Report Summary

Introduction
Consumer's consumption of hot and soft drinks is increasing year-on-year, mainly to fulfil hydration and health demands, and partly to satisfy indulgence needs.  This report identifies what is driving consumers soft and hot drink occasions and assesses which drinks categories are winning share of throat.  Marketers must understand key consumer drivers to grow occasions and maintain market share.

Scope of this Report
-  Detailed occasion and consumption data covering bottled water, carbonated beverages, juices, functional drinks, coffee, tea and other hot drinks
-  Insight in to consumers changing share of throat preferences and the trends driving beverage choice through 2011
-  Showcases the latest best-practice product and marketing innovation highlighting how to capitalize on consumer's unmet needs
-  Strategic conclusions and actions highlighting how manufacturers and retailers should direct resources towards evolving drink trends

Research & Analysis Highlights
Consumers are creating new drink occasions in an effort to satisfy conflicting need states, with health a key driver of future soft and hot drink occasions.  European and US consumers had on average 1,186 soft drink occasions in 2006 and this is forecast to rise to 1,331 by 2011, a growth of 2.3%

Drinks categories are becoming increasingly blurred as consumers' share of throat evolves, and drinks manufacturers are facing increasing competition both from rival brands and more importantly from different drinks categories.

Hot drink preferences are changing with tea becoming increasingly popular in coffee dominated markets such as the US, France and the Netherlands, due to its perception amongst consumers of being healthy.  In contrast, coffee occasions are becoming increasingly indulgent with strong growth in specialty coffee through foodservice channels.

Key Reasons to Read this Report
-  Gain a detailed understanding of the drivers and inhibitors associated with consumers soft and hot drink choices
-  Update your strategic marketing by determining how and why to target consumers better by focusing on key occasions and locations
-  Drive insight generation by using a compelling mix of quantitative and qualitative data illustrating consumer preferences and market developments

Table of Contents

Overview
    Catalyst
    Summary
Table of Contents
Table of Figures
Table of Fables

THE FUTURE DECODED
    INTRODUCTION
        This report covers bottled water, carbonates, functional drinks, juices, tea, coffee and other hot drinks
    TREND: New beverage occasions are emerging as consumers look to satisfy conflicting need states
        Per capita frequency of soft drink occasions is higher in the US than Europe
                German consumers' drinks choices are driven by the health trend
        Increasing temperatures are set to drive soft drink occasion frequencies, especially in the summer months
        The growing number of non-alcoholic drinkers in some countries is driving growth in soft drink alternatives
                Moderated consumption of alcohol is even being seen among students
        Aging populations are shaping the soft drinks industry
        Carbonated drink occasions are evolving to different day parts
                Children are drinking less carbonated drinks
        Hot drink consumption in Western markets is heavily dependent on culture and climate
                Coffee is becoming an indulgent drink
                Hot drink consumption increases in colder climates
        Key take-outs and implications: consumers are choosing beverages that best fit their needs and are willing to forego previous beverage format preferences
    TREND: Healthier drinks are gaining "share of consumer's throat"
        Consumers are increasingly opting for "better-for-you" and "good-for-you" beverages
        There are marked differences between European and US soft drink share of throat
        Consumers' propensity to drink tea is growing in the US, while European consumers are drinking more coffee
                Consumers' growing propensity to drink tea in the US is being driven by its positive health associations
        Key take-outs and implications: health is heavily influencing consumers' hot and soft drink preferences, something which must be recognized in future NPD activity
    TREND: The importance of instantaneous and constant hydration to consumers is growing
        Consumers are increasingly appreciating the importance of staying hydrated
        Women consider hydration to be more important than men
                Older consumers find drinking water more important than younger consumers
                Children are increasingly appreciating the importance of drinking enough water
        Key take-outs and implications: in addition to health, indulgence and convenience needs, physical hydration needs have intensified in recent years
    INSIGHT: Bottled water occasions are increasing, taking an increasing "share of throat"
        Bottled water now accounts for half of all soft drink consumption in Europe
        There is a correlation between the type of ice or water that consumers prefer to consume at home, and the size of the bottled water market in those countries
        There is concern over the nutritional content of flavored water, which may inhibit future growth
        Concerns over the environment may encourage greater tap water consumption in the future
        Key take-outs and implications: bottled water growth has been extremely strong, although there are barriers facing the category in the future
    INSIGHT: The carbonates market is showing little growth as consumers switch to healthier beverages
        Consumers in Europe have under half the number of carbonated drink occasions as the US
        Growth in the carbonates market is being driven by diet variants
        Key take-outs and implications: consumers are switching from carbonated beverages, as it is a category that is generally "off-trend"
    INSIGHT: Juices growth is being driven by the health and indulgence trends
        The number of juice occasions is increasing as consumers look to increase their consumption of fresh items and "good-for-you" nutrients
        Consumers believe that juices are a convenient way of providing part of their five-a-day requirement
        Consumers feel confused by juice labeling
        Key take-outs and implications: as health becomes more important to consumers, the juices market is well placed to benefit
    INSIGHT: Functional drink occasions are growing as consumers take a preventative and convenience driven approach to consumption
        Europeans account for just a third of the total functional drink occasions accounted for by US consumers
        Men are core functional drink consumers but female consumption is increasing
        Aging populations are also changing the profile of the functional beverage consumer
        Key take-outs and implications: consumers are slowly embracing the healthy science behind functional beverages
    INSIGHT: Coffee is overwhelmingly the hot drink preference among Europeans and Americans
        The number of coffee occasions is increasing
        Tea is gaining share of throat at the expense of coffee in the US
        Tea is capitalizing on the health trend
        Other hot drinks represent a small but growing part of overall hot drink occasions
        Key take-outs and implications: coffee continues to attract consumers requiring a pick-me-up and indulgence

ACTION POINTS
    INTRODUCTION
    ACTION: Recognize and react to consumers shifting "share of throat" dynamics
        Target alternative beverage occasions by making beverages more versatile
        Target the student demographic with greater intensity to capitalize on their desire for sophisticated alternatives to alcoholic beverages
        Develop multiple packaging sizes to capture new occasions
    ACTION: Inflate the premium credentials of beverage products and services
        Promote freshness as a core product attribute
        Develop natural or organic products that facilitate premium pricing
        Consider glass packaged beverages to capitalize on the demand for superior sensory satisfaction
    ACTION: Develop and promote healthier coffee at specific occasions
        Challenge the perception that coffee is unhealthy
        Explore the possibilities of promoting coffee's antioxidant benefits to help fight back against teas
        Consider developing milder strength coffee to target health conscious consumers
        Appeal to consumers seeking functional drinks by developing energized coffee, especially by infusing existing variants with natural ingredients
    ACTION: Emphasize the benefits that bottled water offers over tap water
        Emphasize the origin of bottled waters to differentiate from tap water
        Offer a value proposition to attract lower income consumers
        Add additional nutrients to bottled water to compete with functional beverages
        Lower sugar levels in flavored waters to combat cynicism
        Develop recyclable packaging to counter wastage concerns
    ACTION: Focus juice marketing efforts on both healthy and indulgent occasions
        Promote five a day in promotional literature
        Target parents and children with good-for-you juice brands
        Consider altering juice formulations
        Target different day-parts
        Juice marketers should ensure that the origin of their products is clearly marketed
    ACTION: Encourage everyday tea consumption
        Promote tea as a self indulgent treat
    ACTION: Challenge perceptions that carbonated drinks are unhealthy
        Consider added functionality in carbonated drinks to counter the functional drink threat
        Replace artificial flavors and additives with natural ingredients
        Target different day-parts
                Carbonated drinks are increasingly being consumed at breakfast time in the US
                Consider positioning carbonated drinks as an "indulgent treat"
    ACTION: Target specific consumer groups with functional beverage occasions
        Target specific health concerns with functional beverages
        Communicate the ease that your products offer in maintaining a healthy diet
        Ensure that attempts at gender specific functional drink positioning are targeted appropriately

Appendix
    Definitions
    Methodology
    Further reading and references
    Ask the analyst
    Consulting
    Disclaimer

List of Tables

Table 1: Overall and per capita consumption of soft drinks (liters, million), Europe & US, by country, 2001-2011
Table 2: Overall and per capita soft drink occasions, Europe & US, by country, 2001-2011 (millions)
Table 3: European and US consumers abstaining from alcohol by country (percentage and overall, millions), by country, 2006
Table 4: Overall expenditure on soft drinks split by age group, Europe & US (% expenditure) 2003-2005
Table 5: US away from home vs at home sales of coffee products (US$m) 2001-2011
Table 6: Overall and per capita consumption of hot drinks (liters, millions), Europe & US, by country, 2001-2011
Table 7: Overall and per capita hot drink occasions, Europe & US, by country, 2001-2011 (millions)
Table 8: Extent to which consumers consider soft drinks healthy, (% respondents), US & Europe, 2007
Table 9: Hot drinks share of throat(%), by beverage format, Europe & US, 2001-2011
Table 10: Proportion of European consumers who drank more water over the past year, (ranking and % of respondents), 2006
Table 11: Proportion of European consumers who drank more water over the past year, (ranking and % of respondents split by gender), 2006
Table 12: Overall and per capita bottled water occasions (millions), Europe & US, by country, 2001-2011
Table 13: Consumer preferences for water type, Europe & US, 2006 (%)
Table 14: Overall and per capita carbonate occasions (millions), Europe & US, by country, 2001-2011
Table 15: Overall and per capita juices occasions (millions), Europe & US, by country, 2001-2011
Table 16: Expenditure on functional drinks, by age group, Europe & US (% overall expenditure) 2003-2005
Table 17: Overall and per capita coffee occasions (millions), Europe & US, by country, 2001-2011
Table 18: Overall and per capita tea occasions (millions), Europe & US, by country, 2001-2011
Table 19: Overall and per capita other hot drink occasions, Europe & US, 2001-2011 (liters, million)
Table 20: Definition of terms

List of Figures

Figure 1: Packaged coffee sales in the US increase as temperatures decline
Figure 2: Soft drinks share of throat (%), by beverage format, Europe & US, 2001-2011
Figure 3: Consumers across Europe and the US increasingly consider drinking water an important factor in maintaining a healthy diet
Figure 4: Diet Cola will account for over 45% of total cola sales in the US by 2011
Figure 5: Coca Cola Zero has achieved global success by tapping into the values and beliefs of global males and giving them their own Coke
Figure 6: Consumers in the US are forecast to have 114 functional drinks per person per year by 2011
Figure 7: Soft and hot drinks share of throat by age, Europe & US, 2005 (% expenditure) - this shows how functional drink expenditure is dominated by younger consumers
Figure 8: The on-trade offers beverage marketers opportunity to target new soft drink occasions
Figure 9: Consider setting up juice bars to capture soft drink occasions away from alcohol
Figure 10: Ensure that you have packaging sizes to cater for different types of occasion needs
Figure 11: Innocent Drinks has achieved considerable success by marketing healthy products in an engaging and fun manner
Figure 12: Develop natural or organic products to generate premium pricing
Figure 13: Focus marketing on antioxidant levels in your coffee to gain consumer share of throat
Figure 14: Tea manufacturers have long emphasized the healthy properties of their products
Figure 15: Folgers Simply Smooth Coffee provides consumers with a milder strength coffee to cater for those consumers who find coffee too acidy
Figure 16: Appeal to consumers seeking functional drinks by developing energy coffee
Figure 17: Emphasize the origin of bottled waters to differentiate from tap
Figure 18: Develop enhanced waters to capture share of throat from functional drinks
Figure 19: Lower sugar levels in flavored waters to combat cynicism
Figure 20: Target fruit and vegetable juices to parents and children
Figure 21: Industry players need to alter juice formulations with "good-for-you" and "better-for-you" content
Figure 22: Encouraging "everyday consumption" in a broad range of occasion scenarios is an effective way of boosting the versatility of beverage formats and maximizing market potential
Figure 23: Manufacturers must avoid category myopia and recognize that a broader range of product formats are now offering similar benefits
Figure 24: Consider added functionality in carbonated drinks to counter the functional drink threat
Figure 25: Targeting the breakfast occasion could provide a welcome boost to carbonate consumption
Figure 26: Consider positioning carbonates as an indulgent treat to capitalize on the desire for "me-time"
Figure 27: Target specific consumer groups with functional beverage occasions
Figure 28: Embracing functional beverages allows industry players to target specific health concerns