For immediate release

BOTTLED WATER PERSEVERES IN A DIFFICULT YEAR,
NEW DATA FROM BEVERAGE MARKETING CORPORATION SHOW

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Certain brands continue to see strong growth

NEW YORK, NY, 20 April 2009: Although it performed atypically in 2008, bottled water remains a beverage industry phenomenon. Buoyed by some major liquid refreshment beverage trademarks, it stands as the second largest beverage type in the U.S. market and for many years also ranked as the category with the most forceful growth. Only carbonated soft drinks have greater volume, but they have been declining, in no small part because of bottled water's vigorous ascent.

Developments among leading companies indicate U.S. consumers continued thirst for bottled water. The largest bottled water company, Nestlé Waters North America (NWNA), experienced stronger than average growth and enlarged its market share in 2008. The company's share of bottled water volume advanced from less than 30% in 2006 to almost 33% two years later. DS Waters Enterprises, the second largest bottled water company in terms of volume, also outperformed the overall bottled water marketplace in 2008, as did Crystal Geyser.

The leading companies — NWNA, Pepsi, Coca–Cola (with its Dasani brand as well as the Danone brands it markets), DS Waters and Crystal Geyser — accounted for almost 60% of volume and more than 70% of wholesale dollars in 2008.

Rapid volume growth characterized bottled water for most of the current decade, as chronicled in the latest edition of Beverage Marketing Corporation's comprehensive Bottled Water in the U.S. report. Bottled water volume achieved double–digit percentage growth rates in two years and advanced at rates close to that level in several others. For example, bottled water volume grew by 10.8% in 2005 and then enlarged by 9.5% the following year.

Domestic non–sparkling water, the largest part of the U.S. packaged water industry, consistently outperforms other segments. Domestic non–sparkling water's 8.4 billion gallons represented 96% of total volume in 2008. As it has for years, the retail premium PET segment — consisting of still water in single–serve polyethylene terephthalate bottles — continued to drive the overall category's development. PET volume increased from 1.4 billion gallons in 2000 to 5.2 billion gallons eight years later, boosting its share of total bottled water volume from 29% to more than 60%. Before the slower 0.3% growth recorded in 2008, the PET component enlarged by double–digit percentage rates 16 consecutive times through 2007.

The PET segment includes many of the most prominent bottled water brands, some of which bucked the trend toward sluggish growth afflicting the liquid refreshment beverage market in 2008. Although PepsiCo's Aquafina brand remained number–one when measured in producers' revenues, with wholesale dollar sales greater than $1.3 billion, NWNA's Nestlé Pure Life sustained remarkable double–digit volume growth in 2008 to emerge as the largest bottled water brand when measure in gallons. The brand's share of volume shot from less than 10% in 2007 to nearly 12% in 2008. Only two other brands, Aquafina and Dasani, registered double–digit market shares. Further, while Aquafina dollars declined, Pure Life wholesale dollars saw significant growth during the year. NWNA's Poland Spring grew in both sales and volume as well. Its share of PET segment volume reached 8.6%, while its share of dollars rose to 9.0%.

While total bottled water volume did not realize growth in 2008, its 1.0% dip reflected forces affecting the beverage marketplace generally and did not suggest the start of an ongoing diminishment in demand for bottled water. The weakened economy affected the industry as a whole. High energy and commodities costs had been a challenge during much of the year. Unprecedented input costs relating to multiple aspects of beverage manufacturing resulted in higher prices for consumers, which affected all liquid refreshment beverage segments. Significant portions of the country saw unusually cold or wet weather, which dampened demand for cold drinks. Consumer concerns about the environment may have affected some buying decisions, particularly as a result of campaigns targeting bottled water, though this appears not to be a major factor.

In another departure from previous years, producers' revenues declined in 2008. Bottled water wholesale dollar sales first exceeded $6 billion in 2000. By 2007, they topped $11.5 billion. However, category sales declined to $11.2 billion the following year.

Changes in average intake indicate the level of ongoing consumer interest in a product they perceive as a healthful alternative to other beverages. Americans upped their annual consumption by nearly a dozen gallons from 16.7 gallons per person in 2000 to 28.5 gallons eight years later. During the same period, per capita consumption of carbonated soft drinks dropped by more than six and a half gallons. With these sorts of numbers, bottled water proved itself to be the key contributor to growth in liquid refreshment beverage volume.

A detailed analysis of the 2008 bottled water market based on Beverage Marketing data appears in the April/May 2009 edition of Bottled Water Reporter, a publication of the International Bottled Water Association (IBWA). New York City–based Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry.

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For immediate release

SMALLER CATEGORIES STILL SAW GROWTH
AS THE U.S. LIQUID REFRESHMENT BEVERAGE MARKET SHRANK BY 2.0% IN 2008, BEVERAGE MARKETING CORPORATION REPORTS

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Energy drinks and enhanced waters advanced; carbonated soft drinks again declined

NEW YORK, NY, 30 March 2009: In challenging times, the U.S. refreshment beverage market contracted by 2.0% in 2008, according to Beverage Marketing Corporation. This represented the first volume downturn on record. The weakened economy affected the market during the year. However, beverages still performed better than many other industries, such as automobiles and the financial sector. Indeed, several beverage types continued to shine.

During the first several years of the 21st century, newer beverage categories have been principally responsible for what growth has occurred in the non–alcoholic marketplace. Carbonated soft drinks accounted for close to half of total liquid refreshment beverage volume. However, their market share eroded slightly, as it has for several years. Although the marketplace as a whole lost volume in 2008, energy drinks, enhanced bottled waters and ready to drink coffee grew. While conventional carbonated soft drinks remain the most popular category on a volume basis, innovative and functional beverages altered the industry landscape in recent years.

Carbonated soft drinks held five of the top ten positions in the rankings of trademarks by volume. Those were joined by three bottled water trademarks, including Nestlé Pure Life in the Nestlé Waters North America (NWNA) brand's debut on the list of leading brands. The biggest sports beverage in the United States ranks as the fifth biggest liquid refreshment beverage trademark. The sole fruit beverage trademark in the group stood in seventh place in terms of volume.

Although bottled water had three trademarks among the top ten in 2008, up from two the previous year, the category also registered an unprecedented decline in volume. Looking for ways to reduce spending, some consumers may have refilled water bottles with tap water instead of buying new ones.

The performances of the leading companies' liquid refreshment beverage portfolios reflected the downward tendency characterizing the marketplace as a whole. Coca-Cola's total volume dipped by 2% in 2008, while Pepsi's was off by 5% compared to the previous year. However, even in the hard hit carbonated soft drink category, some brands had strong showings. The Coke Zero trademark grew by 25%, for instance, and Pepsi Max enlarged by 45% in 2008.

The big companies have the leading refreshment beverage trademarks; Pepsi–Cola (with five brands), Coca–Cola (with three), the Dr Pepper Snapple Group (with one) and NWNA (with one) account for all of the top-ten trademarks. Nestlé Pure Life achieved by far the fastest growth among leading trademarks in 2008. Indeed, Pepsi's Mountain Dew was the only other trademark to realize enlargement during the year. Aquafina and Gatorade (from Pepsi) and Dasani (from Coke) were the fastest growing leading trademarks in 2007, but each declined in 2008. The Coca–Cola trademark (including all brand variations) held the top spot among liquid refreshment beverages. However, its volume, like the standard carbonated soft drink market as a whole, declined.

"In today's uncertain climate, consumers seek value," said Michael C. Bellas, chairman and CEO, Beverage Marketing Corporation. "Responsive beverage companies are looking for ways to give it to them."

Some smaller categories, especially those emphasizing functional benefits, saw solid growth in 2008. Energy drinks volume increased by 9.0%. Flavored and enhanced water grew by 8.3%. The ready–to–drink coffee segment also advanced. However, none of these categories has a brand big enough to stand among the top ten.

New York City-based Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry.

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For immediate release

U.S. LIQUID REFRESHMENT BEVERAGE MARKET TRENDS AND DEVELOPMENTS ASSESSED IN NEW BEVERAGE MARKETING CORPORATION REPORT

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Recently released Future of Liquid Refreshment Beverages in the U.S. examines growth drivers affecting the beverage marketplace

NEW YORK, NY, November 2008: The late 2000s have proven to be a challenging period for the U.S. liquid refreshment beverage category, but growth persists as do opportunities. Myriad factors confront the market, which consists of carbonated soft drinks, bottled water, milk, fruit beverages, sports beverages, ready–to–drink tea and coffee, and energy drinks. Some relate to broader economic and social conditions, while others relate specifically to the beverage market and developments within the particular segments. The Future of Liquid Refreshment Beverages in the U.S., the latest report in its Focus Report series, Beverage Marketing explores the terrain and peers over the horizon, elucidating the trends shaping the beverage industry landscape and making projections for each segment through 2012.

Higher energy and commodity costs and an overall weak economy have put pressure on the overall marketplace and category performance has been soft in recent years.

In addition to the weakness in the category, the market is in a state of transition. New categories are emerging. Some traditional categories are declining. Still other categories are in the process of being redefined.

All of these changes are of course driven by the consumer. Consumers have dramatically shaken up the beverage business in recent years with greater expectations of the products they consume. They are open to new products. In particular, they are seeking healthier and more functional alternatives.

The emphasis is on niche. More lower in volume yet greater in profitability segments.  For beverage marketers, it's the proverbial double–edged sword — heightened opportunity but also increased risk.

The liquid refreshment beverage market has grown steadily in the past ten years. Volume increased from 29.4 billion gallons in 1997 to 36.5 billion gallons in 2007, a compound annual growth rate (CAGR) of 2.2%. However, volume growth has been softer of late. The market is expected to increase at a five–year CAGR of 1.1% from 2007 to 2012. As a result, the 36.5 billion gallons in 2007 should swell to 38.5 billion gallons by 2012. Segments enjoying more forceful growth, and likely to continue doing so in the near future, include those that meet consumer demands for functional properties, such as energy drinks and sports beverages, or health and wellness benefits, such as ready–to–drink tea.

New York City–based Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry. Each year, the company publishes numerous authoritative market reports on major beverage categories such as milk, carbonated soft drinks, bottled water, fruit beverages, beer and coffee as well as on New Age beverages including energy drinks, sports beverages, soymilk and ready–to–drink tea. For more information about The Future of Liquid Refreshment Beverages in the U.S. — a 34–page report that examines key trends in non–alcoholic beverages — or other reports, visit www.bmcreports.com or contact Charlene Harvey (formerly Salito) at 212–688–7640 ext. 1962.

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For immediate release

MILK MARKET CONFRONTS A DIFFICULT ENVIRONMENT, A NEW BEVERAGE MARKETING CORPORATION REPORT SHOWS

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New Milk and Dairy Alternative Beverages in the U.S. charts fluid milk industry challenges and opportunities

NEW YORK, NY, November 2008: The U.S. fluid milk industry weathered an especially challenging year in 2007. It essentially maintained its volume level from the year before despite double–digit price increases that took milk pricing to unprecedented levels. However, the amount each person consumed continued to decrease, as Beverage Marketing Corporation reveals in the latest edition of its Milk and Dairy Alternative Beverages in the U.S. report.

In 2007, dairy farmers, processors, retailers and consumers experienced the largest price increase in recent history. The price for drinking milk as determined by government regulations averaged $20.81 per hundredweight, more than $6 higher than in 2006. The September price peaked at $24.60. The largest increase occurred between June and July, when price rose by $3.06 per hundredweight, from $20.55 to $23.61. Retail prices were up too in 2007, but less than Federal Order pricing. The average retail price per gallon increased from $3.17 in 2006 to $3.86 in 2007.

In this context, the minimal 0.1% decline in fluid milk volume might be viewed as an unexpectedly solid performance. Milk volume was practically flat in 2007, losing 6.3 million gallons of the 6.3 billion gallon total. This followed a year when milk volume increased. While 2006's 1% growth may seem paltry in other beverage categories, for milk it marked the best growth rate in a decade.

During the last high–pricing period, in 2004, milk volume was down by 50 million gallons, or more than 400 million pounds. In 2005, volume fell by less than 6.2 million gallons, or 53 million pounds, but this decline put total volume at less than 6.2 billion for the first time since the mid–1980s. Volume had ranged between 6.25 and 6.4 billion gallons for two decades, but fell below that level in 2004 and remained there in 2005. In 2006, the gains more than made up for the prior two year losses, and the 2007 price increases did little to offset that growth.

Rising prices persisted in 2008. The last time the milk market experienced such significant price increases was in 2004. Milk prices increased by as much as 35% in the first six months of 2004 and volume fell off precipitously — by as much as 4% to 5% in supermarkets. The market ended down more than 1% that year. Significantly higher costs of farming, including corn feed and historically high fuel costs, precipitated the increases in milk pricing in 2007. Additionally, spiked demand for dairy products overseas has increased competition for milk and has enabled farmers to charge more.

The increased prices for milk go beyond grocery stores, and also affect consumers at pizza parlors, ice cream shops and coffee bars.

Even with 2007's relative stability in overall milk volume, the amount U.S. residents consume declined. Per capita milk consumption exceeded 25 gallons in 1992. A decade later, average intake had fallen to 22 gallons, and by 2007, the figure had fallen to less than 21 gallons per person.

New York City–based Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry. Each year, the company publishes numerous authoritative market reports on major beverage categories such as milk, carbonated soft drinks, bottled water, fruit beverages, beer and coffee as well as on New Age beverages including energy drinks, sports beverages, soymilk and ready-to-drink tea. For more information about Milk and Dairy Alternative Beverages in the U.S. — a 208-page report that examines all aspect of the national milk market — or other reports, visit www.bmcreports.com or contact Charlene Harvey (formerly Salito) at 212–688–7640 ext. 1962.

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For immediate release

SPORTS BEVERAGES' CONTINUED GROWTH MEASURED IN NEW BEVERAGE MARKETING CORPORATION REPORT

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Just–published Sports Beverages in the U.S. examines strategies of leading competitors

NEW YORK, NY, November 2008: The market for flavored fluid replacers and thirst quenchers better known as sports beverages continued to grow in the United States. While brands owned by the leading liquid refreshment beverage companies continue to dominate the category, numerous smaller ones have sought to meet consumer demand for rehydrating drinks. Beverages formally outside the sports beverage arena have also started competing on their turf.

In 2007, the U.S. sports beverage market increased both in wholesale dollars and in volume. Sales enlarged by 1.6% to exceed $4.2 billion, while volume enlarged by 3.0% to approach 1.4 billion gallons.

Throughout the 2000s, category pioneer Gatorade has accounted for more than four-fifths of all sports beverage sales in the United States. The PepsiCo–owned brand has faced intensified competition lately and saw its market share dip from 82% in 2005 to less than 81% two years later. During the same timeframe, Coca-Cola's Powerade has augmented its share of sales. Gatorade faces a challenge not only from Powerade but also its stable–mate Vitaminwater, which is not a sports drink but is viewed by some consumers as close enough.

While the many iterations of Gatorade together with Powerade accounted for almost 97% of sales in 2007, numerous other brands strive for consumers' attention. Would–be contenders include Capri Sun Sport from Kraft Foods, Accelerage from Cadbury and Recharge from RW Knudsen as well as Sunny D Intense Sport, among others.

In their bid for consumer attention and availability, sports beverage marketers have reached into channels conventional and unconventional. Besides convenience stores and supermarkets, the largest channels in the retail segment, bottlers and wholesalers distribute directly to athletic programs and workers in heavy industries. Gatorade's warehouse distribution system gives it extensive coverage in convenience stores as well as supermarkets, where it usually commands a large shelf presence. Coca–Cola uses direct–store delivery, which makes its brand readily accessible to convenience stores as well as non–traditional outlets such as sporting goods stores, schools, gyms, parks and vending machines. The power of Powerade in non–traditional venues inspired Quaker Oats' "availability" initiative, which resulted in the signing up of thousands of new outlets such as schools, health clubs, work sites, parks and tennis courts. At the same time, Powerade increased its emphasis on Gatorade's supermarket stronghold. Now that PepsiCo owns Gatorade, the brand is shuttled through Pepsi bottlers for the vending channel. Warehouse delivery to supermarkets and convenience stores still remains the primary part of the business, and breaking into these channels remains the challenge for smaller brands.

New York City–based Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry. Each year, the company publishes numerous authoritative market reports on New Age beverages including energy drinks, sports beverages and ready–to–drink tea as well as other major beverage categories such as carbonated soft drinks, bottled water, fruit beverages, milk, coffee and beer. For more information about Sports Beverages in the U.S. — a 129–page report that looks at all aspect of the national sports beverage market — or other reports, visit www.bmcreports.com or contact Charlene Harvey (formerly Salito) at 212–688–7640 ext. 1962.

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