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A brief overview of soft drink industry

Hardik Patel

Soft drink refers to non-alcoholic water based beverages which are carbonated or sweetened or flavoured. The soft drinks manufacturersare engaged in the production, marketing and distribution of such beverages. The non-alcoholic beverage market has been divided into juices, carbonated drinks, RTD tea and coffee, bottled water and other types. Soft drinks are hugely popular all over the world with an annual consumption of 34 billion gallons. America is leading country in terms of soft drinks consumption with 25% share of soft drinks in the American beverage market.

History of soft drink manufacturing

In the 18th century, mineral water gained popularity in Europe and America for its therapeutic benefits. Carbonated water was first produced by a British chemist Joseph Priestley in 1772. In 1809, Joseph Hawkins obtained the patent of first soda water manufacturing equipment in USA. Soda water is a mixture of sodium bicarbonate infused with acid to impart effervescence. In 1830s, flavours and sugar began to be added to soda water which made it a refreshing drink for the populace in Europe and America. Newer flavours such as ginger, herbs, roots, lemon and many fruit flavours began to be added to soda water. In 1880s, manufacturers went ahead and started adding stimulants such as coca leaves and cola nuts to soda water. Many of the soft drinks manufacturerswhich emerged during this period continue to dominate the soft drinks market even in the present times. Soft drinks were earlier packed in glass bottles. Crown cap was invented in 1892 to contain carbon dioxide gas in the bottle. Aluminium cans were introduced in 1950s. Plastic bottles emerged in 1970s. Soft drinks have undergone a lot of innovations in the recent years with new health friendly soft drinks hitting the market.

Market trends in soft drinks industry

Soft drink industry has a market share of about 50% in the non-alcoholic drinks segment. As per industry analysts, the soft drinks market is expected to increase by USD 316 billion in the period 2019-2023. CAGR is estimated to be at 6% in this period. The revenue earned by soft drinks manufacturers in the year 2021 is estimated to be USD 742,235 million. The maximum revenue would be generated by USA. Multinational giants dominate the soft drinks industry. These multinationals are mainly concerned with production and marketing while regional bottlers obtain licences from these brands for local distribution in various countries.

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There has been a saturation in the soft drinks market which has caused some amount of deceleration in the growth rate of this industry in the recent years. The reason is the fast growth of other sectors in the non-alcoholic beverage industry such as tea/coffee, bottled water and energy and sports drinks. For example, carbonated sports and energy drinks segment is estimated to grow very fast with a CAGR of 7.2% from 2020 to 2027. This is also the reason why soft drinks manufacturers are diversifying into these segments as well even though soft drinks remain a profitable segment.

3 major players dominate the global soft drinks market, together accounting for 78% of the market share. Other smaller players are also present which make up the remaining share. The competition has increased in the recent years with newer companies even though new entrants find it tough to compete against the high capital investment, reputed brand names and robust distribution channels of global giants.

In terms of regions, soft drinks market growth is expected to be the most swift in Middle East and Africa in the period 2020-2027. The reason is the increasing penetration of global soft drink manufacturers in these countries due to young population, rapid urbanisation and fast growth in infrastructure.

Conclusion The current scenario in the soft drinks market indicate that soft drink manufacturers need to continuously innovate and diversify to maintain profits. Even the global brands need to maintain their brand loyalty in the face of increasing competition .


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