Global Soft Drink & Bottled Water Manufacturing Industry Market Research Report Now Available From IBISWorld
The global economic downturn constrained demand across most of the Global Soft Drink and Bottled Water Manufacturing industry’s markets, causing industry revenue to contract. Consequently, the industry’s revenue growth is estimated to have slowed to 0.7% annually on average since 2007, including a 1.7% increase to $193.2 billion in 2012, driven by rising disposable income in most markets. The industry recorded solid revenue growth before 2009, underpinned by strong volume growth in emerging markets and rising demand for bottled water and other non-carbonated products in more mature markets. This growth occurred despite the industry’s major product, carbonated soft drinks, gradually losing market share as consumers shifted toward healthier beverages.
The industry was transformed when The Coca-Cola Company (TCCC) and PepsiCo merged with their respective North American bottling operations in 2009 and 2010. Prior to this, both companies’ main business was selling beverage concentrate or syrup. The companies outsourced the manufacturing and distribution of soft drinks to regional bottlers, which allowed the parent companies to focus on marketing and product innovation. However, the steadily declining sales of carbonated soft drinks in mature markets, the growing market power of big-box retailers like Walmart and Costco, and the economic downturn led the soft drink giants to buy back their bottling operations. This has helped streamline both companies’ operations, significantly cutting costs and providing them with greater control and flexibility with their distribution networks. The industry is continuing to consolidate, which has depressed the number of industry operators at a 3.3% annualized rate since 2007 to 4,893 companies in 2012. The Global Soft Drink and Bottled Water Manufacturing industry has a medium level of concentration. The Coca-Cola Company (TCCC), PepsiCo Inc. and Coca-Cola FEMSA dominate manufacturing soft drink concentrates in this industry. Since their decision to acquire their major North American bottling operations in 2010, the soft drink giants have become the two largest manufacturers of carbonated beverages. The two companies also engage in bottling other industry products, including water and functional beverages. Outside of the United States, TCCC and PepsiCo sell soft drink syrups or concentrates to many regional bottlers, and they maintain significant equity interests in these companies.
The existence of niche producers in particular regions of the world prevents high industry concentration; they have successfully established and maintained distribution channels and cater to local tastes and preferences. In addition, since the cost associated with transporting these goods over large distances to retail outlets is very high relative to the value of the product, producers must establish operations throughout the world to reach their market. Newer growth segments, such as bottled water and energy drinks, remain fragmented, being that they are young products. Industry concentration is likely to increase as major players acquire smaller producers in highly populated emerging economies that produce growing products, such as bottled water and functional drinks. Consequently, major player growth is mainly inorganic and representative of the stagnant state of demand for soda, the major industry product. The industry will also benefit from more buoyant economic conditions in emerging markets across Asia, Latin America and the Middle East, with rising disposable incomes and urbanization fueling demand for both carbonated and non-carbonated products. Forecast rising global temperatures also bode well for industry growth as people increase drink consumption in hot weather. For more information, visit IBISWorld’s Global Soft Drink and Bottled Water Manufacturing industry report page.
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IBISWorld industry Report Key Topics
The Global Soft Drink & Bottled Water Manufacturing industry produces bottled, tinned and canned beverages for human consumption. This industry comprises establishments engaged in one or more of the following: manufacturing carbonated soft drinks; purifying and bottling water; and manufacturing of other beverages, such as energy and sports drinks.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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