05/11/2013

The fundamentals of the Soft Drink market

The soft drink market fundamentals

The non-alcoholic beverages market is composed of bottled water to dairy products, passing through hot drinks, such as tea and coffee, and soft drinks – Carbonate Soft Drinks (CSD), Non-Carbonated Soft Drinks (NCSD), Ready-to-drink (RTD) teas, sport drinks, energy drinks and juices.

The soft drink market is composed of carbonated and non-carbonated drinks.

Carbonated drinks: the selling of carbonated drinks represents 78% of the Soft Drink Market
-         - Colas: Coca-Cola, Pepsi-cola…
-         - Fruit drinks: Orangina, Fanta
-         - Tea drinks: Liptonic
-         - Lemonade : Sprite, Seven-up
-         - Tonics/ Bitters: Schweppes
-         - Energizing drinks: burn, Redbull
-         - Flavoured water drinks: Schweppes Lemon
-         - Sparking water: Badoit, Perrier

Non-Carbonated drinks: the selling of non-carbonated drinks represents 22% of the soft drink market
-         - Fruit drinks: Oasis, Fanta Still, Minute Maid
-         - Tea drinks: Lipton Ice Tea
-         - Sport drinks: powerade
-         - Milk and fruit juices: Danao
-         - Vitamin drinks: Vitaminwater
-         - Water: Evian

Appendix 1 – Distribution of soft drink sales per type of drinks

Source SRNB, 2008

The target market

The soft drink industry mainly segments its market using age and gender tools.

Appendix 2 – Main customers of the soft drink industry by product

            

According to Xerfi Global research on the Soft Drink market, we can break down the aged-based segmentation in three categories. First, brands target young people between 12-29 years old in order to create an early brand loyalty that will go on until its adulthood and more. Secondly, young adults aged from 20 to 24 years old, generally consumers since their childhood. Thirdly, adults aged from 25 to 35 years with a main focus on diet products, such as Diet coke or Fanta Orange Zero. Here, the gender segment is important to apply its marketing strategy. For instance, Coca-Cola has launched Coca-Cola Light for women and Coca-Cola Zero for men.

The distribution process: from retailers to direct consumers

We can notice that the distribution process of beverage companies is divided between retailers and direct consumers.

There are 3 main retailers: Cf. Appendix 3
-        -  MLSS – Supermarket, Hypermarket and other medium and large size surfaces
-        -  Café, hostels, restaurants, bakeries, gas station, cinemas…

-        -  Hard discount

Indeed, soft drink companies’ direct way of selling product take place through vending machines. However, the direct distribution channel only represents a few part of the French market.  The majority of bottled soft drinks is distributed via retailers.

Appendix 3 – Distribution of soft drink sales according to the selling point


By Sparkling Kiwi!

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