NON-ALCOHOL BEVERAGE MARKET GROWTH STABILITY: REALITY OR MYTH?
BMC's Drinktell™ Database Reveals Quarterly Volatility |
According to common wisdom, the non-alcoholic beverage landscape does not really change that much from year to year. To wit, carbonated soft drinks (CSDs) and fruit beverages decline every year and most of the other segments enjoy steady increases. While this is true from a mile-high view, quarterly data from Beverage Marketing's DrinkTell™ database show that the official narrative is not so clear-cut. As seen in the charts below, volume and wholesale dollars fluctuate more than one might assume.
The sports drink segment is a good example of this unevenness from quarter to quarter. For example, in summer (Q3) 2015, volume and wholesale dollars grew by 8% to 10% (versus the year-earlier quarter). In Q3 2017, volume and wholesale dollars declined by about 7%. Thus, the generally-accepted narrative of "sports drinks always grow about 4% per year" is belied by the fact that quarterly growth rates have seen a 16 percentage point swing in just two years. |
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Some more assumptions are that coconut water is booming and that coconut water is stealing share from sports drinks due to their electrolyte content. This was true enough in the 2014-2016 period, although in 2017 the coconut water segment has slowed considerably. Although coconut water grew volume and wholesale dollars by double digits in the second quarter of 2017, but the segment flat-lined in Q3 2017. As we saw earlier, sports drink also tanked in Q3 2017. So where have these consumers gone? DrinkTell™'s quarterly data provides one way to answer this question by comparing the relative performance of other hydrators such as value-added water or bottled water. |
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Another truism in the beverage industry is that hot categories inevitably cool off. This is a pretty ironclad theory, but the key question is when? By looking at the quarterly charts, one would assume the kombucha market to enjoy decelerating growth from quarter to quarter. This was generally the case between Q4 2014 and Q2 2017. However, in Q3 2017, kombucha suddenly accelerated growth to four-year highs. Thus, the assumption that kombucha was in a "bubble" has been proven incorrect, at least for the time being. |
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| In contrast, according to DrinkTell™, energy drinks display more of the usual pattern of fast-growing categories slowing their growth as their volumetric and wholesale dollar base grows higher. Indeed, energy drinks — which enjoyed high single-digit gains in 2015 — have slowed to about 3% growth in 2017. A look at the quarterly chart also reveals that wholesale dollar growth did not significantly outpace volume growth in the past two quarters as compared to the period from the beginning of 2016 to Q1 2017. This does not preclude a reversal in the future, whereby energy drinks begin to grow faster than 5% again. These trends can be identified much earlier by looking at quarterly rather than annual data. |
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