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Non-alcoholic Beverages: The Market - US - April 2011

This report explores the non-alcoholic beverage market. Although the market exhibited signs of coming out the recession; sales in 2010 largely remained depressed—growing only 0.8% to $50.5 billion during 2009-10 in FDMx. The top three segments in the market show signs of maturity and have been partially responsible for the lackluster growth. As the market displays some signs of stimulation as the economy recovers from the recession, a new threat to growth—inflation, lurks around the corner. In this two-part report on non-alcoholic beverages, Mintel takes an in-depth market-centric view of the market. The consumer-centric view is covered in Mintel’s Non-alcoholic Beverages: The Shopper—U.S., May 2011. This report explores the following aspects of the market as well as others:

  • What factors have inhibited growth; how to overcome growth-inhibiting obstacles?
  • Which segments have managed to beat the recessionary trend, how they have done so?
  • Which of the new products have the potential to bring growth to the market?
  • How has a brisk pace of acquisitions and alliances reshaped the market growth?
  • What major marketing themes have beverage makers employed and how have those themes impacted their brands?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Advertising creative
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Market shows signs of coming out the recession
                      • Carbonated drinks, dairy/dairy-alternative drinks, and juice/juice drinks sales stagnate
                        • Bottled water makes anemic recovery, sports drinks thrive, energy drinks buck the recession
                          • Coffee faces inflation due to supply issues; RTD tea contributes to tea growth
                            • Beverage manufacturers employ multipronged marketing platform
                            • Insights and Opportunities

                              • Functional claims become hard to include; market potentially faces sales decline
                                • Plant-based bottles a competitive advantage
                                  • Stevia: mixed success, offers growth potential
                                    • Figure 1: U.S. population aged 18+, 2006-16
                                • Inspire Insights

                                    • Inspire Trend: “Supernanny State”
                                    • Market Size and Forecast

                                      • Key points
                                        • Market shows signs of coming out of recession; inflation poses next challenge
                                          • Top three segments show signs of maturity: tea, sports, and energy drinks bring growth
                                            • Private labels continue to wield influence
                                              • Sales and forecast of non-alcoholic beverages
                                                • Figure 2: FDMx sales and forecast of non-alcoholic beverages, at current prices, 2005-15
                                                • Figure 3: FDMx sales and forecast of non-alcoholic beverages, at inflation-adjusted prices, 2005-15
                                              • Fan chart forecast
                                                  • Figure 4: Fan chart forecast of FDMx sales of non-alcoholic beverages, at current prices, 2005-15
                                                • Walmart sales
                                                • Market Drivers—Health and Wellness Trends

                                                  • Obesity rates steady, but still a cause for concern
                                                    • Figure 5: Percentage of population aged 20+ who are overweight, obese, or extremely obese, 1988-2008
                                                  • Obesity affects over a third of all children and teens aged 6-19
                                                    • Figure 6: Prevalence of obesity among children and adolescents aged 2-19, 1976-2008
                                                  • Diabetes—the ugly expression of obesity; threatens beverage growth
                                                    • Figure 7: prevalence of diagnosed and undiagnosed diabetes among adults aged 20+, 2005-08
                                                  • Over half of all adults watch their diets; A majority of those seek low-fat/low- sugar food
                                                    • Figure 8: Trends in watching diet among adults aged 18+, 2005-10
                                                    • Figure 9: Trends in watching diet among adults aged 18+, 2005-10
                                                  • Let’s Move program likely to influence choices within non-alcoholic beverages
                                                    • High-fructose corn syrup continues to bother consumers
                                                    • Market Drivers—Demographic and Economic Factors

                                                      • Households with children are key driver in the market
                                                        • Figure 10: Households by presence of children, 2000-10
                                                      • Kids’ population growth lower during 2011-16 compared to 2006-11
                                                        • Figure 11: Personal consumption of different types of beverages among kids, April 2009-June 2010
                                                        • Figure 12: Population of kids aged 6-11, 2006-16
                                                      • Teen population offers little growth for 2006-11, better outlook during 2011-16
                                                        • Figure 13: Personal consumption of different types of beverages among teens, April 2009-June 2010
                                                        • Figure 14: Teen population by age, 2006-16
                                                      • Black and Hispanics are growth-driving population groups
                                                        • Figure 15: Population, by race and Hispanic origin, 2006-16
                                                        • Figure 16: U.S. population buying power, by race and Hispanic origin, 1990-2014
                                                      • High unemployment rate keeps consumer spending conservative
                                                        • Figure 17: Employment status of the civilian non-institutional population aged 16+, 2000-11 (month to date)
                                                      • Key non-alcoholic beverage consumers continue to struggle with unemployment woes
                                                        • Figure 18: Unemployment status (seasonally adjusted) among civilian non-institutional population, by age, gender and race/Hispanic origin, March 2010-March 2011
                                                        • Figure 19: Consumer Price Index,* all items, January 2008-February 2011
                                                        • Figure 20: Percent change in CPI* in food and energy sectors, August 2010-February 2011
                                                    • Competitive Context

                                                      • Increasing trend toward hybrid beverages poses confusion, increases competition
                                                        • Juice + tea concept debuts
                                                          • Figure 21: V8 V-Fusion, tea leaf lands on bottle, TV ad, 2011
                                                        • Flavored water includes fruit and tea flavors
                                                          • Figure 22: U.S. New product launches in flavored bottled water, by flavor, 2010
                                                        • Energy drinks continue to include fruit juice and coffee products
                                                        • Segment Performance

                                                          • Key points
                                                              • Figure 23: FDMx sales and forecast of non-alcoholic beverages, at current prices, by segment, part 1, 2005-15
                                                              • Figure 24: FDMx sales and forecast of non-alcoholic beverages, at current prices, by segment, part 2, 2005-15
                                                              • Figure 25: FDMx sales of non-alcoholic beverages, by segment, 2008 and 2010
                                                          • Segment Performance—Carbonated Drinks

                                                            • Key points
                                                              • Regular soda exhibits bigger decline than diet soda in 2010
                                                                • Figure 26: FDMx volume sales for regular soda, low-calorie soda, and seltzer/tonic water/club soda, 2005-10
                                                              • Key consumers continue to move away; need to rekindle links with teens, young adults
                                                                • Natural and sugar-sweetened soda gains, but still remains small
                                                                  • Diet soda offers growth opportunity only if the taste is right
                                                                    • FDMx sales and forecast of carbonated drinks
                                                                      • Figure 27: FDMx sales and forecast of carbonated drinks, 2005-15
                                                                  • Segment Performance—Dairy and Dairy-alternative Beverages

                                                                    • Key points
                                                                      • Price and supply volatility affect milk sales, may continue in 2011
                                                                        • Figure 28: Trends in dollar and volume sales and price of milk* in FDMx, 2005-10
                                                                      • Soy, kefir, and nut milk show impressive gains
                                                                        • Yogurt drinks turn in dismal performance, need innovation
                                                                          • FDMx sales and forecast of dairy and dairy-alternative beverages
                                                                            • Figure 29: FDMx sales and forecast of dairy and dairy-alternative beverages, 2005-15
                                                                        • Segment Performance—Juice and Juice Drinks

                                                                          • Key points
                                                                            • A mature segment turns in lackluster performance
                                                                              • Price increases and consumer aversion for orange flavor impacts 100% juice
                                                                                • Juice drinks do not resonate with pro-health trend
                                                                                  • Coconut water shows sign of becoming mainstream
                                                                                    • FDMx sales and forecast of juice and juice drinks`
                                                                                      • Figure 30: FDMx sales and forecast of juice and juice drinks, 2005-15
                                                                                  • Segment Performance—Bottled Water

                                                                                    • Key points
                                                                                      • Bottled water makes anemic recovery, bedeviled by price promotions
                                                                                        • Figure 31: Volume sales and price of PET bottled water in FDMx, 2005-10
                                                                                      • Enhanced water sales strong in 2010, low-calorie products will find favor
                                                                                        • Premium brands rebound, albeit slowly
                                                                                          • Major players make efforts to deal with the environmental issue
                                                                                            • FDMx sales and forecast of bottled water
                                                                                              • Figure 32: FDMx sales and forecast of bottled water, 2005-15
                                                                                          • Segment Performance—Coffee and RTD Coffee

                                                                                            • Key points
                                                                                              • Coffee growth remains stable in 2010, but mostly due to inflation
                                                                                                • Figure 33: FDMx volume sales and price trends for coffee* (excluding RTD coffee), 2005-10
                                                                                              • Coffee commodity prices likely to follow the upward trend
                                                                                                • Growth from premium coffee may get derailed due to price hikes
                                                                                                  • Single-cup coffee infuses growth
                                                                                                    • RTD coffee recovers in 2010, needs to grow consumer base
                                                                                                      • FDMx sales and forecast of coffee and RTD coffee
                                                                                                        • Figure 34: FDMx sales and forecast of coffee and RTD coffee, 2005-15
                                                                                                    • Segment Performance—Tea and RTD Tea

                                                                                                      • Key points
                                                                                                        • Tea rebounds after the recession, future outlook positive
                                                                                                          • Canned and bottled tea aids growth, premium and value-priced brands proliferate
                                                                                                              • Figure 35: FDMx sales and forecast of tea and RTD tea, 2005-10
                                                                                                            • Tea prices likely to fluctuate as major growing regions report mixed expectations
                                                                                                              • Dairy producers increase foothold in tea through refrigerated tea
                                                                                                                • FDMx sales and forecast of tea and RTD tea
                                                                                                                  • Figure 36: FDMx sales and forecast of tea and RTD tea, 2005-15
                                                                                                              • Segment Performance—Sports Drinks

                                                                                                                • Key points
                                                                                                                  • Sports drinks make impressive comeback on the strength of innovation
                                                                                                                    • Coconut water: competition or growth driver?
                                                                                                                      • Children and teens show declining interest; teens important for growth
                                                                                                                        • FDMx sales and forecast of sports drinks
                                                                                                                          • Figure 37: FDMx sales and forecast of sports drinks, 2005-15
                                                                                                                      • Segment Performance—Energy Drinks and Shots

                                                                                                                        • Key points
                                                                                                                          • Segment bucks recession but continues to face criticism
                                                                                                                            • Energy shots bring in key growth but remain small part of the overall segment
                                                                                                                              • Figure 38: FDMx sales of energy drinks and shots, 2005-10
                                                                                                                            • FDMx sales and forecast of energy drinks
                                                                                                                              • Figure 39: FDMx sales and forecast of energy drinks*, 2005-15
                                                                                                                          • Segment Performance—Drink Mixes (Other)

                                                                                                                            • Key points
                                                                                                                              • Drink mixes largely remain flat; innovation needed from brands with high awareness
                                                                                                                                • Figure 40: FDMx* sales of drinks mixes, by segment, 2005-10
                                                                                                                              • Other drink mixes turn in lackluster performance
                                                                                                                                • FDMx sales and forecast of drinks mixes (other)
                                                                                                                                  • Figure 41: FDMx sales and forecast of other drinks mixes,* 2005-15
                                                                                                                              • Retail Channels

                                                                                                                                • Overview
                                                                                                                                  • Supermarkets continue to rule as a beverage purchase destination
                                                                                                                                    • Figure 42: FDMx sales of non-alcoholic beverages, by channel, 2008 and 2010
                                                                                                                                • Companies and Brands

                                                                                                                                  • Key points
                                                                                                                                    • Acquisition and alliance activity heats up
                                                                                                                                      • Coca-Cola and PepsiCo continue to lead, both lose market share during 2009-10
                                                                                                                                        • Dr Pepper Snapple Group maintains market share
                                                                                                                                          • Nestlé disappoints due to softness in juice sales, Kraft remains stable
                                                                                                                                            • Dean Foods gains on the strength of price increases in milk segment
                                                                                                                                              • Figure 43: FDMx sales of leading non-alcoholic beverage companies, 2009 and 2010
                                                                                                                                          • Brand Share—Carbonated Drinks

                                                                                                                                            • Key points
                                                                                                                                              • Most regular soda brands decline, natural brands show small growth
                                                                                                                                                • Figure 44: FDMx brand sales of regular soda and seltzer/tonic water/club soda, part 1, 2009 and 2010
                                                                                                                                                • Figure 45: FDMx brand sales of regular soda and seltzer/tonic water/club soda, part 1, 2009 and 2010
                                                                                                                                              • Coke Zero and Pepsi Max exhibit growth, compete on product attributes and marketing push
                                                                                                                                                • Diet Pepsi shows bigger loss than Diet Coke
                                                                                                                                                  • Figure 46: FDMx brand sales of diet soda, 2009 and 2010
                                                                                                                                              • Brand Share—Dairy and Dairy-alternative Drinks

                                                                                                                                                • Key points
                                                                                                                                                  • Private labels share remains stable, branded milk loses market share
                                                                                                                                                    • Lactaid declines as consumers adopt other dairy-free alternatives
                                                                                                                                                      • Figure 47: FDMx brand sales of dairy and dairy-alternative drinks, part 1, 2009 and 2010
                                                                                                                                                      • Figure 48: FDMx brand sales of dairy and dairy-alternative drinks, part 2, 2009 and 2010
                                                                                                                                                  • Brand Share—Juice and Juice Drinks

                                                                                                                                                    • Key points
                                                                                                                                                      • Coca-Cola outpaces PepsiCo on the strength of its Simply brand
                                                                                                                                                        • Kraft’s kids-targeted brands bring in growth
                                                                                                                                                          • Figure 49: FDMx brand sales of juice and juice drinks, part 1, 2009 and 2010
                                                                                                                                                          • Figure 50: FDMx brand sales of juice and juice drinks, part 2, 2009 and 2010
                                                                                                                                                      • Brand Share—Bottled Water

                                                                                                                                                        • Key points
                                                                                                                                                          • Nestlé’s bottled water portfolio outperforms rivals
                                                                                                                                                            • Coca-Cola’s Dasani and Glacéau Vitaminwater turn in weak performances
                                                                                                                                                              • Figure 51: FDMx brand sales of bottled water, part 1, 2009 and 2010
                                                                                                                                                            • PepsiCo’s SoBe Lifewater turns in stellar performance
                                                                                                                                                              • Figure 52: FDMx brand sales of bottled water, part 2, 2009 and 2010
                                                                                                                                                          • Brand Share—Coffee and RTD Coffee

                                                                                                                                                            • Key points
                                                                                                                                                              • Folgers declines and Maxwell House flat; both face competition from gourmet brands
                                                                                                                                                                • Coffeehouse brands perform well, price hike may dampen future growth
                                                                                                                                                                    • Figure 53: FDMx brand sales of coffee and RTD coffee, part 1, 2009 and 2010
                                                                                                                                                                  • Frappuccino finds growth, DoubleShot flat
                                                                                                                                                                    • Green Mountain Coffee Roasters charges ahead by building a single-cup coffee empire
                                                                                                                                                                      • Figure 54: FDMx brand sales of coffee and RTD coffee, part 2, 2009 and 2010
                                                                                                                                                                  • Brand Share—Tea and RTD Tea

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Lipton/PepsiCo partnership maintains leadership but loses market share
                                                                                                                                                                        • AriZona continues to chart its growth path
                                                                                                                                                                          • Figure 55: FDMx brand sales of tea and RTD tea, part 1, 2009 and 2010
                                                                                                                                                                        • Coca-Cola’s premium brands, Gold Peak and Honest Tea, thrive
                                                                                                                                                                          • Figure 56: FDMx brand sales of tea and RTD tea, part 2, 2009 and 2010
                                                                                                                                                                      • Brand Share—Sports Drinks

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Gatorade finds its footing, brand’s repositioning brings growth
                                                                                                                                                                            • Coca-Cola’s Powerade makes a push with Zero and Ion4 extensions
                                                                                                                                                                              • Figure 57: FDMx brand sales of sports drinks, 2009 and 2010
                                                                                                                                                                          • Brand Share—Energy Drinks

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Red Bull increases market share, Monster and Rockstar cede
                                                                                                                                                                                • Living Essential’s 5-Hour Energy continues its growth onslaught
                                                                                                                                                                                  • Figure 58: 5-Hour Energy , TV ad, 2010
                                                                                                                                                                                  • Figure 59: FDMx brand sales of energy drinks, part 1, 2009 and 2010
                                                                                                                                                                                • Coca-Cola and PepsiCo continue the downward slide
                                                                                                                                                                                  • Figure 60: FDMx brand sales of energy drinks, part 2, 2009 and 2010
                                                                                                                                                                              • Brand Qualities

                                                                                                                                                                                • Gatorade goes through a makeover, reconnects with target consumer
                                                                                                                                                                                  • Nestlé Pure Life finds success by marketing wellness at a value price to families and Hispanics
                                                                                                                                                                                    • GMCR accumulates single-cup coffee brands through acquisition and allinaces
                                                                                                                                                                                    • Innovations and Innovators

                                                                                                                                                                                      • Pace of innovation improves in most segments in 2010
                                                                                                                                                                                        • Figure 61: Number of new product launches, by non-alcoholic beverage segment, 2005-10
                                                                                                                                                                                      • Carbonated soft drinks
                                                                                                                                                                                        • Figure 62: Top claims in new carbonated drinks products, 2006-10
                                                                                                                                                                                      • All-natural claims and the use of real sugar continue to grow in new products
                                                                                                                                                                                        • Fruit-flavored Italian soda gains traction; exotic flavors appear in lesser-known brands
                                                                                                                                                                                          • Dairy and dairy-alternative beverages
                                                                                                                                                                                            • Figure 63: Top claims in new dairy and dairy-alternative beverages, 2006-10
                                                                                                                                                                                          • Functional claims make dairy and dairy-alternatives more competitive to other segments
                                                                                                                                                                                            • Nut, seed, soy, and grain milk target vegans; Silk debuts coconut milk
                                                                                                                                                                                              • Juice and juice drinks
                                                                                                                                                                                                • Figure 64: Top claims in new juice and juice drink products, 2006-10
                                                                                                                                                                                              • Superfruits still popular, but move away from pomegranate to fancier Amazon berries
                                                                                                                                                                                                • Coffee and RTD coffee
                                                                                                                                                                                                  • Figure 65: Top claims in new coffee and RTD coffee products, 2006-10
                                                                                                                                                                                                • Coffee makers underscore convenient packaging
                                                                                                                                                                                                  • Fair-trade certified coffee continues to grow
                                                                                                                                                                                                    • Functional and healthy coffee products promise a boost in metabolic rate, and more
                                                                                                                                                                                                      • Bottled water
                                                                                                                                                                                                        • Figure 66: Top claims in plain and flavored bottled water products, 2006-10
                                                                                                                                                                                                      • Enhanced water incorporates exotic flavors, makes flamboyant functional claims
                                                                                                                                                                                                        • Tea and RTD tea
                                                                                                                                                                                                          • Figure 67: Top ten claims in new packaged and RTD tea products, 2006-10
                                                                                                                                                                                                        • Chocolate flavor becomes popular in new tea products
                                                                                                                                                                                                          • Sports drinks
                                                                                                                                                                                                            • Figure 68: Top claims in sports drink products, 2006-10
                                                                                                                                                                                                          • Coconut water–based sports drinks make appearance
                                                                                                                                                                                                            • Gatorade and Powerade innovations focus on sports performance
                                                                                                                                                                                                              • Energy drinks
                                                                                                                                                                                                                • Figure 69: Top claims in energy drinks products, 2006-10
                                                                                                                                                                                                              • New products tout healthy and natural energy boosts
                                                                                                                                                                                                                • Drink mixes
                                                                                                                                                                                                                  • Figure 70: Top claims in new beverage mix products, 2006-10
                                                                                                                                                                                                                • Innovation ranges from protein water mixes to pure fitness to soda tablets
                                                                                                                                                                                                                • Marketing Strategies

                                                                                                                                                                                                                  • Overview
                                                                                                                                                                                                                    • Competitive advertising
                                                                                                                                                                                                                      • PepsiCo’s competitive edge: Pepsi Max and Sierra Mist Natural ads take a dig at Coca-Cola
                                                                                                                                                                                                                        • Figure 71: Pepsi Max—competition with Coke Zero, TV ad, 2010
                                                                                                                                                                                                                        • Figure 72: Sierra Mist Natural—trees plan to trip hiker , TV ad, 2010
                                                                                                                                                                                                                      • Social media use proliferates beyond having a dialogue with consumers
                                                                                                                                                                                                                        • Kraft distributes free MiO samples on Facebook prior to store launch
                                                                                                                                                                                                                          • Gatorade’s new twist on social media: Mission Control
                                                                                                                                                                                                                            • Engage in community improvement
                                                                                                                                                                                                                              • Coca-Cola funds community parks to make people more active
                                                                                                                                                                                                                                • PepsiCo continues with its Pepsi Refresh project
                                                                                                                                                                                                                                  • Diet soda brands heavily target men
                                                                                                                                                                                                                                    • Coke Zero continues with its masculine-tone advertising
                                                                                                                                                                                                                                      • Figure 73: Coke Zero—man enters a time machine , TV ad, 2010
                                                                                                                                                                                                                                    • Dr Pepper 10 targets only men, excludes women from product advertising
                                                                                                                                                                                                                                      • Selling health
                                                                                                                                                                                                                                        • Welch’s picks health platform as the launch pad for its Healthy Start extension
                                                                                                                                                                                                                                          • Figure 74: Welch’s Healthy Start , TV ad, 2010
                                                                                                                                                                                                                                      • Appendix—Trade Associations

                                                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                                                        • American Beverage Association, The
                                                                                                                                                                                                                                        • Caribou Coffee Company Inc.
                                                                                                                                                                                                                                        • Coca-Cola Company (The) (USA)
                                                                                                                                                                                                                                        • Dannon Co
                                                                                                                                                                                                                                        • Dean Foods Company
                                                                                                                                                                                                                                        • Dr Pepper Snapple Group, Inc.
                                                                                                                                                                                                                                        • Dunkin' Brands
                                                                                                                                                                                                                                        • Food and Drug Administration
                                                                                                                                                                                                                                        • General Mills Inc
                                                                                                                                                                                                                                        • Green Mountain Coffee Roasters, Inc.
                                                                                                                                                                                                                                        • Horizon Organic
                                                                                                                                                                                                                                        • International Bottled Water Association
                                                                                                                                                                                                                                        • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                                        • National Cancer Institute (NCI)
                                                                                                                                                                                                                                        • National Coffee Association
                                                                                                                                                                                                                                        • National Soft Drink Association
                                                                                                                                                                                                                                        • Nestlé USA
                                                                                                                                                                                                                                        • Ocean Spray Cranberries, Inc
                                                                                                                                                                                                                                        • Organic Valley Family of Farms
                                                                                                                                                                                                                                        • PepsiCo Inc
                                                                                                                                                                                                                                        • Rainforest Alliance
                                                                                                                                                                                                                                        • Red Bull North America, Inc.
                                                                                                                                                                                                                                        • Starbucks Corporation
                                                                                                                                                                                                                                        • Stonyfield Farm
                                                                                                                                                                                                                                        • The Wendy's Company
                                                                                                                                                                                                                                        • Trader Joe's Company Inc
                                                                                                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                                        • U.S. Department of Agriculture
                                                                                                                                                                                                                                        • Unilever USA
                                                                                                                                                                                                                                        • Walmart Stores (USA)
                                                                                                                                                                                                                                        • Whole Foods Market Inc
                                                                                                                                                                                                                                        • Wm. Bolthouse Farms Inc.

                                                                                                                                                                                                                                        Non-alcoholic Beverages: The Market - US - April 2011

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