Sugar Content is the Leading Factor In The Slowdown of Soft Drinks Sales, But Energy Drinks Buck the Trend

17 Aug 2016 --- As more consumers become aware of the negative health implications of sugarized, carbonated drinks, the global softs drinks industry is undergoing somewhat of a transformation. 

Business valuation and Strategy consultants, Brand Finance has released the results of its annual testing of hundreds of the world’s top brands. All of which are evaluated to determine the most powerful, and the most valuable by country, by industry and against all other global brands. 

Speaking to FoodIngredientsFirst, head analyst Sam Beesely explains how the soft drinks industry is expanding its scope: "As consumer sentiment gravitates towards healthier drinks, high sugar content and carbonated drinks have experienced a reduction in market share. Nutrition drinks, energy drinks and bottled water have enjoyed 5%-7% growth year-on-year, however, the overall industry is only growing at a rate of approximately 2%, reinforcing the fact that non-carbonates are driving the industry forward." 

Beeslely also says: "Many western economies have recently initiated the legislative process of taxing sodas which may push consumers even further from carbonated drinks. Future iterations of our study will no doubt see carbonates exchanged for healthier, sugar-free drinks as the current trend spreads."

Its latest findings show a slowdown in growth in developed markets and a “sensitivity” to health and wellness factors with sugar content being the biggest contributor to poor performance of soft drinks in 2015. 

Brand Finance says its table of results (pictured below) accurately represents this trend as more brands have fallen in value than risen this year.

Despite falling five percent, Coca-Cola remains the world’s most valuable soft drinks brand with a value of US$34.2 billion with Pepsi Cola a close second with a value of US$18.9 billion, also after a decrease in value. 

Responding to increasing health concerns amongst consumers, particularly over sugar content, Coca Cola launched Coca-Cola Life (lower calories version containing stevia) but, according to Brand Finance, it was criticized for being a “gimmick” that didn’t properly promote healthy consumption. 

The total sum of soft drinks brand is US$109.2 billion. 

Despite the trend for less sugary in the soft drinks markets, energy drinks are doing well with several brands widening their scope.
The table shows Red Bull is third place despite dropping 12 percent to a value of US$6.5 billion. 

“Nevertheless, it is commendable that these soft drink giants have held their positions at the top of the table despite the losses in value,” says Brand Finance.

Mountain Dew’s brand value went up 6 percent to US$2.7 billion which bucks the global trend. 

“Whilst consumers may steer clear of carbonated drinks, Mountain Dew has evidently managed to project itself as a worthy purchase despite being carbonated. This is largely due to the fact that the brand has embraced the idea of being an energy drink, thus making the drink appealing to those who want an energy boost,” says Brand Finance.

“As a result, Mountain Dew is fortunate enough not to be subject to health-driven ideologies as much as other carbonated drink brands have been, as the energy drink aspect may alter the consumer’s perspective on the drink’s carbonation.” 

Mountain Dew also has a strong presence in gaming culture which has allowed the brand to distance itself from functional norms of a carbonated drink and instead it has an image as a sports drink, albeit in a virtual sense, adds Brand Finance.

Mountain Dew partnered with PlayStation in a collaboration which allowed players to redeem rewards in the PlayStation Store from bottles of Mountain Dew.

Following suit is Monster with a brand value increase of 6 percent taking it to US$2.5 billion. Monster’s sales were also boosted because the company has expanded the scope of its product and promotions focus on its energy drink image rather than high sugar and carbonated content. 

“Whilst the energy drinks industry is reaching maturity, it is still the fastest growing among carbonates. Carbonated drinks that want to effectively compete should follow in Mountain Dew and Monster’s footsteps and expand the scope of their product,” adds Brand Finance.

by Gaynor Selby