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TRANSCRIPT
2017 Non-Alcoholic Beverage
Trend Analysis
April 27, 2017
Copyright © 2017 Beverage Marketing Corp.
Agenda
I. Market Overview
II. Key Trends
III. Category Updates
IV. Projections
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Beverage Marketing Capabilities
All data in this presentation is supplied by:
Copyright © 2017 Beverage Marketing Corp.
State of the Industry – The Good and the Bad
Beverage Headlines
● Liquid refreshment beverage market grew for third consecutive year in 2016 after flat performance in 2013
● Carbonated soft drinks experienced another modest sales decline in 2016
● Bottled water surpassed CSDs as largest beverage category, led by continued solid growth of single-serve water segment
● Niche categories continue to outperform traditional mass-market categories with exception of bottled water
● Wine and spirits led alcohol growth in 2016, and beer experienced essentially flat performance
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Source: Beverage Marketing Corporation; Bureau of Economic Analysis, Department of Commerce, Department of Labor
Quarterly GDP Change
2011 – 2016
Unemployment Rate
2000 – 2016
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
-1.5%
2.9%
0.8%
4.6%
2.7%
1.9%
0.5%
0.1%
2.8%
0.8%
3.1%
4.0%
-1.2%
4.0%
5.0%
2.3%2.0%
2.6%
2.0%
0.9%0.8%
1.4%
3.5%
1.9%
2011 2012
4.0%
4.7%
5.5%
5.1%
9.0%
8.1%
7.4%
6.2%6.0%
9.6%
4.9%
5.8%
5.3%
4.6%4.6%
5.8%
9.3%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '162013 2014 2015
The economy continues to move in a positive direction with improved GDP growth and lower unemployment, a key to successful beverage market performance
2016
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Annual U.S. Consumer Sentiment Index 1995 – 2016
Source: Thompson Reuters/University of Michigan
92.2 93.6
103.2 104.6105.8 107.6
89.2 89.687.6
95.2
88.687.3 85.6
63.866.3
72.668.0
76.479.2
84.1
92.9 91.8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Consumer sentiment surpassed pre-recession levels in 2015 for the first time, but dipped slightly in 2016
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Th
ou
sa
nd
s o
f S
KU
s
New Beverage Product Introductions 2001 – 2016
Source: Beverage Marketing Corp.; Mintel
New product introductions have risen since 2001 due to the emergence of new categories and heightened consumer demand for variety
1.7 1.6
2.0
2.9
2.6 2.6
3.2
3.8
2.7
3.94.0
4.4
4.74.5
4.34.4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Ca
lori
es P
er
Ca
pit
a P
er
Da
y
U.S. Refreshment Beverage Calories Per Day 1990 – 2016
212.5
251.6263.0
243.7 238.0230.3
222.7214.8
210.9 206.6 203.4199.2 198.6 198.5 197.0
1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Caloric intake from refreshment beverages has been steadily declining since 2000 despite negative publicity the industry has received
• The growth of bottled water and lower-calorie options have contributed to the caloric decline
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
U.S. Total Beverage Market 2011 – 2016
Source: Beverage Marketing Corp.
-0.1%
1.6%
-0.1%
1.1%
1.7%
2.1%
2011 2012 2013 2014 2015 2016
Vo
lum
e C
ha
ng
e
The U.S. beverage market has experienced modestly accelerating growth since declines occurred during the recession
• The market has now experienced three consecutive years of modest growth
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
U.S. Total Beverage Market Volume and Wholesale Revenue
(Millions of Gallons and Wholesale Dollars) 2011 – 2016
Source: Beverage Marketing Corp.
Post-recession annual beverage revenues have been consistently positive, and outpace volume performance due primarily to price increases, trend toward premiumization, and packaging mix shifts
Ch
an
ge
-0.1%
1.6%
-0.1%
1.1%
1.7%
2.1%
1.3%
2.4%
3.7%
1.6%
3.1%
2.5%
4.7%
3.1%
2011 2012 2013 2014 2015 2016 11/16 CAGR
Volume Wholesale Revenue
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
3.4%
0.4% 0.3%
-9.2%
RefreshmentBeverages
TraditionalBeverages
Beverage Alcohol Tap Water
U.S. Beverage Market – 2016 V
olu
me
Ch
an
ge
Source: Beverage Marketing Corp.
In 2016, refreshment beverages performed best while other categories experienced modest growth and tap water declined sharply
2017 Non-Alcoholic Beverage Trend Analysis
• Bottled Water • CSD • Energy Drinks • Fruit Bevs • RTD Coffee • RTD Tea • Sports Drinks • VA Water
• Hot Coffee • Hot Tea • Milk
• Beer • Spirits • Wine
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-0.8% -1.4%
12.3%
11.0%
4.8%3.9%
3.4%
8.6%
CSDs Fruit Bevs Value Added Waters
RTD Coffee
Energy Drinks
Sports Bevs
RTD Tea Bottled Water
Vo
lum
e C
ha
ng
e
The U.S. Liquid Refreshment Beverage Market 2016
In general, traditional mass market categories have struggled while niche categories have experienced growth
• Bottled water is the primary exception of a mainstream category that has thrived
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Vo
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The U.S. Beverage Alcohol – 2016
Wines and spirits have been driving beverage alcohol growth with beer experiencing sluggish performance despite growth in craft beer
0.1%
1.2%
2.0%
0.3%
Beer Wine Spirits Total BeverageAlcohol
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Estimated Tap Water Volume Growth 2000 – 2016
20.0%
-5.7%
-1.3%-0.5%
-6.7%
-4.0%
-5.3%
-9.7%-10.9%
-1.8%
23.7%
1.2%
7.6%
-4.4%
6.3%
-9.2%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
'00/
01
'01/
02
'02/
03
'03/
04
'04/
05
'05/
06
'06/
07
'07/
08
'08/
09
'09/
10
'10/
11
'11/
12
'12/
13
'13/
14
'14/
15
'15/
16(P
)
One reflection of a healthy beverage industry is the decline of tap water, and tap water consumption has been trending down in recent years
• Tap water consumption spiked during the recession but has since declined
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Volume Share of Stomach by U.S. Beverage Segment – Billions of Gallons 2011 – 2016
22.7% 20.1%
15.2% 20.6%
10.6%10.3%
9.8%11.0%
10.4%9.1%
6.0%6.0%
5.7%4.9%
2.2%2.5%2.1%
2.2%0.8%1.1%
0.8%0.9%
13.7% 11.3%
2011 2016
CSDs
Bottled Water
Milk
Coffee
Tea
Fruit Beverages Sports Bev
Wine/Spirits Energy Drinks
Value-Added Water Tap/Others
Beer
100% = 59.8 100% = 62.0
Over the last five years, bottled water has increased its share of stomach by more than 5 share points, capturing the undisputed #1 position
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
2016 Category Winners and Losers
* Volume increases ** Volume declines
WINNERS*
• Bottled Water
• RTD Coffee
• RTD Tea
• Sports Drinks
• Energy Drinks
• Valued-Added Water
LOSERS**
• CSDs
• Milk
• Fruit Beverages
More non-alcoholic beverage categories grew in 2016 than declined, and niche categories generally outperformed large traditional categories
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2017 Non-Alcoholic Beverage Trend Analysis
Copyright © 2017 Beverage Marketing Corp.
IMPROVED
• CSD
• Bottled Water
• Milk
• Value-Added Water
WORSENED
• RTD Coffee
• RTD Tea
• Fruit Beverages
• Sports Drinks
• Energy Drinks
2016 Beverage Report Card
Fewer categories experienced improved performance in 2016 compared to 2015
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2017 Non-Alcoholic Beverage Trend Analysis
Copyright © 2017 Beverage Marketing Corp.
Decade Comparison 2006 – 2016
Which Categories Gained, Which Lost Volume?
4.5%
4.8%
9.9%
1.6%
3.6%
11.1%
-2.6%
-1.9%
0.8%
Category Millions of Gallons 2006/16 CAGR
4,528
641
230
164
84
-939
-2,628
2,482
402
Total LRB
CSD
Fruit Beverages
RTD Coffee
Value-Added Water
Sports Drinks
Energy Drinks
RTD Tea
Bottled Water
Bottled water has gained the most volume over the last 10 years while carbonated soft drinks have lost the most, and fruit beverages have also lost significant volume
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Bil
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U.S. Carbonated Soft Drink Market 2011 – 2016
CSD Market Growth 2012 – 2016
Carbonated soft drink volume declined for the 12th consecutive year in 2016 and was surpassed by bottled water as the largest beverage category in the U.S.
• Today’s consumers are migrating to healthier options and want more variety
13.6
13.3
12.9
12.8
12.612.5
2011 2012 2013 2014 2015 2016
Year Change
11/12 -1.8%
12/13 -3.2%
13/14 -1.0%
14/15 -1.5%
15/16 -0.8%
11/16 CAGR
-1.7%
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
U. S. CSD Volume and Wholesale Revenue Billions of Gallons and Wholesale Dollars
2011 – 2016
$51.7
$52.4
$51.4 $51.6
$52.5
$53.2
13.6
13.3
12.9 12.8
12.6 12.5
11.8
12
12.2
12.4
12.6
12.8
13
13.2
13.4
13.6
13.8
$50.0
$50.5
$51.0
$51.5
$52.0
$52.5
$53.0
$53.5
2011 2012 2013 2014 2015 2016
Revenue Volume
Carbonated Soft Drink Market Growth
2012 – 2016
The revenue picture for CSDs is somewhat brighter as revenues have increased modestly over the last five years due primarily to higher prices and changing packaging mix
Year Volume Revenue
11/12 -1.8% +1.2%
12/13 -3.2% -1.9%
13/14 -1.0% +0.6%
14/15 -1.5% +1.6%
15/16 -0.8% +1.4%
11/16 CAGR
-1.7% +0.6%
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Carbonated Soft Drink Market Growth by Type
2012 – 2016
U.S. Carbonated Soft Drink Market Share by Type 2011 – 2016
69.3%
30.7%
73.9%
26.1%
2011 2016
Regular
Diet
Diet soft drinks have hit a ceiling and are declining at a faster rate than regular soft drinks though performance has improved in each of the last three years
• Some diet consumers have shifted to bottled water and other categories
• Diet CSDs now account for just over a quarter of category volume
Year Regular Diet
11/12 -1.1% -3.4%
12/13 -1.9% -6.3%
13/14 +0.8% -5.4%
14/15 -0.1% -5.2%
15/16 +0.3% -3.8%
11/16 CAGR
-0.4% -4.8%
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Search for zero-calorie sweeteners continues; ideal sweetener should be natural, stable, in good supply, cost effective, and taste like sugar
Stevia/Erythritol Stevia/Erythritol Stevia/Erythritol/Monk Fruit
Sugar/Stevia Sugar/Stevia Stevia
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Craft Soda
Craft sodas have emerged as a viable option for today’s consumers with new brands and companies entering the market, but the base is small and performance has been mixed
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Smaller packaging sizes have been a source of innovation and also help contribute to reduced caloric intake
2017 Non-Alcoholic Beverage Trend Analysis
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SodaStream Bonne O
Enthusiasm for home dispensing of soft drinks has waned
• Keurig Kold was discontinued and SodaStream was repositioned to a system for sparkling water
• In alcohol, ABI and Keurig have teamed up to develop home dispensers for alcoholic beverages
Keurig Kold
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Consumer health and variety demands negatively impact CSD consumption. CSD category performance is further impacted by other external factors that contribute to consumption declines
Source: Beverage Marketing Corporation
● Reasons for reducing CSD consumption:
o Health
o Variety
o Economy (when weak)
● Legislation and messaging from government and regulatory agencies
● Tax threats aimed at reducing consumption
● Negative commentary from medical studies and other organizations
● Steady drumbeat of negative press
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
50
60
70
80
90
100
110
120
130
140
150
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CSDs PET Single Serve Bottled Water
Wholesaler Dollars Per Gallon Indexed to 2000
Ind
ex
2016 Absolute Price
$4.27
$1.21
2017 Non-Alcoholic Beverage Trend Analysis
Modest pricing increases in carbonated soft drinks coupled with significant pricing declines in bottled water have contributed to respective category performances
-27-
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
U.S. Bottled Water Market 2011 – 2016
Bottled Water Market Growth
2011 – 2016
Bottled water has experienced healthy growth each year since the recession
• The category is aided by its positioning as the ultimate health beverage
• The category now is now the largest beverage category in the U.S. volumetrically
9.19.7
10.210.9
11.8
12.8
2011 2012 2013 2014 2015 2016
Bil
lio
ns o
f G
all
on
s
Year Change
11/12 +6.5%
12/13 +4.7%
13/14 +7.3%
14/15 +7.9%
15/16 +8.6%
11/16 CAGR
+7.0%
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
U.S. Bottled Water Market
2014 – 2016
Volume, Share and Growth by Segment
The single-serve water segment continues to drive overall category growth and accounts for two-thirds of total volume
• Domestic sparkling was fastest growing segment in 2016 off a small base
• In the last four years, all category segments experienced increased volume
Share
Category 2014 2015 2016 2016 14/15 15/16
Non-Sparkling
PET Single-Serve 7,234.2 7,881.3 8,603.3 67.3% 8.9% 9.2%
1-2.5 Gallon 1,033.7 1,071.6 1,109.9 8.7% 3.7% 3.6%
Direct Delivery 1,284.8 1,338.0 1,382.6 10.8% 4.1% 3.3%
Vending 861.7 884.7 917.8 7.2% 2.7% 3.7%
Subtotal 10,414.5 11,175.6 12,013.6 94.0% 7.3% 7.5%
Domestic Sparkling 338.8 423.7 573.9 4.5% 25.1% 35.5%
Imports 149.3 169.3 194.4 1.5% 13.5% 14.8%
TOTAL 10,902.5 11,768.7 12,781.9 100.0% 7.9% 8.6%
Millions of Gallons Change
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Advances in Supply Chain Costs
While stable, PET water pricing continues to be historically aggressive and is likely to remain so at least through 2017
• Every-day pricing has been as low as $2.49-2.99 for 24-packs at retail
● High-speed bottle filling in a range of 15-18 million cases per year per line
● Mostly stable resin costs with the exception of a recent uptick
● Continued bottle light-weighting
● Stable fuel costs but may rise this year
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
U.S. Retail PET Water Market
Branded vs. Private Label
2011
Private Label47.5%
Branded52.5%
Private Label36.7%
Branded63.3%
2016
While branded water outsells private label in the retail PET segment, private label has made significant inroads over the last five years
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
U.S. Retail Premium Bottled Water Market
Share by Volume and Revenues
2016
Regular PET Bottled Water
Flavored Water
Enhanced Water
Volume Share Revenue Share
94.5%
4.5%
1.0%
83.7%
13.5%
2.9%
Retail Premium Bottled Water Market Growth by Type
2016
Segment Volume Revenue
Flavored +9.5% +8.0%
Enhanced +8.9% +10.6%
Regular PET +9.2% +8.1%
TOTAL +9.2% +8.4%
Value-added waters account for just 5% of single-serve water beverage volume, but hold a larger share of revenues due to higher pricing
2017 Non-Alcoholic Beverage Trend Analysis
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Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Enhanced Waters
PH Balanced Water Plant Water Essence Water
Essentia Trader Joe’s Hint
Structured Water
Penta
Enhanced waters of all types are now proliferating and gaining traction in all parts of the country
• These premium-priced, craft type waters are adding additional benefits to consumers’ water experience, and offer variety beyond plain water
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
Bottled water became the leading beverage catetgory in the U.S. on a volume basis in 2016, surpassing CSDs
• As CSDs continue to decline and bottled water continues to grow, the gap between the two categories is only likely to widen
• On a dollar basis, CSDs continue to be larger than CSDs however
Projected Water & CSD Growth
Millions of Gallons
2010 – 2020
0
3000
6000
9000
12000
15000
18000
2010 2011 2012 2013 2014 2015 2016 2017p 2018p 2019p 2020p
Bulk, HOD, Vended, Sparkling, Imported Waters
Premium Retail PET Waters
CSDs 10-Yr CAGR: -1.6%
Enhanced Water
Flavored Water
2017 Non-Alcoholic Beverage Trend Analysis
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p: Projected Source: Beverage Marketing Corporation
Copyright © 2017 Beverage Marketing Corp.
Like most other mass-market refreshment beverage categories, fruit beverage consumption has been on the decline over the last decade
• Category performance has been negatively impacted by high relative prices, high caloric and sugar content, and limited innovation
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2017 Non-Alcoholic Beverage Trend Analysis
3.43.3 3.2
3.1 3.1 3.1
2011 2012 2013 2014 2015 2016
Bil
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U.S. Fruit Beverage Market 2011 – 2016
Fruit Beverage Market Growth
2011 – 2016
Year Change
11/12 -4.1%
12/13 -1.9%
13/14 -2.8%
14/15 -1.1%
15/16 -1.4%
11/16 CAGR
-2.3%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
The category is split nearly evenly between 100% juice and juice drinks but both segments of the category have been in decline
• Both segments have declined in the range of 2%-3% annually over the last five years
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2017 Non-Alcoholic Beverage Trend Analysis
U.S. Fruit Beverage Market Share by Type 2011 – 2016
52.2%
47.8%
53.0%
47.0%
2011 2016P
100% Juice
Fruit Drinks
Fruit Beverage Market Growth by Type
2012 – 2016
Year 100% Juice Fruit Drinks
11/12 -2.8% -5.6%
12/13 -1.2% -2.7%
13/14 -2.6% -3.0%
14/15 -0.2% -2.1%
15/16 -3.1% +0.7%
11/16 CAGR
-2.0% -2.6%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp. -37-
Fruit drinks are dominated by shelf-stable formats while 100% juice is led by the chilled, ready-to-serve production format
• Consumers view chilled juices as fresher while shelf-stable is key with fruit drinks because they are positioned more as portable refreshment beverages and so packaged similarly to other refreshment beverages
2017 Non-Alcoholic Beverage Trend Analysis
Fruit Drink Share
By Segment
2016
Shelf-Stable36.0%
Concentrate
3.2%
Chilled, Ready-to-
Serve60.8%
100% Juice
By Segment
2016
Shelf-Stable75.9%
Concentrate
2.0%
Chilled, Ready-to-
Serve22.1%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
-38-
HPP Juice Brands
Despite softness in the overall fruit beverage market, high-pressure pascalization (HPP) juices have emerged as a premium growth segment, but prices are high and the volume base is relatively low
2017 Non-Alcoholic Beverage Trend Analysis
Copyright © 2017 Beverage Marketing Corp.
Sports drinks, which provide hydration, electrolytes and energy, are experiencing growth in the mid-single digits
• Category volume in 2016 exceeded 1.5 billion gallons
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2017 Non-Alcoholic Beverage Trend Analysis
U.S. Sports Drink Market 2011 – 2016
1,335.2 1,366.0 1,374.5 1,415.81,493.9
1,551.6
2011 2012 2013 2014 2015 2016
Mil
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Sports Drink Market Growth
2012 – 2016
Year Change
11/12 +2.3%
12/13 +0.6%
13/14 +3.0%
14/15 +5.5%
15/16 +3.9%
11/16 CAGR
+3.0%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Energy drinks have experienced mid-to-high single digit growth in each of the last four years though experienced a slow-down in the latter half of 2016
• The category’s high profitability makes it popular with brand owners, distributors and retailers
-40-
2017 Non-Alcoholic Beverage Trend Analysis
U.S. Energy Drink Market 2011 – 2016
450.5
515.1543.4
578.0629.3
659.6
2011 2012 2013 2014 2015 2016
Mil
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Energy Drink Market Growth
2012 – 2016
Year Change
11/12 +14.3%
12/13 +5.5%
13/14 +6.4%
14/15 +8.9%
15/16 +4.8%
11/16 CAGR
+7.9%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
RTD Tea
Tea in ready-to-drink format is having the greatest growth in the overall tea market
• While more expensive, consumers like the flexibility and convenience of RTD tea
Loose/Bagged/Mix/Pods
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60.0%
40.0%
54.3%
45.7%
2011 2016
U.S. Tea Market Share by Segment
2011 – 2016 Tea Market Growth by Segment
2012 – 2016
Year RTD Tea Loose/Bagged/Mixed/Pods
11/12 +5.2% +0.3%
12/13 +0.6% -1.0%
13/14 +3.9% -0.5%
14/15 +4.5% -3.2%
15/16 +3.4% -1.5%
11/16 CAGR
+3.5% -1.2%
2017 Non-Alcoholic Beverage Trend Analysis
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
The RTD tea category has experienced solid growth in recent years, driven in part by the health benefits of the category and convenience of the RTD format
• Category volume exceeded 1.7 billion gallons in 2016
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U.S. RTD Tea Market 2011 – 2016
1,439.71,515.2 1,525.1
1,584.41,655.1
1,711.3
2011 2012 2013 2014 2015 2016
Mil
lio
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f G
all
on
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RTD Tea Market Growth 2012 – 2016
Year Change
11/12 +5.2%
12/13 +0.6%
13/14 +3.9%
14/15 +4.5%
15/16 +3.4%
11/16 CAGR
+3.5%
2017 Non-Alcoholic Beverage Trend Analysis
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
RTD coffee remains a relatively small share of the total U.S. coffee market, but growth has been healthy
Whole Bean/ Ground/Pods/ Instant/Mixes
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2017 Non-Alcoholic Beverage Trend Analysis
RTD Coffee
98.8%
1.2%
98.1%
1.9%
2011 2016
U.S. Coffee Market Share by Segment
2011 – 2016 Coffee Market Growth by Segment
2012 – 2016
Year RTD Coffee Ground/Whole
Inst/Mixed/Pods
11/12 +10.0% +7.1%
12/13 +10.7% +2.5%
13/14 +10.6% +1.0%
14/15 +18.5% +1.9%
15/16 +11.0% +1.6%
11/16 CAGR
+12.1% +2.8%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
RTD coffee has experienced double-digit volume growth over the last five years
• The category is growing from a small base as it has experienced stiff competition from the large number of coffee stores in the U.S. selling fresh ready-to-serve coffee
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2017 Non-Alcoholic Beverage Trend Analysis
U.S. RTD Coffee Market 2011 – 2016
72.980.1
88.898.2
116.4
129.2
2011 2012 2013 2014 2015 2016
Mil
lio
ns o
f G
all
on
s
RTD Coffee Market Growth 2012 – 2016
Year Change
11/12 +10.0%
12/13 +10.7%
13/14 +10.6%
14/15 +18.5%
15/16 +11.0%
11/16 CAGR
+12.1%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp.
Milk has been on a steady decline for a number of years as consumers migrate to other beverage options
• Still, a high percentage of American households keep milk in their refrigerator though they consume it less often
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2017 Non-Alcoholic Beverage Trend Analysis
6.2 6.1 6.05.8 5.7 5.7
2011 2012 2013 2014 2015 2016
Bil
lio
ns o
f G
all
on
s
U.S. Milk Market 2011 – 2016
Milk Market Growth
2011 – 2016
Year Change
11/12 -1.6%
12/13 -2.3%
13/14 -3.2%
14/15 -1.4%
15/16 -0.6%
11/16 CAGR
-1.8%
Source: Beverage Marketing Corp.
Copyright © 2017 Beverage Marketing Corp. -46-
#MilkTruth
The milk trade association has been advertising the benefits of milk but it has not translated into sales increases
• Milk is being positioned as an authentic product that’s a great source of protein
2017 Non-Alcoholic Beverage Trend Analysis
Copyright © 2017 Beverage Marketing Corp.
Growing Importance of
Innovation
• Consumer-centric focus
• Small and now big player priority
• “Re-imaging” Beverages Redefining beverage
categories Creating new
moments of consumption
New levels of sophistication
New ways of interacting with consumers
More and more “lifestyle” beverages
HPP Juice Cold Brew Coffee Plant-based Water
Kombucha
Select Offerings and Categories of Today’s Emerging Beverages
Coconut Water
2017 Non-Alcoholic Beverage Trend Analysis
Innovation will be a key driver for the beverage marketplace going forward
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Copyright © 2017 Beverage Marketing Corp.
Category 2015 2016 15/16
Plant Water $594.5 $695.8 17.0%
Kombucha 379.2 534.5 40.9%
HPP/Cleanses 415.5 486.2 17.0%
RTD Protein Drinks 186.9 196.2 5.0%
Probiotics 177.2 191.3 8.0%
Cold Brew Coffee 57.4 108.0 88.2%
Functional Bevs 87.0 87.9 1.0%
Premium Mixers 55.0 56.5 2.7%
RTD Mate/Guayusa 21.0 22.7 8.1%
TOTAL $1,973.8 $2,379.1 20.5%
Up and Coming Categories vs. Traditional LRB Categories 2015 - 2016
(Wholesale Dollars and Wholesale Dollar Growth)
Traditional LRB 97.8%
Up and Coming 2.2% Share
100% = $109.5 Billion
2017 Non-Alcoholic Beverage Trend Analysis
Source: Beverage Marketing Corp.
The beverage market continues to fragment with craft beers, craft spirits and craft LRBs; these niche categories are small but growing faster than the overall market
Copyright © 2017 Beverage Marketing Corp.
Many big brands are declining, a reflection of the challenges of being big today and the emergence of smaller niche categories and brands
Top 10 Soft Drinks
Coca-Cola Classic
Pepsi Cola
Diet Coke
Mountain Dew
Diet Pepsi
Diet Mountain Dew
Top 10 Beer Brands
Bud Light
Coors Light
Budweiser
Miller Lite
Natural Light
Busch Light
Busch
Top 10 Spirits Brands
Bacardi
Crown Royal
Absolut
2017 Non-Alcoholic Beverage Trend Analysis
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Copyright © 2017 Beverage Marketing Corp.
$1B
Projected Value
High Growth
Energy
Enhanced Fruit Drinks
Enhanced Water
SS Dairy Drinks
Low Growth
$500M
20%
0%
-5%
Bulk/HOD Water
Milk
Soy
(2011-2016 CAGR)
Hard Cider
Alc Pouches
Table Wine
Imp. Beer
Malternatives
Craft Beer
Enhanced RTD Teas SPFJ
100% Juice Fruit
Drinks
Flavored Water
$250M
Diet CSDs
Reg CSDs
$35B $50B $25B $10B $5B
Prem CSDs
PET Water
Organic Juices
10% RTD Coffee
Sparkling Wine
Straight Whiskey
Sports Drinks
Tequila
Coconut Water Almond Milk
Vodka
RTD Teas
2017 Non-Alcoholic Beverage Trend Analysis
In the future, the marketplace will be characterized by numerous high-value, low relative volume opportunities
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Copyright © 2017 Beverage Marketing Corp.
p: Projected Source: Beverage Marketing Corporation
2017 Liquid Refreshment Beverage Projections
Among refreshment beverages, the strongest growth is projected for bottled water, value-added water, energy drinks and RTD teas and coffees in 2017
• CSDs, milk and fruit beverages will need to innovate and provide healthier options to rekindle growth
LRB Category 2017(p)
RTD Coffee +10.5% to +11.5%
Value-Added Water +9.0% to +10.0%
Bottled Water +8.0% to +9.0%
Energy Drinks +5.5% to +6.5%
RTD Tea +4.0% to +5.0%
Sports Drinks +3.0% to 4.0%
Fruit Beverages -0.5% to -1.5%
Carbonated Soft Drinks -1.0% to -2.0%
TOTAL LRBs +3.0% to +4.0%
2017 Non-Alcoholic Beverage Trend Analysis
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Thank You
• Strategic Associates
• Research
• Advisors
Beverage Marketing Corporation