spray).
PAB operates its own bottling plants and distribution facilities and sells branded finished goods directly to independent distributors and retailers. PAB also sells concentrate and finished goods for our brands to authorized and independent bottlers, who in turn also sell our brands as finished goods to independent distributors and retailers in certain markets. PAB’s net revenue was $21.1 billion, $21.4 billion and $22.4 billion in 2013, 2012 and 2011, respectively, and approximated 32%, 33% and 34% of our total net revenue in 2013, 2012 and 2011, respectively. PepsiCo 2015 SEC 10-K.
— Dr Pepper Snapple Group (DPS):
Dr Pepper Snapple Group is the third largest carbonated beverage manufacturer. They recorded a slight CSD increase of 0.8 sales dollars based on a 3.3 % increase in pricing and volume quantity declines of 2.4 %. Dr Pepper Snapple Group is based in Plano, Texas and employs approximately 20,000 people, operates 24 bottling and manufacturing facilities and more than 200 distribution centers across the United States, Canada, Mexico and the Caribbean.
Dr Pepper Snapple Group, Inc. (NYSE: DPS) is an integrated refreshment beverage business marketing more than 50 beverage brands to consumers throughout North America. In addition to its flagship Dr Pepper and Snapple brands, the company’s portfolio includes 7UP, Mott’s, A&W, Sunkist Soda, Hawaiian Punch, Canada Dry, Schweppes, Squirt, RC Cola, Diet Rite, Peñafiel, Rose’s, Yoo-hoo, Clamato, Mr & Mrs T, Venom Energy Drink and other well-known consumer favorites. For more information on DPS, please visit www.drpeppersnapple.com. 2015 Wells Fargo Securities Report.
Energy Drinks: 2015 Wells Fargo Securities Report
Energy drinks continue to increase with consolidated category sales dollars up 11.1 % in the 2015 YTD period.
- Red Bull is the market leader and increased their prices 5% in January. Their sales dollars grew 9.4 %percent and sales volume sales quantity increased 4.3 % in the YTD period.
- Rockstar increasing their prices by 1.5 % and registered a monthly increase of 29.5 % in sales dollars, and a 27.6 % growth in sales volume quantity YTD.
- Monster Energy drink is being transitioned into the Coca-Cola distribution system, reports strong growth of +11.2 % in sales dollar and +12.6% sales volume quantity after a slight price decrease of -1.3 %.