Not for All the Beer in China
Certain drinks are synonymous with specific countries. It might be tea in China, wine in France, coffee in Italy or tequila in Mexico. But, traditional perceptions of how the world drinks have been challenged over the past decade, and this is reflected by a new generation of dynamic niche categories, notably RTD tea, functional drinks, RTD coffee, flavored milk, soy beverages, drinkable yogurt and RTD premixes. These types of drinks were virtually non-existent on the global stage 10 years ago, but they are now a significant collective force, accounting for around one in every eight U.S. dollars spent on liquid intake, according to Euromonitor International. Crucially, it is a participation forecast to bulge over the next five years.
The rapid expansion of supermarkets, especially in the emerging economies, has been an important platform for showcasing wider beverage choice, driving the expectations of a burgeoning and increasingly aspirational middle-class. Stronger pressure on products to rotate has also brought pricing to the forefront of the operating environment. These big changes have happened in a relatively short timeframe, bringing with them tough strategic challenges. PepsiCo’s decision last year to regain control of its two biggest bottlers, Pepsi Bottling Group and Pepsi Americas, was, for example, a deal born of this new era of heterogeneous global beverage culture. The current era is one in which portfolio diversity, on the one hand, and control over route to market, on the other, has become a prerequisite to maximizing share of throat power.