Global Share of Throat & Wallet

Share of the Global Throat and
Wallet
December 2009
Global Throat and Wallet
Euromonitor International
Introduction
Setting the Scene
Dairy in Focus
Last Decade in Focus
Human Need for Fluids
Demographic Dividend in Drinks
Conclusions
Definitions
2
Introduction
Scope
This briefing on the global market for packaged beverages covers the following products:
Disclaimer
Much of the information in this briefing is of a statistical
nature and, while every attempt has been made to ensure
accuracy and reliability, Euromonitor International cannot be
held responsible for omissions or errors
Figures in tables and analyses are calculated from
unrounded data and may not sum. Analyses found in the
briefings may not totally reflect the companies opinions,
reader discretion is advised
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Introduction
Objectives of the Drinking Habits Series

This report opens Euromonitor Internationals series of new
global briefings on the worlds drinking habits.

The Drinking Habits series is an attempt to investigate the
importance of branded packaged drinks to humans daily need
for fluid. By taking 2.2 litres a day as a conservative estimate of
the recommended liquid intake, we build up a picture of how
the world drinks, past, present and future. Most importantly, we
track the contribution of branded packaged beverages as a
share of total liquid consumption.
The analysis sheds more light on what, in effect, is the degree
of opportunity for growth in commercialised soft, hot, alcoholic
and dairy drinks, in different regions around the world.
A closer look into the share of throat and wallet reveals
striking regional disparities in the importance of branded
packaged drinks: from highly saturated Western European and
North American markets to the fast maturing regions of Eastern
Europe and Latin America. Crucially, data from the emerging
Asian economies and Middle East and African markets expose
a pool of untapped opportunity.
From questions on What the world drank, drinks and will be
drinking and Where the world buys its drink we move to the
questions of how manufacturers react to evolving consumer
demands and adapt their offerings. We investigate the changes
in leading companies product portfolios, as they develop new
categories, innovative ingredients and packaging.
In short, the Drinking Habits series is a map identifying
opportunity zones in commercialised drinks.
4
Introduction
Objectives of the Global Share of Throat and Wallet Report

Share of Global Throat and Wallet is the first in the series of briefings on Global Drinking Habits.
With the global financial crisis intensifying competition for the money the world spends on beverages, Euromonitor
International analyses the contribution of branded packaged beverages to total liquid consumption.
As part of the study, consumer profiles for different drinks categories are analysed, in order to understand how
investors might benefit from demographic dividend.
We examine if, in a world with ageing population, adult-profile soft drinks categories will be the safe bet for high
profile strategic investment over the next 10 years.
We also assess if adult-profile categories need to raise their segmentation game to increase their appeal to wider
consumer groups within the adult population and, even more importantly, to reach out to the childrens consumer
group (aged 0-14) which accounts for one in every four people on the planet.
Further to this, Euromonitor International interrogates the disparity between branded packaged drinks consumption
and recommended total intake, and identifies three different geographical zones where branded drinks consumption
has reached different levels of maturity.
Both branded and unbranded balances of consumption are analysed on the global scale over the past decade, at
present and as a key opportunity for new business in the future.
Introduction
Key Findings
Economy
Human Fluid Need
When Lehman Brothers collapsed in September 2008
Global consumption of packaged branded non-alcoholic
and the Western banking sector slipped into crisis, the

contagion spread quickly to all corners of the world.
Descent into a worsening global economic climate has
been a pivotal force since 2008. Few could have
predicted the depth of the crisis, which had its roots in
the US sub-prime mortgage market.
In this uncertain macro-economic landscape,
competition for beverage share of throat and wallet has
never been more intense.
drinks is equivalent to around 0.5 litres a day in 2009,

against the average humans need for 2.2 litres of liquid,
based on World Health Organization recommendations.
There is, however, significant disparity between regions,
with packaged drinks accounting for two thirds of
required liquid intake in industrialised markets,
compared with around one tenth in the largely untapped
emerging markets of Asia, the Middle East and Africa.
Alcoholic vs Non-Alcoholic vs Dairy
Demographics
Alcoholic and non-alcoholic drinks do not always operate
The ageing of the global population reflects declining
in different competitive playing fields. Beer, for example,

has a quasi soft drinks status in some regions.
Critically, the money channelled into alcoholic drinks has
a direct bearing on disposable income available for soft,
drinks hot drinks and dairy beverages.
Milk drinks are regarded as a staple product and have
shown strong resilience to the effects of the current
economic contraction.
birth rates in key regions, notably Eastern and Western

Europe.
However, although population growth rates are slowing,
there are still a significant number of countries with
youthful populations, such as India and Mexico.
Correctly targeting and then harnessing youthful and
ageing demographics in specific countries is one of the
biggest challenges ahead for all segments of the drinks
industries.
6
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
7
Setting the Scene
What Does the World Drink in 2009

Globally, some 1.4 trillion litres of commercial packaged beverages were consumed in 2009, including both the on-
trade and off- trade, equivalent to around 4 litres per capita per week.
An unprecedented global financial crisis has intensified competition for the money spent on beverages. Share-ofthroat is now a major cross-industry strategic challenge, as purse strings tighten from London to New York to Sydney.
Setting the Scene
Global Picture: Throat & Wallet Disparity as 2009 Unfolds

Hot tea accounts for
the largest share of

actual global RTD retail
beverage consumption,
but its share of wallet is
weak.
Hot coffee, for
example, accounts for
double the value of tea,
but only 59% of the
volume.
This is indicative of the
coffee industrys more
effective
premiumisation, fuelled
by strong worldwide
development of caf
culture.
Beer, driven by
standard lager, holds
the largest share of
spending, accounting
for one fifth of global
beverage expenditure.
Collectively, alcoholic
drinks account for a
substantial 45% share.
Note: Shares are part-year estimates.
Setting the Scene
Tea and Bottled Water Driving New Beverage Business

Development of new business is the key to building a stronger share of throat position, and in 2009 the most
significant rises were generated by bottled water and hot tea. Collectively, these two sectors accounted for more than
three out of every 10 litres of actual beverage volume growth, based on provisional 2009 results.
Hot tea accounted for 17% of actual volume growth in 2009, but drought conditions in India, Kenya and Sri Lanka in
2009, which collectively account for over half the worlds total tea production, are set to push tea prices up, potentially
to an all-time high. There will, therefore, be pressure on demand in the short term.
10
Setting the Scene
Value Losses Across the Board in 2009

The most striking result of 2009 is the across the board losses in drinks value. In one year, on the back of the global
financial crisis and fluctuations in US$ exchange rates, the drinks businesses lost over US$55 billion in value. All
major categories contributed to this loss in value.
In some categories, like milk, loss in value was also driven by a decline in international commodity prices.
11
Setting the Scene
Key Drinks Fortunes in Economic Downturn

Beer
Domestic lager has gained consumers from the imported lager category as
consumers trade down, benefiting both volume and value sales. Economy lager also
enjoys the benefit of being largely present in the off-trade.
Wine
With less money to spend, consumers are cutting down on buying champagne, as it
is too expensive and is seen as a luxury. Champagne is the biggest loser in alcoholic
drinks as a result of the recession.
Spirits
The trading-up trend is weakening, and consumers are trading down to mid-priced
and economy brands. Local spirits such as cachaa in Brazil and soju in South Korea
benefit as lower priced alternatives to international spirits.
Milk
Milks staple status and greater affordability linked to a decline in international

commodity prices allowed sales to grow in volume despite the current economic
recession.
Coffee
Resisting downward pressure from the deteriorating global economic climate, the
category is expected to generate strong sales, even in contracting fresh coffee
markets.
Tea
Black tea looks well positioned to weather the global financial storm. Low unit prices
and multiple brands in the traditional tea markets will see consumption remain stable.
Bottled Water
A backlash against still bottled water in developed markets was in place before the
economic downturn; however, the crisis is accelerating the decline. Functional bottled
water is still niche and therefore still has significant potential.
Concentrates
Low unit price and geographical spread will see concentrate volumes actually
increase globally. This will be driven in two directions: low-sugar/functional ingredients
in developed markets, and emerging market consumption.
12
Setting the Scene
Emerging Markets are the Lynchpin of Opportunity to 2010
13
Setting the Scene
Longer Term Trends in the Share of Throat
Performance in first and second tier emerging markets will play an increasingly important role in the development of
the forecast global picture.

14
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
15
Dairy in Focus
Dairy Sales Growth Slows in 2009

Global retail sales of drinking milk products
declined marginally in retail value in 2009.

This decline was mainly prompted by a
moderate drop in milk prices, as a result of
lower demand and large production stocks.
When milk prices peaked in early 2008,
farmers increased production which, as a
result of weaker demand during the second
half of 2008 and in 2009, prompted a fall in
prices of 3% at global level.
Demand in volume, however, remained
fairly stable, as a result of relatively low
prices and the staple commodity status of
milk in most countries.
In countries like Ukraine, for instance,
chocolate confectionery sales declined by
over 13% in retail volume, as consumers
cut expenditure on non-essential food
products. Demand for milk products, on the
other hand, declined by a mere 1%, as
Ukrainians focused on affordable staple
products consumed on a day-to-day basis.
Private labels share grew by over one
percentage point to reach 23% in 2008, and
is expected to continue to growth
throughout 2009, as price gains increasing
relevance among cash-strapped
consumers.
16
Dairy in Focus
Crisis Impact on Dairy

Drinking milk products are regarded as a staple
in the diet of many countries. This, along with

milks relatively low price, makes these
products quite resilient to recession, as
consumers tend to cut down on other, nonessential items, such as indulgence products.
Sales of drinking milk products grew by 2% in
retail volume in 2009; slightly faster than in the
previous year. Demand for drinking milk
products is being underpinned by lower global
milk prices, which makes this commodity more
affordable to consumers.
Despite lower commodity prices being only
partly passed on to consumers, there was still
a cost reduction in milk products across
regions.
Demand for health and indulgence continued
to be a recurrent theme in innovation in 2009,
and drove demand in categories such as
flavoured milk drinks and soy beverages, which
grew by 5% and 7%, respectively, in retail
volume in 2009.
Demand for soy beverages continues to grow
in emerging markets, driven by middle class
consumers in urban areas. Retail sales of
these products grew by 12% in China and 14%
in India in 2009, a trend that is likely to
continue in the medium term.
17
Dairy in Focus
Dairy Retail Volume Growth 2009-2014
18
Dairy in Focus
Dairy: One Market, One Strategy

Robust growth in the Middle East and Africa and Asia-Pacific
will continue beyond 2009, particularly in markets such as

China and India.
Manufacturers should adapt their long-term strategies
accordingly, prioritising those markets where organic growth
will be strongest.
International manufacturers should therefore adopt a dual
strategy in order to maximise growth at a global level.
On the one hand, they should extend standard priced
packaged milk lines to developing markets, using local inputs,
where possible, to minimise costs and final retail prices.
Manufacturers should not overlook the fact that maintaining
relatively low prices is crucial to allowing middle class
consumers to trade up from fresh to packaged milk in
emerging markets.
Innovation should focus on vitamin enrichment and the
introduction of low-fat lines targeting middle class consumers
in fast growing urban areas.
On the other hand, the industry should enhance the premium
content of brands in more mature markets, through the
addition of additional health properties.
The development of hybrid super-premium brands,
combining indulgence, health, organic and fair trade
properties, will be crucial to expanding the consumer base of
drinking milk products in more mature markets, where health,
social or organic properties are no longer enough to expand
sales when marketed separately.
19
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
20
Bottled Water Posts Big Gains Share of Throat

Soft drinks were a stellar growth industry in the
past decade, but significant pressure from the

worldwide financial crisis is set to narrow crossindustry performance disparities over the short to
medium term.
A decade ago, the portfolios of major soft drinks
companies, notably Coca-Cola and PepsiCo,
were heavily loaded with carbonates. This has
changed significantly due to strong development
of a broader spectrum of categories. This is a
strategic revision that is clearly visible in share of
throat, with bottled water, notably, accounting for
16% of global beverage consumption in 2008,
compared with less than 10% in 1998. Fruit juice,
a strong good-for-you category, also made a
significant, albeit more modest gain over the past
decade.
The highest profile share-of-throat loser has been
carbonates, reflecting wider rejection of sugary
drinks, especially in developed markets, as
consumers look to fight obesity and avoid bad-foryou consumption choices.
Beer lost ground in the five years to 2003, but
investment in more effective segmentation,
combined with aggressive pricing, triggered a
return over the following 5-year cycle, and it is the
only alcoholic drinks category gaining share within
the industry.
21
Niche Adult and Functional Drinks Hit Rapid Streak of Growth

Significant investment from the major multinational soft drinks companies, especially in the emerging markets, fuelled
the upward surge of bottled water. High yield packages (5+ litres) have been a particularly important spur, the result of
poor potable water availability in key high volume markets, such as Mexico and China, and a corresponding increase
in consumer sophistication and spending power.
Among the new generation of niche, value-enhancing categories, star performers have been RTD tea, energy drinks,
flavoured milk, drinking yoghurt and soy. Each of these is now competing for daily liquid intake. However, recession
across the industrialised markets is likely to put pressure on demand, at least in the short term.
RTDs (premixes) were a dynamic category of alcoholic drinks between 1998 and 2003, but growth slowed to 2008
due, firstly, to growing consumer concern over alcohol content and related consumption by young people and,
secondly, to growth in energy drinks, which signalled a new era of mixability (mainly with vodka), especially in the ontrade.
22
Wine and Spirits Losing Share of Wallet

Wine and spirits both registered declines in
their share of wallet, reflecting an increasingly

difficult operating environment for premium
drinks in the worlds richer nations. Beer held
firm over the review period, with strong
segmentation offsetting aggressive pricing.
Despite the global sluggishness of carbonates,
the category saw share of wallet drop by only
one percentage point over the period 19982008, underscoring effective positioning from
industry leaders Coca-Cola and PepsiCo.
Bottled water made big value gains,
accounting for one in every US$14 of drinks
spending in 2008, compared with less than
one in 20 a decade earlier.
Shares of spending in hot tea and coffee are
substantially below volume shares, which
indicates that more effective premiumisation
remains a key challenge for the tea industry in
particular, potentially through stronger
investment in niche formats, such as green
and herbal tea.
In dairy, weaker participation of milk was partly
offset by the development and premiumisation
of flavoured milk and drinking yoghurt, which
fuelled a collective share of 3% in 2008.
23
New Generation of Value-enhancing Categories Raise Profile

The importance of emerging value added niche categories, notably RTD tea, functional drinks, flavoured milk,
drinking yoghurt and soy beverages, is clearly visible from their upbeat retail growth curves over the past decade.
Notwithstanding a tougher operating environment over the short term, these categories will continue to be the target
of significant new investment.
Drinking yoghurts value growth was underpinned by consumers trading up from low-priced standard milk lines with
limited scope for differentiation to premium specialised health-orientated dairy drinks. This trend was particularly
apparent in developed markets.
The hot coffee industry significantly
raised its global game between

2003 and 2008, and much of the
credit lies with Starbucks. The
premiumisation of coffee in the ontrade has filtered positively into the
off-trade. Indeed, while Starbucks
has suffered in its domestic
market, growth continues in the
international arena, particularly in
emerging markets.
In alcoholic drinks, beer has
outperformed wine year-on-year
for over a decade, illustrating a key
shift in consumption culture. The
global disparity would have been
wider had it not been for upbeat
wine growth in key Asian and
Eastern European markets, which
offset declines in Western Europe.
24
A Decade of Change for Global Share of Throat 1998-2008
25
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
26
Global Picture: The Human Fluid Need

To replace lost fluids, the average human,
according to World Health Organization

recommendations, needs 2.2 litres of nonalcoholic liquid a day, of which water
should ideally be the primary source. Of
course, humans need to modify their liquid
intake depending on activity, climate and
health criteria. 2.2 litres is, therefore, no
more than a rough guideline.
In 2008, global per capita consumption of
commercially produced non-alcoholic
drinks totalled 132 litres, representing
16% of the recommended annual intake.
The implication is that tap water and other
unbranded liquids fuelled a substantial
proportion of the balance.
The disparity between branded
consumption and recommended total
intake sheds some light on the steep rise
of bottled water demand over the past
decade. Crucially, demand has increased
substantially in poorer regions of the world
where potable water infrastructure is
weak.
The unbranded balance of consumption
has narrowed only slightly over the past
decade, and remains a key opportunity for
new business going forward.
27
Adding Alcoholic Drinks into the Mix

Alcoholic drinks, which are usually excluded from
Note: Total
calculations when assessing the fulfilment of the

human need for liquid, reduce the noncommercialised drinks consumption even further.
In 2008, global per capita consumption of
commercially produced packaged alcoholic
drinks totalled 35 litres per person per year.
Together with commercialised non-alcoholic
packaged drinks, this reduces the
unbranded/non-commercialised drinks proportion
to below 80%.
Within alcoholic drinks, the share attributed to
beer is increasing steadily, whilst spirits are on
the decline. The shares of wine and other,
smaller categories have been stable over the
years.
Milk and soy drinks are on a slow but steady rise.
Drinking yoghurt and flavoured milk drinks
shares of throat are increasing sharply, whilst
sour milk drinks are steady.
2008 was the year in which the share of
carbonates in global share of throat started to
decline. This is the only major category within
soft drinks seeing a decline.
Every category in hot drinks is still growing in
importance on the global scale.
= 803 litres per person per year

= 2.2 litres per person per day
28
Global Picture: Human Fluid Intake, Saturated Zone

In 2008, packaged non-alcoholic drinks accounted
for over 66% of the recommended human fluid

intake in the industrialised markets of North
America, Western Europe and Australasia.
This is indicative of the strength and breadth of
retail consumer culture in the richer nations, and is
a key reason why the beverage arena in those
markets is so competitive.
Saturation of branded beverages means that
growth has increasingly been achieved by
increasing market share.
A key trend is that packaged drinks accounted for
just over 60% of recommended liquid intake in
1998, growing to over 66% a decade later.
However, this share is forecast to contract by 2013.
The end of the growth curve can be explained, first,
by projections of a slow return to recovery in the
macro-economies of the industrialised markets and,
secondly, by a growing propensity toward tap water
due to environmental concerns.
Soft drinks peaked in 2005-2007, and are now
declining, mostly on the back of declines in
carbonates but also in bottled water and
fruit/vegetable juice.
Dairy share of throat contracted slowly but steadily
over the last decade. This trend is likely to continue
in the next five years.
29
The Importance of Alcoholic Drinks in Saturated Markets

Adding alcoholic drinks into the mix reduces the
unbranded, unpackaged balance of drink

consumption even further: an average 637 litres
per person per year of commercialised
alcoholic, hot, soft and dairy drinks was
consumed in 2008.
North America tops the charts, with 705 litres of
branded liquid per capita in 2008. Australasia is
second, with 638 litres of commercialised drinks
per person in 2008. Western Europe lags
further behind, with 569 litres.
Over the last decade, an average person in
North America added over 55 litres of
commercialised drinks to their yearly intake. At
the same time, an average person in Western
Europe and Australasia increased their intake
by 42 litres each.
Additional volumes came mostly on the back of
increases in soft drinks consumption.
Dairy was a main casualty in Western Europe
and North America, but not in Australasia.
Alcoholic drinks share is declining in Western
Europe but is still fairly stable in North America
and growing in Australasia.
Hot drinks are performing well in Australasia
and North America, but stagnating in Western
Europe.
30
Global Picture: Human Fluid Intake, Maturing Zone

In the emerging markets of Latin
America and Eastern Europe,

packaged non-alcoholic drinks
accounted for around 22% of
recommended liquid intake in 2008,
up from 16% a decade earlier.
This steep rise bears testimony first
to the high level of investment in
the drinks industry since 1998 and,
second, to the strong growth of
retail consumption culture.
Crucially, the region is far from
reaching saturation point. Indeed,
using the industrialised markets as
a benchmark, per capita
consumption of branded nonalcoholic beverages has potential
to increase by upwards of 300
litres.
Forecasts to 2013 indicate growth
of around 24 litres.
The growth potential of these
maturing markets is at the core of
why all major multinational
beverage companies are looking to
strengthen their regional positions,
from Moscow to Mexico City.
31
Pick and Mix Categories in Maturing Markets

Adding alcoholic drinks into the mix reduces
the unbranded, unpackaged balance of

drink consumption even further: an average
257 litres per person per year of
commercialised alcoholic, hot, soft and dairy
drinks was consumed in 2008.
Latin America averaged 338 litres of
branded liquid per capita in 2008. Eastern
Europe lags far behind, with only 177 litres.
Over the last decade, an average person in
Latin America added an impressive 83 litres
of commercialised drinks to their yearly
intake. At the same time, an average person
in Eastern Europe increased their intake by
67 litres.
Additional volumes came mostly on the
back of increases in soft drinks consumption
in Latin America, and in alcoholic drinks,
most notably beer, in Eastern Europe.
Soft drinks and alcoholic display the biggest
disparity in drinks consumption in the two
regions. An average person in Latin America
in 2008 consumed 205 litres of soft drinks
and 57 litres of alcoholic drinks. At the same
time, an average consumer in Eastern
Europe drank only 15 litres of soft drinks,
but 102 litres of alcoholic beverages.
32
Global Picture: Human Fluid Intake, Untapped Zone

The low impact of packaged non-
alcoholic drinks in Asia-Pacific and

the Middle East/Africa is striking,
with branded products accounting
for little more than one in every 10
litres of recommended liquid intake
in 2008.
Low actual liquid consumption
across much of Africa and some of
the poorest countries of Asia goes
some way to explaining the
weakness, but it is also a reflection
of a widespread culture of
unbranded beverage consumption.
The opportunity for growth of
branded beverages is, by
implication, vast. For example, if
the mature zone is used as a
benchmark, per capita
consumption has potential to
increase by as much as 100 litres
over the medium to long term.
Given the size of the population in
this untapped area, estimated at
some 5 billion people, or 71% of
the world total in 2008, the growth
potential for all beverage sectors is
substantial.
33
Only Pockets of Opportunity for Alcoholic Drinks

Unlike in regions with saturated and
maturing commercialised drinks

markets, adding alcoholic drinks into
the mix reduces the unbranded,
unpackaged balance of drink
consumption only marginally: an
average 98 litres per person per year
of commercialised alcoholic, hot, soft
and dairy drinks was consumed in
2008.
The two regions display very similar
share of throat profiles: Asia-Pacific
averaged 100 litres of branded liquid
per capita in 2008, and the Middle East
and Africa 95 litres.
However, Asia-Pacifics
commercialised drinks market was
much more dynamic than the market in
the Middle East and Africa. Over the
last decade, an average person in
Asia-Pacific increased commercialised
drinks consumption by 40 litres a year,
compared with only 15 litres in the
Middle East and Africa.
Additional volumes came mostly on the
back of increases in soft drinks
consumption, but also in alcoholic
drinks and dairy.
34
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
35
Ageing Global Population Is Fuelling a Boom in Adult Drinks

There was a significant global expansion of the adult population over the period 1998-2008, which created a natural
platform of growth for emerging categories, such as RTD tea, RTD coffee, functional drinks and soy beverages. A
large number of new legal drinking age consumers coming into the 20-39 age band also created opportunities for the
alcoholic drinks industry.
Increasing concern for age or rather its effects on health has boosted demand for functional milk and probiotic
drinking yoghurts, a trend that is having a positive impact on dairy drinks sales at a global level.
Critically, the global population is continuing to age, especially in the industrialised markets and Eastern Europe. By
implication, this means there will be a burgeoning 40+ age band over the next 10 years. Harnessing the consumption
demands of this population will be one of the key challenges across the drinks industries.
The worlds key youthful demographics are in Latin America, Asia-Pacific, and the Middle East and Africa. Critically,
although the worlds population is ageing, some of the biggest investment in the short to medium term will be
channelled into emerging markets with a more youthful profile.
Key burgeoning age bands going forward
CSDs, fruit juice,

concentrates, dairy
Bottled water, RTD tea/coffee, functional drinks, beer,

pre-mixes, wine, spirits, hot coffee and tea
36
Youthful Populations Drive Multi-profile Drinks 1998-2008

The decline in global throat participation of adult profile drinks between 1998 and 2008 reflects, firstly, youthful
demographics in key emerging markets of Latin America, Asia and the Middle-East/Africa, and, secondly, a global
surge in bottled water consumption, which has a multi-profile consumer base.
The global development of packaged water, in bulk, family and single-serve sizes, has offset a slowdown in
carbonates. Equally, there has been significant segmentation activity in fruit/vegetable juice, together with new
investment in the niche categories of flavoured milk, drinking yoghurt and soy beverages. Collectively, lunch box
consumption for children has increased across each of these sectors.
Both hot tea and hot coffee, two fundamentally adult profile sectors, have lost share of throat over the past decade.
Indeed, bringing new consumers on stream is a key challenge for the hot beverage industry. In alcoholic drinks, gains
in the share of throat of beer have been countered by slowdowns in wine and spirits. However, as a result of the
recession, in 2008 and 2009, beer has seen its worst performance of the last decade, as Eastern European markets,
such as Russia, which have been driving global beer growth, are seeing declines.
Adult Profile Drinks in Share of Throat Context
Note: Adult profile beverages are broadly defined as Alcoholic drinks, Hot drinks, Functional drinks, RTD coffee and RTD tea.
37
Premiumisation Buoys Spending on Adult Drinks 1998-2008

The drop in share of wallet of adult profile drinks has been less than in throat over the past decade, due in large
measure to the growth of premium adult soft beverage sectors, such as energy drinks, RTD tea and RTD coffee. Adult
profile drinks have also been buoyed by the effective premiumisation of hot coffee, especially since 2003.
In alcoholic drinks, RTD premixes were a niche growth sector until 2003, cannibalising some value from wine, spirits
and beer, above all in the young adult market. However, both the wine and spirits category have enjoyed healthy
value growth over the past few years, due to consumers trading up to premium drinks.
Carbonates remain the dominant value sector in multi-profile beverages. The less precipitous decline in wallet share
versus throat share is indicative of weaker penetration by second tier brands at the global level.
Over the course of the review period, bottled water overtook fruit/vegetable juice to become the second ranked multiprofile sector. Crucially, the good-for-your-family beverage playing field has become more competitive year-on-year
Women are proving to be the most dynamic consumer segment behind the increasing importance of adult
consumption in dairy drinks. They are health-orientated in their choices and happy to try new dairy drink lines offering
properties benefiting the skin and the digestion, driving growth at sector level in more developed markets.
Adult Profile Drinks in Share of Wallet Context
Note: Adult profile beverages are broadly defined as Alcoholic drinks, Hot drinks, Functional drinks, RTD coffee and RTD tea.
38
Children Still Account for One in Four of the Global Population

The global 0-15 age-band contracted by 1% over the 2003-2008 period, against growth of 13% in the over 65 band.
This is a reflection of declining birth rates in key population enclaves across Western and Eastern Europe.
In Russia and Germany, for example, under-15s account for only 14% of the population.
In the major markets of China and the US, populations are also ageing, with the under-15s accounting for little more
than one in every five people. In the case of China, this has led some economists to speculate that the country might
grow old before it grows rich.
The world, of course, is far from homogeneous, and there are a number of major emerging markets where
populations are youthful. Among the most important are India and Mexico, where the under-15 age band accounts for
almost one in every three people. In practical terms, this means that the labour pool is likely to increase by around
one million people a year in both countries between 2010 and 2025.
Key 0-14 populations:

Mexico
India
Saudi Arabia
Philippines
South Africa
Egypt
Indonesia
39
Emerging Markets Are Key to Growth in Child-profile Drinks

The child population in the saturated markets (North America, Western Europe and Australasia) is forecast at 157
million in 2010, less than in Latin America and substantially below totals in the Middle East and Africa, and AsiaPacific. This sheds light on the likely direction of new product development in childrens drinks over the short to
medium term. Globally, children (aged 0-14) account for more than one in every four people on the planet.
The number of children is declining in Asia-Pacific, while growth is flat in Latin America, but both regions are identified
as a key focus for new investment, notably in carbonates, fruit juices, concentrates and liquid dairy. Between 2008
and 2010, carbonates, for example, are forecast to generate 2 billion litres of new consumption in Asia-Pacific and 3
billion litres in Latin America. By contrast, demand is forecast to slide by 3 billion litres in North America.
Until children reach teenage status, it is their parents who make the key consumption choices. However, concern over
sugary drinks tends to be less invasive in the emerging markets, which is why the big cola players will look to shore
up their positions over the next five years.
In the developed markets, there will be stronger promotional and marketing activity behind the nutritional benefits of
child-oriented drinks.
40
Teenagers a Tough, but Lucrative Consumer Base to Crack

The over-14 teenage market is a key consumer base for energy drinks, sports drinks, carbonates and any beverage
product with a sociable and fun profile. It is, arguably, one of the toughest markets to crack in the beverage industry.
Equally, this population group is estimated to be one of the biggest soft drinks consumers in per capita terms. The
rewards of successful product development are, therefore, very high.
The Middle East and Africa and Latin America are the only regions where the teenage market is growing in size,
indicating that investment in new product activity is likely to be high in the future. Conversely, a sharp drop in Eastern
Europes teenage population is expected, with a related knock-on effect on teenage profile products.
In the richer industrialised regions, the teenage population growth rate is flat, but investment will continue to be high
in energy drinks and fun-profile products. This age band tends to be the least concerned about good-for-you products
because, critically, they are largely making their own consumption choices, unlike the under-15s.
41
Time-rich Retirees are Key Growth Age Band in Europe

The legal drinking age varies between countries and regions, but broadly speaking the over-19 age band is the key
focus for all alcoholic drinks categories. It is increasing in size in all regions of the world, notably in Latin America. In
Mexico, for example, the adult pool is forecast to grow by upwards of one million a year to 2020. Beer, in particular, is
forecast to harness this demographic windfall.
Latin America and Asia-Pacific will also see the largest actual growth in consumption of wine and spirits to 2010.
These sectors are likely to become increasingly competitive, with white spirits, notably vodka, looking to win more
ground on brown spirits among the newest generation of legal drinking age consumers.
It is striking that Western Europe sits second only to Asia-Pacific in the size of its over 65 population, projected at 78
million in 2010, compared, for example, with 40 million in Latin America. This population of retired adults is time-rich,
which equates favourably with multi-occasion drinks, particularly hot tea, hot coffee and hot chocolate. This consumer
segment is also a golden niche for functional innovation in dairy drinks, as older consumers are happy to pay a
premium for products adapted to their specific nutritional needs.
42
Adult Profile Drinks Sustain High Participation

In 2009, financial crisis and demographic pressures have intensified competition for the money spent on beverages.
Three of the top five sectors in terms of share of throat are broadly geared to an adult consumer base, namely hot
tea, hot coffee and beer.

Despite the economic recession, innovations in dairy drinks have continued to target adult consumers with specific
needs. Many adults place even more importance on health during periods of economic contraction, as the pressure to
look good and healthy increases for fear of losing their jobs. New product developments in 2009 have focused on the
introduction of lactose-free properties, cardio-vascular health-friendly soy lines and vitamin-enriched weight-control
dairy drinks.
Bottled water is the main multi-profile sector, but has come under pressure in the developed markets due to concern
over throwaway plastic bottles and their impact on the environment. This negative lobbying has also gained limited
momentum in emerging markets.
Carbonates, despite strong pressure, look like sustaining a significant share of both wallet and throat, with children
and young adults remaining the key consumer base.
Further, the adult categories of wine and spirits, which have lower shares of throat, continue to be key drivers of
spending.
43
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
44
Conclusions
Key Industry Drivers

Segmentation
Health and Wellness
Segmentation within categories has become increasingly
Growing consumer awareness of health issues has been
important to share-of-throat gains.

In beer, for example, there has been highly effective
development of economy, standard and premium
segments. In times of boom and bust, this has enabled
consumers to cross-trade, depending on their available
disposable income.
Targeting women, children and older consumers is
becoming a norm, especially in saturated markets, not
only in terms of marketing but also packaging,
ingredients and colours.
a major determinant of share-of-throat over the past

decade, illustrated by significant upturns in categories
with a better-for-you image, such as bottled water, RTD
tea, soy beverages and low-calorie drinks.
Milk, historically a beneficiary of health consumption, has
been hit by the latest growth trends, firstly, because
there is greater beverage competition, and secondly,
because concern over cholesterol levels has weakened
demand.
Comfort consumption
Premiumisation
Consumer confidence globally is running at its lowest
Reduced milk demand over the past decade has been
ebb in years, and this is impacting marketing strategies.

Coca-Colas Open Happiness campaign, for example,
is a move to tap into desire for optimism at a time of
bleak macro-economic conditions. Also, the introduction
by Starbucks of a new range of hot tea is a bid to
capture the same type of stress-free aspiration.
In alcoholic drinks, there is also a related trend towards
escapist consumption as macro economies deteriorate.
offset in the dairy industry by successful development of

the value-added products flavoured milk and drinking
yoghurt. Both categories have become strong
competitors for good-for-you and functional soft drinks.
Premiumisation has also been important in the coffee
industry, driven by the on-trade.
This has raised the competitive stakes for hot tea, which
has so far been slow to develop a successful premium
tier at a global level.
45
Conclusions
Diversity in Share Of Throat & Wallet

Portfolio Diversity
Portfolio diversity has become increasingly important
Saturated Zone
In the worlds developed markets of Western Europe,
across the drinks industries. Coca-Cola and PepsiCo, for

North America and Australasia, packaged non-alcoholic
example, used to be heavily weighted towards
drinks accounted for around 66% of recommended
carbonates, but both have moved aggressively into a
human fluid intake in 2009, up from just under 60% a
much broader range of categories over the past decade.
decade earlier.
This has radically changed the share-of-throat picture,
The upward curve has, however, hit a brick wall,
with bottled water and functional beverages becoming
indicating saturation. This means that brand growth will
increasingly high profile. This has raised the competitive
increasingly be driven by market share, in turn raising
bar for hot drinks, dairy drinks and mainstream soft
the share-of-throat competitive stakes to 2010 and
drinks.
beyond.
Maturing Zone
Untapped Zone
In the maturing markets of Latin America and Eastern
In the comparatively untapped zones of the Middle East
Europe, the packaged drinks industries are far from

saturation.
Branded products accounted for around 22% of
recommended liquid intake at the close of the review
period, up from 16% a decade earlier. A commensurate
rise in share is possible over the next 10-year period,
driven by high levels of investment from the major
multinationals.
and Africa, and Asia, branded products still account for

only one in every 10 litres of recommended liquid intake.
The growth potential of this region, with a combined
population of some 5 billion people, is vast. Crucially, this
region, more than any other, is likely to be the target of
stronger positions by multinationals across the beverage
industries.
46
Introduction
Setting the Scene
Dairy in Focus
Conclusions
Definitions
47
Definitions
General Definitions
All values expressed in this report are in US dollar terms, using a fixed exchange rate (2008, unless otherwise
stated).
2009 figures are based on Q2-Q3 2009 research and are, therefore, part-year estimates.
2009-2014 figures for Hot Drinks and Soft Drinks are based on preliminary research findings as of Q3 2009. Final
2009-2014 figures for Hot Drinks and Soft Drinks will be published by Euromonitor International in December 2009.
All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data
are expressed in current terms; inflationary effects are taken into account.
All volumes expressed in this report are in million litres and ready-to-drink (RTD) million litres.
Share of Throat volume sales of beverages.
Share of Wallet value sales of beverages.
Product coverage:
Alcoholic Drinks
Hot Drinks
Liquid Dairy
Soft Drinks
48
Definitions
Alcoholic Drinks Definitions

Alcoholic Drinks coverage:
Beer: An alcoholic drink usually brewed from malt, sugar, hops and water and fermented with yeast. Some beers are
made by fermenting a cereal, especially barley, and therefore not flavoured by hops. Alcohol content for beer varies
as much as 14% abv (alcohol by volume), although 3.5-5% is most common. Beer is often loosely classified by the
nature in which it is made: Top fermented (ie ales, bitters, wheat beers, stouts, porters etc) Bottom fermented (ie all
lagers). Note: pre-mixed beers such as beer/lemonade, beer/whisky or beer/tequila mixtures are excluded from the
data. These are included in flavoured alcoholic beverages (FABs). Beer is the aggregation of lager, dark beer, stout
and LABs/NABs.
Cider/perry: Cider is made from fermented apple juice, while perry is made from fermented pear juice. Both artisanal
and industrial cider/perry are included.
RTDs/High-strength premixes: This the combination of RTD and high-strength premixes. RTD stands for ready-todrink. Other terms which may used for these products are FABs, alcopops and premixes. The RTDs sector is the
aggregation of malt-, wine-, spirit-based and other types of premixed drinks. These drinks usually have an alcohol
content of around 5%, but it can be as high as 10% abv. Premixes containing a high percentage of alcohol of around
15%+ combined with juice or any other soft drink are included here. These are usually marketed as a product to be
drunk neat with ice, to mix with an energy drink and/or to make cocktails. Fruit-flavoured, vodka-based spirits with an
alcohol content of between 16-21% are classified here. Examples: Aliz, Ursus Roter, Berentzen Fruchtige, Kleiner
Feigling.
Wine: This is the aggregation of still and sparkling light grape wines, fortified wine and vermouth and non-grape wine.
In terms of alcohol content, light wine usually falls into the 8-14% abv bracket, while fortified wine ranges from 14% to
23% abv. For this study, low- and non-alcoholic wine is also included in the data (attributed to each sector as
appropriate).
Spirits: This is the aggregation of whisk(e)y, brandy and cognac, white spirits, rum, tequila, liqueurs and other spirits.
49
Definitions
Hot Drinks Definitions

Hot Drinks coverage:
Coffee: The aggregation of fresh and instant coffee.
Tea: Tea types and consumption habits differ greatly as a result, Western countries will focus more upon black tea,
whereas Asian countries (mainly Japan, China and South Korea, but also India, Thailand, Vietnam, Malaysia and
Indonesia) will focus more upon green and flavoured varieties. The three main categories of tea are black, green,
and oolong. Within each of these categories there are many varieties. Green teas, black teas and oolong teas come
from the same tea plant species, the difference being the processing of tea. Black tea undergoes several hours of
oxidation during preparation (accelerated by heat and humidity) whereas oolong tea is partially fermented and green
tea is steamed to stop oxidation.
Other hot drinks: Only malt- or plant-based powders, granules, blocks or tablets mixed with milk or water are
included. The packaging usually recommends either milk or water, but consumers do not always follow this for
different reasons, for example cultural reasons, and dietary or cultural requirements. These products can be
consumed hot or cold. The packaging often has serving recommendations.
Note: Flavoured powder milk drinks are excluded to avoid double-counting, as such powdered drinks are usually
mixed with milk.
50
Definitions
Liquid Dairy Definitions

Liquid Dairy coverage:
Milk: This is the aggregation of fresh/pasteurised, long-life/UHT and goat milk. Note: Powdered milk (dehydrated)
used in place of fresh or long life milk or goat milk and infant milk formula is excluded.
Flavoured milk drinks: This is the aggregation of dairy-only flavoured milk drinks and flavoured milk drinks with fruit
juice. Note: Flavoured powder milk drinks are excluded.
Soy beverages: This is the aggregation of soy milk and soy drinks. Note: Only RTD liquid products are included. Soy
powder is excluded.
Drinking yoghurt: This is the aggregation of regular drinking and functional drinking yoghurt.
Sour milk drinks: Includes kefir, lassi as well as buttermilk and whey drinks. Kefir is significant in Eastern Europe. A
cultured-milk beverage, kefir has a creamy consistency and slightly sour taste. Kefir is prepared by culturing fresh
milk with kefir grains/ granules which are a natural mother-culture. Traditionally, butter milk is the slightly sour,
residual liquid which remains after butter is churned, ie milk from the butter or buttermilk. It is usually flecked with tiny
spots of sweet, creamy butter. The flavour of buttermilk is similar to yoghurt. Commercial buttermilk is nowadays
made by adding a lactic acid bacteria culture to pasteurised sweet milk, and it may or may not have added butter
flecks. The milk is later left to ferment. Low/reduced fat sour milk drinks are also included here.
Note: Coffee whiteners, condensed/evaporated milk, flavoured, functional condensed milk and cream are excluded.
51
Definitions
Soft Drinks Definitions

Soft Drinks coverage:
Carbonates: Euromonitor International defines carbonates as all non-alcoholic drinks into which carbon dioxide gas
has been dissolved, and therefore the drink is carbonated. Carbonates are an aggregation of cola carbonates and
non-cola carbonates, whether regular or low-calorie.
Fruit/vegetable juice: This sector only includes still drinks. Carbonated varieties are included in the non-cola
carbonates subsector. Juice flavoured milk drinks and fruit shakes are excluded. However, fruit/vegetable drinks that
contain a minimum amount of milk are included within this sector. This sector is the aggregation of 100% juice,
nectars (25-99% juice content), juice drinks (up to 24% juice content) and fruit-flavoured drinks.
Bottled water: This sector includes sparkling water, spring water and purified/table water. This is the aggregation of
still bottled water, carbonated bottled water, flavoured bottled water and functional bottled water.
Functional drinks: This is the aggregation of sports drinks, energy drinks and elixirs. Health and meal replacement
drinks, such as Slim Fast and Pedialyte, are not included. Powder energy drinks are excluded and are included within
the powder concentrates subsector.
Concentrates: This is the aggregation of liquid concentrates and powder concentrates. RTD concentrates volumes
are calculated by applying an average conversion ratio for each country to as sold liquid and powder volumes. The
conversion ratios for liquid and for powder are specific to each country and can be viewed alongside as sold
volumes in the appendix of each country report.
RTD tea: This is the aggregation of still RTD tea and carbonated RTD tea.
RTD coffee: Includes packaged ready-to-drink coffee. This sector does not include coffee flavoured milk drinks.
Leading brands in off-trade volume include Georgia, Nescaf and Suntory Boss.
Asian speciality drinks: Asian speciality drinks are traditional drinks or national specialities commonly found in Asia.
This is the aggregation of Asian cereal-pulse based drinks, Asian juice drinks and other Asian speciality drinks.
52
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Global Share of Throat &amp; Wallet

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Global Share of Throat &amp; Wallet

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Share of the Global Throat and

Global Throat and Wallet

Global Throat and Wallet

Global Throat and Wallet

Objectives of the Drinking Habits Series

global briefings on the worlds drinking habits.

Global Throat and Wallet

Objectives of the Global Share of Throat and Wallet Report

Global Throat and Wallet

Human Fluid Need

When Lehman Brothers collapsed in September 2008

Global consumption of packaged branded non-alcoholic

and the Western banking sector slipped into crisis, the

drinks is equivalent to around 0.5 litres a day in 2009,

Alcoholic vs Non-Alcoholic vs Dairy

Alcoholic and non-alcoholic drinks do not always operate

The ageing of the global population reflects declining

in different competitive playing fields. Beer, for example,

birth rates in key regions, notably Eastern and Western

Global Throat and Wallet

Setting the Scene

Global Throat and Wallet

What Does the World Drink in 2009

Global Throat and Wallet

Setting the Scene

Global Picture: Throat & Wallet Disparity as 2009 Unfolds

the largest share of

Setting the Scene

Global Throat and Wallet

Tea and Bottled Water Driving New Beverage Business

Setting the Scene

Global Throat and Wallet

Value Losses Across the Board in 2009

Setting the Scene

Global Throat and Wallet

Key Drinks Fortunes in Economic Downturn

Milks staple status and greater affordability linked to a decline in international

Setting the Scene

Global Throat and Wallet

Emerging Markets are the Lynchpin of Opportunity to 2010

Setting the Scene

Global Throat and Wallet

Longer Term Trends in the Share of Throat

the forecast global picture.

Global Throat and Wallet

Global Throat and Wallet

Dairy Sales Growth Slows in 2009

declined marginally in retail value in 2009.

Global Throat and Wallet

Crisis Impact on Dairy

in the diet of many countries. This, along with

Global Throat and Wallet

Dairy Retail Volume Growth 2009-2014

Global Throat and Wallet

Dairy: One Market, One Strategy

will continue beyond 2009, particularly in markets such as

Global Throat and Wallet

Last Decade in Focus

Global Throat and Wallet

Bottled Water Posts Big Gains Share of Throat

past decade, but significant pressure from the

Last Decade in Focus

Global Throat and Wallet

Niche Adult and Functional Drinks Hit Rapid Streak of Growth

Global Share of Throat & Wallet

Global Share of Throat & Wallet