Two facts remain constant in Australia’s beverage market: it’s constantly changing and it’s only increasing in competitiveness.
Here’s quick run down on the major trends across soft drinks, juice, beer, wine, bottled water and coconut water — and, more importantly, the business takeaways for each.
1. Water, in all sorts of flavours
Some 4.9 million Aussies drink bottled water every week. But the growing industry still has issues: increasing competition from private-label brands and the environmental concerns torment it. Differentiation is the key in a cluttered market. Take the Thankyou Group: it uses profits to fund safe water projects in developing countries, while Schweppes’ pocket-sized handy flavours can be mixed into water “on the go”, hitting consumers’ twin desires for convenience and customisation.
Business takeaways: Bottled water is cluttered, so set yourself apart with new flavours, social enterprise or unique packaging.
2. Slowing soft drinks
From the outside in, new companies seem to be entering the scene, but Roy Morgan Research shows that Coca Cola is still the one that Aussies and Kiwis choose (and that’s aged 14 and over). What’s more, in Australia, the five most popular soft drinks are all cola flavoured! Aggressive pricing and changing consumer trends have limited the sector, compounded by greater private-label and value-product penetration, plus healthier beverages and packaged water. Global guzzling of packaged water is tipped to overtake carbonates this year, reaching 233 billion litres.
Business takeaways: Be quick to adapt to market changes and shifting consumer trends. Tastes change, so innovating and launching new products is the major way businesses can keep up. Take CCA’s new offering as an example: Coca-Cola Life is an attempt to win over increasingly health-conscious consumers. Lisa Winn, CCA’s Australian marketing director, says this product is for “balance seekers” — in other words, those who have concerns around sugar (but still want to drink soft drinks), yet don’t like the different tastes of Diet Coke and Coke Zero.
3. Healthy juice market?
Fruit juice may sound healthier than soft drinks, but the industry is facing one of the same major issues: sugar. “That Sugar Film” is just one example of the way sugar — any type of sugar — is the big baddie of the food chain. Add that to fluctuating fruit prices, cost pressures and competition from private labels, and there’s the recipe for slowing growth in the sector.
Business takeaways: Think about how to appeal to increasingly health-conscious consumers. Nudie has done this with “no added sugar” and “no concentrate” on (or in) their product.
4. Turbulent wine times
Wine is hinged to the Australian dollar. In the mid-1980s, the plunging jumbuck was good for exports, but come the mid-2000s, exporters didn’t appreciate the appreciating dollar — along with drought, high water costs and the old GFC. Now we’re in the 20-teens, the dollar is dipping again, so the wine sector is looking up. The problem is Spain, Argentina, Chile et al, are infiltrating market with low-priced wine, leaving many Aussie producers struggling to compete.
Business takeaways: The clear thing is that our wine sector needs to stop relying on the dollar. Producers must look at ways of sustainably growing profits. Investment in innovation and look at how to market the USP of your wine offerings. (Bailey’s new organic Shiraz is a good example.)
5. Rising coconut waters
This is now a mainstream category, which in itself shows how the market has grown since Nudie first introduced this exotic beverage five years ago in Australia to meet health-conscious consumers’ growing demands. Today, supermarket shelves bulge with coconut water brands — in fact coconut in all its forms to boost product sales. According to Innova, coconut flavours and ingredients featured in over 4% of global soft drink launches in the 12 months ending June 2014 and over 6% of global drink launches in 2014.
Business takeaway: Coconut business is big business. It must be — celebrities endorse it. But it’s beyond coconut water: declining soft drink and fruit juice sales have seen a huge market share open up in the “better-for-you beverages”. The USA has given us aloe juice and maple sap drinks. But the non-negotiable thing about this “no added nasties” category for consumers is the hero ingredient. So think clean labelling, which clearly highlights the natural ingredients.
6. Beer froth
Beer is in upheaval. Consumption is down, while imported, premium and craft beers have more market share than the big mainstream brands. Just as with bottled water, beer makers are looking to flavours and fusion products to differentiate. The growing craft beer market is also being hampered: Australia now has 150 smaller breweries, yet while they flourish locally, they are struggling to overcome entry barriers nationally. Consumer advocacy group Choice says that Australia’s two largest brewers, Lion and Carlton & United Breweries (CUB), are using local contracts to lock out local craft brewers from pubs.
Business takeaways: This market keeps growing in surprising ways and people are looking for beer with a difference — whether it tastes a little bit different or has a great story. Beer and cider companies, big and small, should look at promoting their unique brand essence, using marketing, packaging and labelling to build a strong connect with their market. Rebello Wines’ award-winning Cheeky Rascal Methode Traditionelle Cider is a great example.
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