A study from Beverage Digest and the Beverage Marketing Corporation, released Tuesday, finds that non carbonated drinks are experiencing strong growth, with energy drinks are witnessing double-digit increases last year, Dasani, one of Atlanta-based Coke’s water lines, growing 11 percent and coffee growing by 9.4 percent.
So why are new consumer preferences increasingly switched to energy drinks, water and teas? It could be that CPG companies are being undermined by their inability to predict and maintain margins due to soaring commodity prices. Meanwhile a long established brand manufacturer’s price premium has been eroded by the intensified emergence and penetration of private labels with high quality products that are effectively generic with their MNC counterparts. As a result, supermarkets have begun leveraging their new power over manufacturers, demanding room for margins in return for visible shelf space; more so worse is the intensification of regulators interested in verifying product claims and ensuring basic safety of product ingredients.
The carbonated beverage manufacturers need to tighten the control over their value chain by
a. bringing capabilities in house and start acquiring their bottlers.
b. investing in joint ventures and brand education programs that will generate local consumer insight
c. cater to the needs of the poor and middle class by locally adapting their portfolios.
d. directing resources towards identifying the limited private label penetration in innovation sensitive niches which reap high margins.