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Carbonated Soft Drinks - US - April 2017

"The CSD (carbonated soft drink) market continued to struggle from 2015-16, with sales falling and effective stagnation forecast through 2021. While the vast majority of consumers use CSDs, the mature market is struggling to grow as users seeking more-healthful options cut back and turn instead to BFY (better for you) beverages, as well as coffee, tea, and hybrid drinks. Strong brand recognition is key to growth as is engagement with iGeneration, Millennials, parents, and Hispanics through proactive outreach and product innovation."
- Mimi Bonnett, Director - Food and Drink, Foodservice

This Report discusses the following key topics:

  • CSD users often also enjoy BFY drinks, and report increasing BFY consumption
  • BFY drinks, concerns with sugar and additives drive down CSD usage

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Sales fall in 2016 and little growth forecast through 2021
          • Figure 1: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2011-21
        • The issues
          • CSD users often also enjoy BFY drinks, and report increasing BFY consumption
            • Figure 2: Consumption of carbonated drinks, by amount compared to a year ago, December 2016
          • BFY drinks, concerns with sugar and additives drive down CSD usage
            • Figure 3: Top reasons for CSD attrition, December 2016
          • The opportunities
            • Younger generations, parents, Hispanics show robust category engagement
              • Figure 4: Any or more consumption of carbonated soft drinks compared to a year ago, for iGeneration, Millennials, parents, and Hispanics, December 2016
            • Hispanic Millennials stand out as very active in the CSD market
              • Figure 5: Any or more consumption of select carbonated soft drinks compared to a year ago, for Millennials, by Hispanic origin, December 2016
            • Consumer interest in category innovation is high
              • Figure 6: Carbonated soft drink innovation, for iGeneration, Millennials, parents, and Hispanics, December 2016
            • Beverage blurring creates opportunity, potential competition, and confusion
              • What it means
              • The Market – What You Need to Know

                • Consumer preference for BFY drinks dampens CSD market growth
                  • Regular carbonated soft drinks are the largest, most stable segment
                    • Obesity rates, sugar taxes and BFY drinks compound challenges
                      • Positive market factors include high penetration and demographic trends
                      • Market Size and Forecast

                        • Growth dips in 2016 and forecast shows flat sales through 2021
                          • Figure 7: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2011-21
                          • Figure 8: Total US retail sales and forecast of carbonated soft drinks, at current prices, 2011-21
                      • Market Breakdown

                        • Regular soft drinks are the largest, fastest-growing segment
                          • Figure 9: Market share of carbonated soft drinks, 2016
                          • Figure 10: Total US retail sales of carbonated soft drinks, by segment, at current prices, 2014 and 2016
                        • Modest growth projected for regular CSD segment through 2021
                          • Figure 11: Total US retail sales and forecast of carbonated soft drinks by segment, at current prices, 2016
                        • Drug stores and “other” retail channels grow share from 2014-16
                          • Figure 12: Total US retail sales of carbonated soft drinks, by channel, at current prices, 2014 and 2016
                      • Market Perspective

                        • Bottled water market soars, reflecting consumer quest for BFY drinks
                          • Figure 13: Total US retail sales and forecast of bottled water, at current prices, 2011-16
                        • Sparkling water and CSDs – Not necessarily an either/or proposition
                          • Figure 14: Consumption of CSDs and sparkling water, compared to a year ago, December 2016
                        • Juices, coffee, and tea compete with CSDs
                          • Hybrid drinks offer opportunity, plus competition and potential confusion
                          • Market Factors

                            • Obesity epidemic creates challenging landscape for CSDs
                              • Macroeconomic factors shape household budgets and CSD choices
                                • Figure 15: Consumption of CSDs compared to a year ago, by household income, December 2016
                                • Figure 16: Consumer confidence and unemployment, 2000-September 2016
                              • Engagement among iGeneration and Millennials is key to growth
                                • Figure 17: Any or more consumption of select CSDs compared to a year ago, by generation, December 2016
                                • Figure 18: US population aged 18+, by generation, 2012-22
                              • Diverse young consumers and parents key to market
                                • Figure 19: Population by race and Hispanic origin, 2012-22
                                • Figure 20: Hispanic share of population, by generation, 2017
                                • Figure 21: Any, more, or less consumption of CSDs compared to a year ago, for Hispanics and Hispanic Millennials, December 2016
                            • Key Players – What You Need to Know

                              • Only one of the three largest suppliers grew MULO sales in 2016
                                • Category leaders pull out stops, still struggle
                                  • Diet struggles as consumers turn to BFY alternatives
                                    • Private label sales fall, while niche suppliers grow via innovations
                                    • Manufacturer Sales of Carbonated Soft Drinks

                                      • The three largest players command over 90% of MULO sales
                                        • Private label sales fall, as small suppliers build share from modest base
                                          • Figure 22: Manufacturer sales of carbonated soft drinks, by leading companies, 2015 and 2016
                                      • What’s Working?

                                          • On-point, diverse marketing strategies support lead position
                                            • Aspirational qualities: themes of play, connection, and romance
                                              • Figure 23: Coke subway TV ad, March 2017
                                              • Figure 24: Coke elevator TV ad, March 2017
                                            • Sponsorship of sports events and celebration of community
                                              • Figure 25: Coke March Madness and work ad, March 2017
                                            • Pairing food and soda
                                              • Figure 26: Coke “Love Story” ad, September 2016
                                              • Figure 27: Coke “Moments Made Yummier” video, September 2016
                                            • Seasonal promotions: tradition, nostalgia, and family
                                              • Figure 28: Coke 2016 Christmas ad, December 2016
                                            • Sprite and Fanta, with fruit-flavored CSDs and playful, hip campaigns
                                              • Sprite rolls out special editions, benefits from LeBron James endorsements
                                                • Figure 29: Sprite’s LeBron James and Lil Yachty ad, February 2017
                                              • Fanta ads showcase fruit-flavored CSDs spurring social, fun, playful dance numbers
                                                • Figure 30: Fanta Bring the Bold to the movie theater, July 2016
                                              • Dr Pepper Company, with growth in Dr Pepper and Canada Dry
                                                • Quirky ads for unique cravings for Dr Pepper
                                                  • Figure 31: Crave Rider ad for Dr Pepper, March 2017
                                                • An emphasis on relaxation and natural ingredients from Canada Dry
                                                  • Figure 32: Canada Dry, The Root of Relaxation, May 2016
                                                  • Figure 33: Canada Dry, Relax Harder, January 2016
                                                • Brands known in Latin America, craftier, retro feel grow base
                                                • What’s Struggling?

                                                  • Diet sodas continue to struggle, with few bright spots
                                                    • PepsiCo – while still a leading supplier – sees continued loss of share
                                                      • Figure 34: Pepsi Max, We Know How Much It Means, March 2017
                                                      • Figure 35: Pepsi Uncle Drew clip, March 2017
                                                  • What’s Next?

                                                    • Natural ingredients, “free from” drinks and more varied, original flavors
                                                      • More sophisticated sodas, including those designed for food pairing
                                                        • Sodas with natural caffeine, health benefits, and a hybrid nature
                                                        • The Consumer – What You Need to Know

                                                          • CSD usage is high, though many also enjoy other carbonated drinks
                                                            • iGeneration and Millennials among strongly engaged CSD users
                                                              • Increasing BFY drinks and cutting back sugar propel CSD cutbacks
                                                                • Younger users cut CSD usage to try new flavors, formulations
                                                                  • CSDs are especially popular with meals, in restaurant deals
                                                                    • “Healthy” and “all natural” innovation most widely sought
                                                                    • Consumption of Carbonated Soft Drinks

                                                                      • Vast majority of those surveyed enjoy a range of CSDs
                                                                        • Figure 36: Consumption of carbonated drinks, compared to a year ago, December 2016
                                                                      • While penetration is high, more are cutting back than increasing usage
                                                                        • Figure 37: Consumption of CSDs compared to a year ago, by type of CSD, December 2016
                                                                      • iGeneration and Millennials stand out as key CSD consumers
                                                                        • Figure 38: Consumption of carbonated drinks compared to a year ago, by generation, December 2016
                                                                      • Many younger consumers drinking more CSDs, as older users cut back
                                                                        • Figure 39: Consumption of carbonated drinks compared to a year ago, by generation, December 2016
                                                                        • Figure 40: Consumption of CSDs compared to a year ago, by generation and type of CSD, December 2016
                                                                      • More-affluent HHs show preference for low-calorie, natural CSDs
                                                                        • Figure 41: Consumption of CSDs compared to a year ago, for household income, December 2016
                                                                      • Parents consume a wider range of CSDs
                                                                        • Figure 42: Consumption of carbonated drinks compared to a year ago, by parental status, December 2016
                                                                        • Figure 43: Consumption of CSDs compared to a year ago, by parental status and type of CSD, calorie content, December 2016
                                                                        • Figure 44: Consumption of CSDs compared to a year ago, by parental status and type of CSD, December 2016
                                                                      • Hispanics – and especially Hispanic Millennials – key to future growth
                                                                        • Figure 45: Consumption of carbonated drinks compared to a year ago, by Hispanic origin and Millennial generation, December 2016
                                                                        • Figure 46: Consumption of CSDs compared to a year ago, for Hispanic Millennials, Part I, December 2016
                                                                        • Figure 47: Consumption of CSDs compared to a year ago, for Hispanic Millennials, Part II, December 2016
                                                                    • Reasons for Attrition

                                                                      • Healthful alternatives and sugar concerns are core reasons for attrition
                                                                        • Figure 48: Reasons for attrition, December 2016
                                                                      • A quest for new drinks, flavors propels iGeneration users to cut back
                                                                        • Figure 49: Reasons for attrition, by generation, December 2016
                                                                      • Healthful, low-sugar options luring upper-income CSD users
                                                                        • Figure 50: Reasons for attrition, by household income, December 2016
                                                                      • Hispanics, while concerned with CSD sugar, also want variety and flavor
                                                                        • Figure 51: Reasons for attrition, by Hispanic origin, December 2016
                                                                    • Replacement Beverages

                                                                      • Water is top replacement beverage, followed by tea, juice, and coffee
                                                                        • Figure 52: Replacement beverages, December 2016
                                                                      • Millennials replace CSDs with wide range of alternatives
                                                                        • Figure 53: Replacement beverages, by generation, December 2016
                                                                      • When seeking CSD alternatives, Parents embrace a wide variety
                                                                        • Figure 54: Replacement beverages, by parental status, December 2016
                                                                      • Hispanics often drink more water to cut back on sugar and caffeine
                                                                        • Figure 55: Replacement beverages, by Hispanic origin and Millennials, December 2016
                                                                    • Consumption Occasion

                                                                      • CSDs are popular meals, but also associated with snacks and gatherings
                                                                        • Figure 56: Occasion for carbonated soft drink consumption, December 2016
                                                                      • Younger users enjoy CSDs at meals, Millennials exhibit broader usage
                                                                        • Figure 57: Occasion for carbonated soft drink consumption, by generation, December 2016
                                                                      • Parents often enjoy CSDs at meals – and throughout the day
                                                                        • Figure 58: Occasion for carbonated soft drink consumption, by parental status, December 2016
                                                                      • Hispanics – especially Millennials – consume CSDs on many occasions
                                                                        • Figure 59: Occasion for carbonated soft drink consumption, by Hispanic origin and for Millennials, December 2016
                                                                    • Attitudes toward Carbonated Soft Drinks

                                                                      • Opportunities lie in capitalizing on regular meals, growing daily usage
                                                                        • Figure 60: Attitudes toward carbonated soft drinks, December 2016
                                                                      • Foodservice deals may be key to rolling out CSDs to iGeneration
                                                                        • Figure 61: Attitudes toward carbonated soft drinks, by generation, December 2016
                                                                      • Parents keep on hand for guests and special occasions
                                                                        • Figure 62: Attitudes toward carbonated soft drinks, by parental status, December 2016
                                                                      • Hispanics likely to enjoy CSDs at many occasions, as well as beyond home
                                                                        • Figure 63: Attitudes toward carbonated soft drinks, by Hispanic origin, December 2016
                                                                    • Carbonated Soft Drink Innovation

                                                                      • “Healthy options” are a priority, but consumers eager for other benefits
                                                                        • Figure 64: Carbonated soft drink innovation, December 2016
                                                                      • Younger consumers show the high interest in innovations
                                                                        • Figure 65: Carbonated soft drink innovation, by generation, December 2016
                                                                      • Parents also very open to added benefits and supplements
                                                                        • Figure 66: Carbonated soft drink innovation, by parental status, December 2016
                                                                      • Hispanics seek CSDs with greater range of benefits
                                                                        • Figure 67: Carbonated soft drink innovation, by Hispanic origin and for Millennials, December 2016
                                                                    • Appendix – Data Sources and Abbreviations

                                                                      • Data sources
                                                                        • Sales data
                                                                          • Fan chart forecast
                                                                            • Consumer survey data
                                                                              • Direct marketing creative
                                                                                • Abbreviations
                                                                                • Appendix – Market

                                                                                    • Figure 68: Total US sales and forecast of carbonated soft drinks, at inflation-adjusted prices, 2011-21
                                                                                    • Figure 69: Total US sales and forecast of regular soft drinks, at inflation-adjusted prices, 2011-21
                                                                                    • Figure 70: Total US sales and forecast of diet soft drinks, at inflation-adjusted prices, 2011-21
                                                                                    • Figure 71: Total US retail sales of carbonated soft drinks, by retail channel, at current prices, 2010-20
                                                                                    • Figure 72: Average household size, by race and Hispanic origin, 2016
                                                                                    • Figure 73: Distribution of generations, by race and Hispanic origin, 2017
                                                                                    • Figure 74: Median household income, by race and Hispanic origin of householder, 2015
                                                                                • Appendix – Key Players

                                                                                    • Figure 75: MULO sales of regular soft drinks by leading companies and brands, rolling 52 weeks 2015 and 2016
                                                                                    • Figure 76: MULO sales of diet soft drinks by leading companies and brands, rolling 52 weeks 2015 and 2016

                                                                                Companies Covered

                                                                                • Walmart Stores (USA)

                                                                                Carbonated Soft Drinks - US - April 2017

                                                                                US $3,995.00 (Excl.Tax)