LFR’s December report into the global soft drinks market said that growth in consumer spending is likely to be “extremely modest” over the next year, with a tendency towards cheaper products set to continue.
The report said that the euro crisis and reduced consumer confidence had resulted in the Organisation for Economic Co-operation & Development revising its forecast for global economic growth for the year to 3.8%, with a 3.4% figure expected for 2012.
Consumer spending
“These economic indicators suggest any growth in consumer spending is likely to be extremely modest over the coming year”, predicted LFR.
“The trend towards cheaper products is expected to continue for the short-term at least, a factor that may hold back growth in sectors with higher-value priced products such as sports and energy drinks.”
The firm also said that the bottled water market may suffer “to some extent” from depressed consumer spending, since people in the developed world may turn back toward tap water on cost grounds.
The UK soft drinks market is also showing little evidence of growth despite sales remaining strong, according to the report.
The sector was valued at more than £6bn last year, while per capita consumption remained above 90 litres, despite falling sales.
Growth in consumption
However, the report said: “Market value is notably high in western Europe countries such as Germany and the UK, although many of these markets are highly mature and displaying little evidence of growth in consumption.”
In regional terms, LFR found that sales of soft drinks remained “heavily skewed” towards developed parts of the world, such as western Europe, North America and Japan.
But it warned: “While penetration levels remain high in countries such as the UK, France and Germany, emerging economies are assuming increasing significance and are poised to increase their share of the market.”
In global terms, LFR predicted global volume and value growth in soft drinks to continue rising over the next few years.
Last year, the global market was worth 569bn litres, up from 483bn litres in 2006. The global market value also rose from $377bn to $447bn over the same period.