Changing Consumer Tastes: Seeking Regional Opportunities in an Evolving Beverages Market

© Euromonitor International
1
AUSDRINKS ASIA PACIFIC REGIONAL BEVERAGES SUMMIT 2016
CHANGING CONSUMER TASTES; SEEKING REGIONAL
OPPORTUNITIES IN AN EVOLVING BEVERAGES MARKET
MARCH 2016, SYDNEY

2
REGIONAL SNAPSHOT
NATURAL, HEALTH & WELLNESS
FORTIFIED / FUNCTIONAL
EXPORT OPPORTUNITIES IN ASIA

3Global soft drinks growth entering steady state
 Global soft drinks total volume grows by 3% during 2015. Global soft drinks consumption growth continues to
surpass that of any other drinks industry. With a significant portion of this growth coming from often extremely
low-priced bottled water, the need for sustained, profitable growth remains acute.
REGIONAL SNAPSHOT

4Asia Pacific accounts for a larger share of throat
REGIONAL SNAPSHOT

5Leading geographies in Asia Pacific
REGIONAL SNAPSHOT

6Leading soft drink categories in Asia Pacific & Australasia
REGIONAL SNAPSHOT

7
REGIONAL SNAPSHOT

8Natural, health & wellness trends & growth drivers
What are the major growth drivers for natural and health and wellness?
Authenticity
Back to basics (traditional ingredients)
Awareness of allergies / food intolerances
Provenance
Increasing access to information through technology
Prevalence of lifestyle diseases (obesity, diabetes etc)

9What is “natural”?
 No strict definition of natural
 Naturally Healthy Beverages naturally contain a substance that improves health and wellbeing beyond the
product’s pure calorific value.
 Naturally Healthy Beverages are usually a healthier alternative such as 100% fruit/vegetable juice, Superfruit
juice (including cranberry juice), natural mineral water, spring water, RTD green tea, RTD oolong tea.

10What is “better-for-you”?
 Better-for-you products refer to products where the amount of a substance considered to be less healthy (e.g.
sugar, caffeine or fat) has been actively reduced or removed during production.
 The “less healthy” element forms part of the positioning and/or marketing of the product.
 Better-for-you includes reduced sugar, reduced caffeine and reduced fat.

11Health & wellness soft drinks in 2015 – regional variance
Asia Pacific (2015, million litres)
BFY Soft Drinks
FF Soft Drinks
NH Soft Drinks
Organic Soft Drinks

12Asia Pacific challenges Western European dominance
 In Asia Pacific, NH soft drinks accounts for the largest volume share (71%) of health & wellness soft drinks. This is
compared with organic soft drinks, better-for-you soft drinks and fortified/functional soft drinks.

13Bottled water and RTD tea feature heavily in NH soft drinks

14RTD Green Tea
Ichi Ocha
RTD green tea product from Indofood Asahi
launched in 2014. Made from Ichiban tea.
Increasing number of Japanese restaurants
in Indonesia have boosted the popularity of
“Ocha”, Japanese green tea.
Indonesia
Source: http://www.indofood.com/product/beverage
Real Leaf Slim
RTD green tea product by Swire Coca-Cola
Taiwan Ltd. This is a fortified extension to
an existing successful brand of Japanese
style RTD tea. The tea claims to improve
digestive health.
Taiwan
Source: 7net (www.7net.com.tw
Everyday Morning Healthy Double Fibre
RTD green tea by Vitalon Foods Corp
launched in 2015. Fortified with chicory
fibre, positioned for digestive health.
Taiwan
Source: http://www.everymorning.com.tw

15Bottled water
 Asia Pacific bottled water total
volume sales grew by 10% CAGR
between 2010 and 2015 to reach 87
billion litres.
 Asia Pacific accounts for more than
double the size of North American
bottled water sales in 2015.
 China drives growth in Asia Pacific,
representing 48% of Asia Pacific
volume sales in 2015.
 Water safety issues boost sales in
China as consumers trade up to
premium products.

16UK Chancellor signals sugar tax
Mexico
 Mx$1/litre tax implemented in 2014 for all drinks with added
sugar content. Legislators are currently considering reducing
this by 50% for beverages that fall below the 5g of sugar per
100 ml threshold.
United Kingdom
 Levy to be imposed on soft drinks with more than 5g of sugar
per 100ml. Higher rate for drinks with more than 8g per
100ml. Fruit juice and milk-based drinks are exempt.
Philippines
 Proposed tax of approximately $0.22/litre to be levied on
carbonates, energy drinks and other beverages containing
added sugar.
What about fruit juice and
milk-based drinks?
Is the sugar tax expected to
have a negative impact on
soft drink consumption?

17
REGIONAL SNAPSHOT

18What is fortified/functional?
When identifying fortified/functional products, we focus on products to which health
ingredients (typically those with health claims) have been added.
Fortified/functional beverages provide health benefits beyond their nutritional value and/or the
level of added ingredients wouldn’t normally be found in that product.
The product must have been actively fortified/enhanced during production and the health
benefit needs to form part of positioning/marketing of the product.

19Fortified/functional trends & growth drivers
“hectic consumer lifestyles”
“energy boosting”
“endurance”
“overworked consumers”
“general wellbeing”
“immune support”
“limits fat absorption from food”
“weight management”
“digestive health”
“bone health”
“fortified with fibre”
“calcium”
“vitamins”
“L-carnitine”

20Major FF soft drink categories (by volume)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Indonesia India Japan New
Zealand
Australia South
Korea
Philippines Thailand
FF Soft Drinks by Category (2015, volume terms)
FF Sports Drinks
FF Energy Drinks
FF RTD Tea
FF RTD Coffee
FF Fruit/Vegetable Juice
FF Liquid Concentrates
FF Carbonates
FF Bottled Water
FF Asian Speciality Drinks

21Major FF soft drink categories (by value)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Indonesia India Japan New
Zealand
Australia South
Korea
Philippines Thailand
FF Soft Drinks by Category (2015, value terms)
FF Sports Drinks
FF RTD Tea
FF RTD Coffee
FF Fruit/Vegetable Juice
FF Energy Drinks
FF Concentrates
FF Carbonates
FF Bottled Water
FF Asian Speciality Drinks

22China accounts for almost 2/3 of FF volume sales

23Regulation
Japan - FOSHU
 Previously, strict pharmaceutical law in Japan prevented medical claims on product
packaging.
 MHLW introduced Food for Specified Health Uses (FOSHU) in 1991.
 Manufacturers required to gain FOSHU (Foods for Specified Health Use) approval by the
Ministry when they wish to claim health benefits on product packaging.
 Applications must include scientific documentation demonstrating the medical or
nutritional basis for a health claim.
 Costly and timely burden for manufacturers to register products as FOSHU.
FOSHU logo

24China drives growth in FF energy drinks

25FF energy drinks challenges FF flavoured milk drinks

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REGIONAL SNAPSHOT

27Opportunities in Asia for Australasian businesses
 Asia Pacific, particularly China’s growing appetite for high quality products represents an enormous
opportunity for Australasian businesses.
 Key areas within the soft drinks space highlighted today include bottled water and fortified/functional soft
drinks.
 Australasian businesses to capitalise on “clean”, “green” positioning as a selling point for bottled water sales in
China.
 Fortified/functional drinks may also offer a growth opportunity for Australasian businesses
 FF energy drinks key to unlocking value
 Positioning in Asia Pacific countries may be quite different to the positioning used at home
 Regulation in emerging markets

28Online sales in China, the rise and rise of Alibaba
 Online sales in China grew by 53% in 2015 to reach US$293 billion, of which
food and drink sales accounted for 7%. Online sales conducted via mobiles
(i.e. smartphones) and tablets accounted for 51% of online sales in China
during 2015.
 February 2014 saw the launch of Tmall Global, a cross-border platform and
an extension of Alibaba Group’s B2C Tmall.com business in China.
 As of August 2015, around 5,400 overseas brands from 25 countries and
regions had opened stores on Tmall Global which is used by a growing
number of brands from the US, Germany, Australia, South Korea, Japan,
Taiwan and Hong Kong as a stepping-stone into China.
 Australia Post partnered with Alibaba in 2014, allowing Australian
businesses to use their Australian business licenses and ship their products
directly from Australia to China.

29SUMMARY
Future opportunities & threats for
soft drinks in Asia
+ -

30
THANK YOU FOR LISTENING
Erika Sirimanne
www.euromonitor.com

Changing Consumer Tastes: Seeking Regional Opportunities in an Evolving Beverages Market

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