The Asia Pacific soft drinks market grew by 4.4% in 2016 to reach a value of approximately US$277 billion. This huge segment is expected to grow to US$387 billion by 2021. In volume terms, the Asia Pacific region consumed 251,393 million litres in 2016 and this figure will increase by 35.2% to 339,783 million litres in 2021.
Carbonated drinks still remain the largest segment within the soft drinks market accounting for 18.1% of total consumption in value terms. In the long term, it is expected that non-carbonated drinks like water and juices will eat into the carbonated drinks share as consumers, particularly in urbanised cities of Asia, are becoming more health-conscious and make that gradual switch for water and non-carbonated drinks.
Meanwhile, China, a market of 1.25 billion people, have 45.5% share of the regional market. As such, any slight change in consumer behaviour or regulations relating to the soft drink industry in this country will affect the market composition of the whole region.
Despite the rapid growth of domestic beverage companies in various countries in Southeast Asia and China, Coca-Cola and its affiliates still maintain its leading position in the soft drink industry generating 16.9% share of the region’s market in value terms. Coca-Cola is no longer all about carbonates as it has fully diversified into all the non-carbonated segments from juices to water to sports/energy drinks to RTD tea.
The soft drink industry in Asia Pacific, as a whole, is not going to mature or saturate cause, as the population grows, so does the demand for soft drink. Drinks manufacturers are also highly active and innovative with frequent new product launches or extensions to reinvigorate the market. In fact, consumption of soft drink is expected to increase further with the proliferation of food courts and coffee shops in many developing and emerging economies in Asia, as well as the changing consumer behaviour in favour of eating-out due to busy work lifestyles. In addition, in some countries, the soft drink industry goes through consolidation where market share is concentrated in the hands of a handful of players. For example, in Southeast Asia, we see the region consolidating with giants like Thai Beverage Plc picking up shares of other companies while Asahi selling off some of its soft drink assets in Indonesia and China recently.
CGI in-house research sees a bright tunnel for the soft drink industry in the region, with drinks manufacturers rapidly innovating their products to meet consumer growing health preferences – for example less sugar, use of stevia as sugar replacement, and use of more functional ingredients; as well as consumer preference for drinks with real taste – for example RTD green tea with the original taste of green tea with no sugar added.
In addition to that, the success of a new soft drink product need not only come from its product composition, but also could be attributed to its packaging – attractive, convenience and mobile packaging will be the trend of tomorrow.
Another factor that seems to play a crucial role in the success of a soft drink product in Asia, particularly in the emerging and developing parts of the region like Indonesia, Cambodia and Vietnam, is the ability of the product to reach out to the masses – in terms of effective marketing and distribution network as well as reliable agents to carry the products through effective channels, and ensuring proper and sufficient display of the product at the right supermarket shelves.