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Carbonated Soft Drinks - Canada - July 2014

“Natural sweeteners such as stevia may help to reduce these perceptions of artificiality and help to boost consumption among Millennial females.”
- Warren de Lima, Senior Food and Drink Analyst

This report looks at the following issues:

  • Lower/no-calorie CSDs continue to provide growth opportunities
  • Boosting CSD usage among Millennial females
  • Increasing product transparency can also benefit CSD brands
  • Food-based consumption occasions can boost sales

Carbonated soft drinks (CSDs) remains a popular category, enjoyed by 88% of Canadian adults. The category’s ability to cater for different tastes and interests has ensured that it continues to grow, with retail values expected to reach $2.84 billion in 2014. However, the market has continued to face challenges from health-related organisations over the sugar content of many CSD products. This has led to the development of a thriving lower-calorie segment, with 2014 seeing the launch of the mid-calorie Pepsi Next.

Coca-Cola and Pepsi continue to dominate the market but there appears to also be growing interest in other flavoured carbonates, often coming from smaller operators. The market remains a proactive one in innovation terms, with Coca-Cola’s launch of a customisable carbonate machine (Keurig Cola) adding further to consumer interest in more tailored CSD products. The category remains diverse and suited to consumption across a wide variety of occasions, with value and volume growth expected to continue in a challenging soft drinks market in the coming years.

For the purposes of this report, Mintel defines the carbonated soft drinks market as covering all carbonated soft drinks sold through the retail and non-retail channels. Data include sales through the following outlets:

  • Take-home (including impulse): This includes grocery retail outlets where CSDs are purchased for the purpose of in-home consumption or for drinking on the go, comprising supermarkets, convenience stores and gas service stations among others.
  • On-premise: This includes anywhere where CSDs are bought to consume on site, eg leisure centres, hotels, restaurants, fast food venues, cafés, education establishments, the workplace and in the on-trade (ie pubs, bars and clubs). Please note that the non-retail scope of this report includes QSRs (Quick-service Restaurants) and other venues without an on-trade licence in addition to pubs and clubs. However, sales made via these on-trade channels are not included in the Market Size and Forecast section.

The basic ingredients of soft drinks (excluding fruit juices and bottled water) are water, a sweetener, an acid and flavouring. For many years, caffeine and caffeine citrate have been permitted in cola-type beverages to a maximum level of 200ppm caffeine. In March 2010, after an extensive review of all available science, Health Canada authorised the broader use of caffeine and caffeine citrate in all carbonated soft drinks (both cola-type and non-cola-type carbonated soft drinks). The maximum level of use in cola-type beverages remains 200ppm and the maximum level of use in all other types of carbonated soft drinks is 150ppm.

Products that state ‘reduced sugar’ on labels must contain at least 25% less sugar than the standard variant of the drink. Products which state ‘no added sugar’ on labels are drinks which have had no additional sugar added. As with reduced sugar drinks, these products are not sugar-free as they may have natural sugar derived from one of their ingredients, such as the sugar from natural orange juice.

 

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Table of contents

  1. Introduction

      • Definition
        • Excluded
          • Abbreviations
          • Executive Summary

              • The market
                • Figure 1: Forecast of Canada value retail sales of carbonated soft drinks, 2009-19
                • Figure 2: Forecast of Canada volume retail sales of carbonated soft drinks, 2009-19
              • Market factors
                • Ongoing negative media focus on sugar and sugary drinks
                  • Government regulations and rising material costs provide challenges for operators
                    • Summer provides growth opportunities
                      • An ageing population poses some challenges
                        • The consumer
                          • CSDs drunk by the majority of Canadians
                            • Figure 3: Usage of different types of carbonated soft drinks in the past month, May 2014
                          • CSDs are most likely to be drunk with a meal or as a thirst quencher
                            • Figure 4: Occasions for drinking CSDs, May 2014
                          • Flavour has a large influence in CSD decisions
                            • CSDs are perceived as an artificial treat
                              • The majority of CSD users now check the packaging
                                • Figure 5: Attitudes towards CSDs, May 2014
                              • What we think
                              • Issues and Insights

                                  • Lower/no-calorie CSDs continue to provide growth opportunities
                                    • The facts
                                      • The implications
                                        • Boosting CSD usage among Millennial females
                                          • The facts
                                            • The implications
                                              • Increasing product transparency can also benefit CSD brands
                                                • The facts
                                                  • The implications
                                                    • Food-based consumption occasions can boost sales
                                                      • The facts
                                                        • The implications
                                                        • Trend Application

                                                            • The Big Issue
                                                              • Prove It
                                                                • Experience Is All
                                                                • Market Drivers

                                                                  • Key points
                                                                    • CSDs are being linked to growing health problems
                                                                      • Figure 6: Body mass index, self-reported rate of being overweight or obese among Canadian adults, by gender, 2009-13
                                                                    • Alternative sweeteners
                                                                      • Government regulations and rising material costs provide challenges for operators
                                                                        • The 2014 ‘summer of sport’ provides sales opportunities
                                                                          • Consumer confidence and disposable income remain resolute
                                                                            • Figure 7: Consumer Confidence Index, monthly, January 2008-May 2014
                                                                            • Figure 8: Household disposable incomes and savings in Canada, 2008-14
                                                                            • Figure 9: Consumer Price Index in Canada, 2008-14
                                                                          • An ageing population poses potential issues
                                                                            • Figure 10: Projected trends in the age structure of the Canada population, 2014-19
                                                                          • Tapping into the growth of spirits
                                                                          • Strengths and Weaknesses

                                                                            • Strengths
                                                                              • Weaknesses
                                                                              • Competitive Context

                                                                                • Key points
                                                                                  • CSDs continue to lead the way in the soft drinks landscape
                                                                                    • Figure 11: Value retail sales ($ millions) in selected beverage categories in Canada, 2009-12
                                                                                    • Figure 12: Volume retail sales (million litres) in selected beverage categories in Canada, 2009-12
                                                                                • Who’s Innovating?

                                                                                  • Key points
                                                                                    • Private labels challenge the CSD companies with a natural proposition
                                                                                      • Figure 13: Share of new product launches within the Canada CSD market, by ultimate company, 2010-13
                                                                                    • Canada Dry Mott’s launches slim and tall cans
                                                                                      • Coca-Cola launches several special edition cans
                                                                                        • Coke is set to move into DIY territory
                                                                                          • PepsiCo looks to naturally derived stevia sweetener with Pepsi Next launch
                                                                                            • Coca-Cola expected to respond with a naturally sweetened variant
                                                                                              • Private labels and smaller companies launch CSDs positioned as natural
                                                                                              • Market Size and Forecast

                                                                                                • Key points
                                                                                                  • Warmer weather creates uptick in volume consumption, but also a competitive sales environment
                                                                                                    • Figure 14: Canada retail value and volume sales of carbonated soft drinks, 2009-19
                                                                                                  • Health concerns look set to impact sales of CSDs
                                                                                                      • Figure 15: Forecast of Canada value retail sales of carbonated soft drinks, 2009-19
                                                                                                      • Figure 16: Forecast of Canada volume retail sales of carbonated soft drinks, 2009-19
                                                                                                    • Competition from at-home soda machines could affect sales of CSDs
                                                                                                      • Forecast methodology
                                                                                                      • Segment Performance and Market Share

                                                                                                        • Key points
                                                                                                          • Colas remain the largest segment, but other carbonates are driving growth
                                                                                                            • Figure 17: CSD retail market segmentation, by value, 2012 and 2013
                                                                                                            • Figure 18: CSD retail market segmentation, by volume, 2012 and 2013
                                                                                                          • Coca-Cola and Pepsi dominate
                                                                                                            • Figure 19: CSD retail market share, by value and volume, 2013
                                                                                                            • Figure 20: CSD retail market share, by value and volume, 2011-13
                                                                                                        • Companies and Products

                                                                                                          • Coca-Cola Limited Canada
                                                                                                            • PepsiCo
                                                                                                              • Canada Dry Mott’s
                                                                                                                • Boylan
                                                                                                                • Brand Research and Social Media

                                                                                                                  • Key findings
                                                                                                                    • Market overview
                                                                                                                      • Key social media metrics
                                                                                                                        • Figure 21: Key social media metrics, June 2014
                                                                                                                      • Brand usage and awareness
                                                                                                                          • Figure 22: Brand usage and awareness for selected carbonated soft drinks brands, May 2014
                                                                                                                        • Interaction with CSD brands
                                                                                                                          • Figure 23: Interactions with selected carbonated soft drinks brands, May 2014
                                                                                                                        • Leading recent online campaigns
                                                                                                                          • Coca-Cola leads the way
                                                                                                                            • Campaigns from other selected CSD brands
                                                                                                                              • What we think
                                                                                                                                • Online conversations
                                                                                                                                    • Figure 24: Online conversations for selected carbonated soft drinks, by day, 4 June 2013-4 June 2014
                                                                                                                                  • Where are people talking about carbonated soft drinks brands?
                                                                                                                                    • What are people talking about?
                                                                                                                                      • Figure 25: Topics of conversation around selected carbonated soft drinks brands, 5 June 2013-4 June 2014
                                                                                                                                  • The Consumer – Usage of CSDs

                                                                                                                                    • Key points
                                                                                                                                      • CSDs drunk by the majority of Canadians
                                                                                                                                          • Figure 26: Consumption of carbonated soft drinks in the past month, May 2014
                                                                                                                                        • Standard/Regular cola leads the way
                                                                                                                                          • Figure 27: Usage of different types of carbonated soft drinks in the past month, May 2014
                                                                                                                                          • Figure 28: In-home and out-of-home usage of different types of carbonated soft drinks in the past month, May 2014
                                                                                                                                        • Low/no-calorie colas have potential to expand
                                                                                                                                          • Opportunities also exist for low/no-calorie flavoured CSDs
                                                                                                                                            • A quarter of Canadians drink regular fruit-flavoured CSDs
                                                                                                                                              • Tonic/soda water and other carbonates drunk by three in 10
                                                                                                                                                • One in five Canadians adopt a wide CSD repertoire
                                                                                                                                                  • Figure 29: Repertoire of usage of types of CSDs, May 2014
                                                                                                                                              • The Consumer – Occasions for Drinking CSDs

                                                                                                                                                • Key points
                                                                                                                                                  • CSDs are most likely to be drunk with a meal or as a thirst quencher
                                                                                                                                                    • Figure 30: Occasions for drinking CSDs, May 2014
                                                                                                                                                  • More than two in five drink CSDs to quench thirst and for refreshment
                                                                                                                                                    • Many consumers also drink CSDs as a treat
                                                                                                                                                      • The relationship between CSDs and alcohol
                                                                                                                                                        • CSDs may also be able to grow in the exercise category
                                                                                                                                                        • The Consumer – Reasons for Choosing Different Types of CSDs

                                                                                                                                                          • Key points
                                                                                                                                                            • Flavour has a large influence in CSD decisions
                                                                                                                                                              • Figure 31: Reasons for drinking CSDs, May 2014
                                                                                                                                                            • Price also plays a large part in shaping purchase trends
                                                                                                                                                              • The importance of lower calorie and portability
                                                                                                                                                              • The Consumer – Perceptions of Soft Drinks

                                                                                                                                                                • Key points
                                                                                                                                                                  • CSDs are perceived as an artificial treat
                                                                                                                                                                    • Figure 32: Attributes associated with carbonated soft drinks, May 2014
                                                                                                                                                                  • Refreshment cited by two in five adults
                                                                                                                                                                    • CSDs remain competitive on price
                                                                                                                                                                      • Correspondence mapping of soft drinks
                                                                                                                                                                        • Figure 33: Attributes associated with different types of soft drinks, May 2014
                                                                                                                                                                        • Figure 34: Correspondence analysis, July 2014
                                                                                                                                                                    • The Consumer – Attitudes towards CSDs

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Summary of attitudes towards CSDs
                                                                                                                                                                          • Figure 35: Attitudes towards CSDs, May 2014
                                                                                                                                                                        • Over half of CSD drinkers check the ingredients
                                                                                                                                                                          • Figure 36: Health and taste-related attitudes towards CSDs, May 2014
                                                                                                                                                                        • A third prefer the taste of ‘lighter’ CSDs
                                                                                                                                                                          • CSDs can further leverage functionality
                                                                                                                                                                            • Figure 37: Functionality-related attitudes towards CSDs, May 2014
                                                                                                                                                                          • CSDs can tap into the popularity of alcoholic drinks
                                                                                                                                                                            • Figure 38: Attitudes towards CSDs in pubs/bars/restaurants, May 2014
                                                                                                                                                                          • Recommendations can entice a quarter to try something new
                                                                                                                                                                            • Figure 39: Innovation and newness-related attitudes towards CSDs, May 2014
                                                                                                                                                                        • The Consumer – CSDs and Chinese Canadians

                                                                                                                                                                          • Key points
                                                                                                                                                                            • A third of Chinese Canadians drink five or more types of CSDs
                                                                                                                                                                              • Figure 40: Number of types of CSDs consumed – Overall vs Chinese Canadians, May 2014
                                                                                                                                                                              • Figure 41: CSD consumption among the overall population vs Chinese Canadians, May 2014
                                                                                                                                                                            • New flavours, high fruit content and functional benefits all resonate among Chinese Canadians
                                                                                                                                                                                • Figure 42: Significant difference in CSD purchase motivation – Overall vs Chinese Canadians, May 2014
                                                                                                                                                                            • The Consumer – Target Groups

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Four target groups
                                                                                                                                                                                  • Figure 43: Target groups for CSDs, May 2014
                                                                                                                                                                                • Fanatics (30%)
                                                                                                                                                                                  • Conflicted Indulgers (26%)
                                                                                                                                                                                    • Disengaged (23%)
                                                                                                                                                                                      • Moderators (21%)
                                                                                                                                                                                      • Appendix – Who’s Innovating?

                                                                                                                                                                                          • Figure 44: New product launches in the Canada CSDs market, by claim, 2010-14
                                                                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                                                                          • Figure 45: Best- and worst-case forecasts for the Canada CSD retail market, by value, 2014-19
                                                                                                                                                                                          • Figure 46: Best- and worst-case forecasts for the Canada CSD retail market, by volume, 2014-19
                                                                                                                                                                                      • Appendix – Brand Research and Social Media

                                                                                                                                                                                        • Brand usage or awareness
                                                                                                                                                                                          • Figure 47: Brand usage or awareness, May 2014
                                                                                                                                                                                          • Figure 48: Coca-Cola usage or awareness, by demographics, May 2014
                                                                                                                                                                                          • Figure 49: Pepsi usage or awareness, by demographics, May 2014
                                                                                                                                                                                          • Figure 50: Dr Pepper usage or awareness, by demographics, May 2014
                                                                                                                                                                                          • Figure 51: Sprite usage or awareness, by demographics, May 2014
                                                                                                                                                                                          • Figure 52: Mountain Dew usage or awareness, by demographics, May 2014
                                                                                                                                                                                          • Figure 53: Canada Dry usage or awareness, by demographics, May 2014
                                                                                                                                                                                        • Activities done
                                                                                                                                                                                          • Figure 54: Activities done, May 2014
                                                                                                                                                                                        • Brand analysis
                                                                                                                                                                                          • Figure 55: Brand name key social media metrics – Coca-Cola, June 2014
                                                                                                                                                                                          • Figure 56: Brand name key social media metrics – Pepsi, June 2014
                                                                                                                                                                                          • Figure 57: Brand name key social media metrics – Dr Pepper, June 2014
                                                                                                                                                                                          • Figure 58: Brand name key social media metrics – Mountain Dew, June 2014
                                                                                                                                                                                          • Figure 59: Brand name key social media metrics – Sprite, June 2014
                                                                                                                                                                                          • Figure 60: Brand name key social media metrics – Canada Dry, June 2014
                                                                                                                                                                                      • Appendix – The Consumer – Usage of CSDs

                                                                                                                                                                                          • Figure 61: CSDs consumed in the past month, May 2014
                                                                                                                                                                                          • Figure 62: CSDs consumed in the past month – Any cola (net), by demographics, May 2014
                                                                                                                                                                                          • Figure 63: CSDs consumed in the past month – Any flavour (net), by demographics, May 2014
                                                                                                                                                                                          • Figure 64: CSDs consumed in the past month – Any low calorie (net), by demographics, May 2014
                                                                                                                                                                                          • Figure 65: CSDs consumed in the past month – Standard/regular cola, by demographics, May 2014
                                                                                                                                                                                          • Figure 66: CSDs consumed in the past month – Low or no-calorie/diet cola, by demographics, May 2014
                                                                                                                                                                                          • Figure 67: CSDs consumed in the past month – Regular flavoured soft drink, by demographics, May 2014
                                                                                                                                                                                          • Figure 68: CSDs consumed in the past month – Low or no-calorie/diet flavoured soft drinks, by demographics, May 2014
                                                                                                                                                                                          • Figure 69: CSDs consumed in the past month – Other standard fruit-flavoured carbonated soft drinks, by demographics, May 2014
                                                                                                                                                                                          • Figure 70: CSDs consumed in the past month – Other low or no-calorie/diet fruit-flavoured carbonated soft drinks, by demographics, May 2014
                                                                                                                                                                                          • Figure 71: CSDs consumed in the past month – Carbonated fruit juice and juice drinks, by demographics, May 2014
                                                                                                                                                                                          • Figure 72: CSDs consumed in the past month – Tonic/soda water, by demographics, May 2014
                                                                                                                                                                                          • Figure 73: CSDs consumed in the past month – Other carbonated soft drink, by demographics, May 2014
                                                                                                                                                                                        • Repertoire
                                                                                                                                                                                          • Figure 74: Repertoire of CSDs consumed in the past month, by demographics, May 2014
                                                                                                                                                                                      • Appendix – The Consumer – Occasions for Drinking CSDs

                                                                                                                                                                                          • Figure 75: Occasions for drinking CSDs, May 2014
                                                                                                                                                                                          • Figure 76: Most popular occasions for drinking CSDs, by demographics, May 2014
                                                                                                                                                                                          • Figure 77: Next most popular occasions for drinking CSDs, by demographics, May 2014
                                                                                                                                                                                          • Figure 78: Other occasions for drinking CSDs, by demographics, May 2014
                                                                                                                                                                                      • Appendix – The Consumer – Reasons for Choosing Different Types of CSDs

                                                                                                                                                                                          • Figure 79: Reasons for choosing different types of CSDs, May 2014
                                                                                                                                                                                          • Figure 80: Most popular reasons for choosing different types of CSDs, by demographics, May 2014
                                                                                                                                                                                          • Figure 81: Next most popular reasons for choosing different types of CSDs, by demographics, May 2014
                                                                                                                                                                                          • Figure 82: Other reasons for choosing different types of CSDs, by demographics, May 2014
                                                                                                                                                                                      • Appendix – The Consumer – Perceptions of Soft Drinks

                                                                                                                                                                                          • Figure 83: Perceptions of different types of beverage categories, May 2014
                                                                                                                                                                                          • Figure 84: Most popular attributes associated with carbonated soft drinks, by demographics, May 2014
                                                                                                                                                                                          • Figure 85: Next most popular attributes associated with carbonated soft drinks, by demographics, May 2014
                                                                                                                                                                                      • Appendix – The Consumer – Attitudes towards CSDs

                                                                                                                                                                                          • Figure 86: Attitudes towards CSDs, May 2014
                                                                                                                                                                                          • Figure 87: Agreement with the statements ‘I like to check the ingredients on the packaging of carbonated soft drinks’ and ‘Carbonated soft drinks with less sweet flavours would complement a meal better’, by demographics, May 2014
                                                                                                                                                                                          • Figure 88: Agreement with the statements ‘Carbonated soft drinks are acceptable as an occasional treat for children’ and ‘I would be interested in buying carbonated soft drinks that aid digestion’, by demographics, May 2014
                                                                                                                                                                                          • Figure 89: Agreement with the statements ‘I'd be interested in buying carbonated soft drinks containing botanical extracts’ and ‘I prefer the taste of diet/light carbonated soft drinks to regular/standard variants’, by demographics, May 2014
                                                                                                                                                                                          • Figure 90: Agreement with the statements ‘Bars/pubs/restaurants should make carbonated soft drinks more visible to customers’ and ‘I am interested in buying high-quality mixers to go with spirits^’, by demographics, May 2014
                                                                                                                                                                                          • Figure 91: Agreement with the statements ‘Recommendations from friends/family encourage me to try new types of carbonated soft drinks’ and ‘Carbonated soft drinks which are less fizzy appeal to me’, by demographics, May 2014
                                                                                                                                                                                          • Figure 92: Agreement with the statements ‘I like to make my own carbonated soft drinks at home’ and ‘I would be interested in trying a carbonated soft drink with a thicker texture’, by demographics, May 2014
                                                                                                                                                                                      • Appendix – The Consumer – CSDs and Chinese Canadians

                                                                                                                                                                                          • Figure 93: Selected demographics, by total population against Chinese Canadians, May 2014
                                                                                                                                                                                      • Appendix – The Consumer – Target Groups

                                                                                                                                                                                          • Figure 94: Target groups, May 2014
                                                                                                                                                                                          • Figure 95: Target groups, by demographics, May 2014
                                                                                                                                                                                          • Figure 96: CSDs consumed in the past month, by target groups, May 2014
                                                                                                                                                                                          • Figure 97: Occasions for drinking CSDs, by target groups, May 2014
                                                                                                                                                                                          • Figure 98: Reasons for choosing different types of CSDs, by target groups, May 2014
                                                                                                                                                                                          • Figure 99: Attributes associated with soft drinks, by target groups, May 2014
                                                                                                                                                                                          • Figure 100: Attitudes towards CSDs, by target groups, May 2014

                                                                                                                                                                                      Companies Covered

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                                                                                                                                                                                      Carbonated Soft Drinks - Canada - July 2014

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