The overall market of soda in 2016 and its impact on brand management

By Anais Dewitte

Dear Sodaholic readers,

healthy_sodas_photodiscAs you know the overall market of the soda industry is full of surprises and exciting innovations. But first of all let’s try and define this dense market, shall we?

The sodas are part of the soft-drink industry that is to say non-alcoholic and generally carbonated beverages with a special flavour that often rely on sweet tastes and sugar. As Madeleine explained in our first article, the history of soda goes back in time to the 18th century and it has been diversifying ever since. Two companies are dominating the game by capturing most of the market-share: Coca-Cola and Pepsi with almost 70%. Indeed, the war between the two brands has now become part of a legend. They both have a huge distribution network and fiercely control their value-chain. Both possess a huge brand portfolio: Coca-Cola holds more than 500 non-alcoholic beverage brand while Pepsi benefit from a more diversified product portfolio as much in the beverage industry as in the food industry. Furthermore, the soda companies constantly innovate in the taste they present and the combinations possibles are almost impossible to count. So brand managers need to deliver a consistant message among their different brands and products.

Nonetheless, the market suffers from saturation. For example, when we only look at the market of cola the brands are very numerous. Let me tell you a little story about my own experience, I participated to a blind-tasting where we had to taste several Colas and you’d think it’d be easy to recognise a Coca-Cola but it wasn’t. Thus, the brand manager has a significant role to play and I’d say he has a bigger part to play in this industry because he has to sell the experience that goes along with drinking the soda because in the end, the tastes are all pretty similar. That’s what Coca-Cola did with its “Share a coke campaign”: people don’t buy a coca-cola, they buy the opportunity to share a moment with their friend while Pepsi consumers buy a sense of youth and a trendy product. Soda brand managers need to deliver emotions through the expression of their brand identity and core values.Pepsi_OOTB_StillsAll.jpg

However, the industry faces one major structural issue: the sales have dramatically dropped for around ten years. Indeed, the issue of obesity is growing and I don’t mean to bore you by talking about figures but I do believe that it is one of these burnings society issues. So let me introduce you one of the most recent findings of the NHS: more and more children are starting to become obese at four or five years old. Moreover, statisticians predict that around 4 in 10 adults will become obese by 2035 in the United-States. Meanwhile the awareness concerning the amount of sugar in soda and sugary drinks and the dangers it has on our health is constantly raising. The NHS revealed that the consumption of sugary drink increase the risk of obesity and type 2 diabetes. Because of this, consumers tend to turn to healthier drinks such as juices or flavoured water, these drinks also contain sugar but they are not considered as harmful as sodas are.

Also, new type of national regulations to prevent the obesity might harm the soda brands: for example, in 2014 in Mexico, the government imposed additional taxes for sodas.

As a result, companies and brand managers need to adapt: the big players such as Coca-Cola and Pepsi who catch the lion share need to regain the trust of their customers while there is a big opportunity for newcomers to create less sugary and more authentic sodas.

imagesIn the cola market, Zevia is a serious competitor. Zevia is a healthy soda brand with zero calories sweetened with stevia. It responds to the demand of consuming natural products, consuming differently to be more responsible for one’s health.

Pepsi, Coca-Cola and Dr Pepper need to adapt so they’ve already introduced for several years drinks with Stevia, such as the Coca-Cola life and by declining their range of products they are trying to follow the trend. They also release new types of packaging with smaller cans tcoca-cola-life-avis-santeo reduce the amount of soda thus the calories you take when you drink one can. But it is difficult for them to be perceived as healthy brands: they need to adapt their global strategy to match to this new branding strategy in order to be taken seriously.

Stay tuned



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