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Consumer Trends, Diversification, and Strategies in the Global Beverage Industry

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  • 213 Pages
  • September 2021
  • Region: Global
  • Policy2050
  • ID: 5514959

Beverage Consumption Has a Very Close Relationship With Time, and Consumers’ Boundaries Continue to Blur.

This report explores the perceptions and behaviors of beverage consumers in the newly disrupted, increasingly health-oriented world, as well as the various responses from multinational beverage companies and disruptive brands.

The market landscape for beverages is being reshaped by a myriad of factors, including extreme swings from portfolio diversification to prioritization, shifts in global operational strategies, and technological advancements.

This report identifies trends, analyzes specific functional beverage products, highlights what top beverage industry executives are saying about these trends and their internal approaches, and outlines best practices for the global beverage industry. It is intended to serve as a powerful strategic document for an industry during a time of extreme change.

Product diversification sometimes serves as a risk-reduction strategy, enabling a level of success in emerging, high growth areas that reduces the impact of all the inevitable disappointments and failures. As the proverb goes, don’t put all your eggs in one basket. Some multinationals in the consumer packaged goods industry have even resolved to churn a specific percentage of their portfolio annually, as a matter of principle.

This report provides an opportunity for beverage companies to benchmark their strategies against the rest of the industry.

It is over 60,000 words, structured into 4 sections:

  • Executive Summary: A standard executive summary is insufficient for a report of this scope. This executive summary aims to provide a high-level view for the multiple areas covered. Consumer Trends bullet points are arranged into “meeting interests with strategies,” “pandemic-related,” “understanding time and timing,” “exercising flexibility and foresight.” The market landscape is addressed under “the big picture,” “strategic considerations,” “lifestyle drivers,” “policy drivers,” “M&A,” “the strategic framework,” “global scale + localization,” “from volume to value.” Strategic insights are arranged into “executive considerations,” “marketing considerations,” and “technical considerations.”
  • Consumer Trends: This section outlines 9 consumer trends that are relevant to the mid-pandemic and post-COVID world. The Consumer Trends section helps multinational corporations to gain a better understanding of their global consumers and helps smaller beverage companies to identify which strategies are worthy of their limited capital in uncertain times. This section aims to understand the modern consumer with nuance, exploring the connections between beverage consumption, time, individual preferences, and local cultures.
  • A Diversified Beverage Industry: This section analyzes the diversification strategies of multinational beverage and consumer goods companies. The analysis accounts for lifestyle drivers, policy drivers (COVID-19 responses, sugar taxes, European energy drink regulations, educational programs, and product certifications), as well as the M&A activities that can produce far-reaching effects. This section also provides a strategic framework for diversification strategies that could help your company to identify its unique strategic assets and diversification best practices.
  • Beverage Industry Strategies: This section outlines 12 strategies that are being used by the largest beverage companies and by the small and medium-sized enterprises with the ability to disrupt them in certain categories. Many of the ideas contained within this section and the overall report are easily extractable for the purposes of presentations and competitive analysis.

This report lays down all of these cornerstones carefully so that your beverage company can build emerging functional categories, and its own future, from a strong foundation.

Within this actionable, strategic framework, the report addresses specific, competitive, operational questions such as:

  • How are multinational beverage companies “curating” or “churning” their product portfolios to account for changing tastes, health interests, on-premise and digital habits, and COVID-19 infection rates with corresponding public restrictions or reactions?
  • How does their massive global scale positively and negatively affect business resilience, compared with emerging brands?
  • How does global success inform regional or “lift-and-shift” strategies? How might established global bottling partnerships distract from a more focused, sustainable pursuit of consumer segments who are transacting within dynamic environments and developing channel-specific preferences?
  • How might a preoccupation with channels, trends, and internally competitive products ultimately distract from more fundamental, generational changes?
  • In spite of all the disruption, how might retail distribution still act as a discovery tool or legitimizer for a new brand or category? How have emerging brands managed to disprove widely-held investor and industry beliefs by experiencing significant D2C sales?
  • Why are clean and minimalist brand designs especially popular with digitally native vertical brands and their corporate imitators?
  • How can beverage companies improve the quality of their decision-making through an acknowledgement of uncertainties, corresponding methodologies, deliberate fostering of creativity, effective coordination/reorganization, and diversity/inclusion? How can they arm their workforce with tools and resources such as data analytics, market research, a decision matrix, and even historical context?
  • How are multinational beverage companies managing investor perceptions and capturing their share of high growth in fad-like health categories through a pattern of acquisitions, rapid scaling, divestitures, and restructurings? How have expedited timelines, less definitive forecasts, and logistical adaptations become more prominent aspects of that pattern?
  • What internal corporate culture shifts, and external societal effects, might result from the beverage industry’s tendency toward mergers and acquisitions? How might cultural shifts impact the key assets, such as differentiated qualities/brands or innovative talent? Why are financial optics sometimes prioritized over brand growth?
  • How can iconic beverage brands still be effectively leveraged in slightly evolved or entirely different beverage categories?
  • How did pandemic lockdowns cause dramatic and distinct changes in food and beverage consumption? Why should companies evaluate these shifts with increased granularity and try to identify the probable durations of new trends?
  • Why are consumers’ perceptions of time increasingly relevant to the beverage industry, and how is this already being accounted for in product development and marketing?
  • How are beverage consumers and beverage companies reacting to one another and majorly or incrementally redefining categories in the process?
  • Which objectives, best practices, and global considerations should be top-of-mind during attempts at diversification? What planning exercises, from brand mapping to SWOT analysis, might help multinational consumer goods companies to avoid missteps?
  • How is the overhaul of beverage portfolios also sometimes associated with an overhaul of pricing and packaging strategies?
  • How can an understanding of target markets improve R&D and reduce false interpretations of data?
  • How can digital environments be used to guide ideation and product/market fit?
  • How has the pandemic increased the need for a level of operational agility more commonly associated with the tech sector, and which aspects of the technological adoption life cycle might be relevant to beverages?
  • As consumers become more interested in the processes behind beverages with functional claims, what are the opportunities to connect with those interests through digital content, and what are the risks?
  • How are beverage companies seeking a more optimal balance of flavor and function across categories, and attempting to convey these new or reformulated products during a time when sampling events are mostly suspended?
  • What is the spectrum of possibilities for public health improvements through beverage innovations?
  • How are lifestyle choices and changes driven by urbanization, public policies, and the health/wellness media industry? How do those lifestyle adjustments, in turn, act as drivers of the beverage industry evolution?
  • Why are Pigouvian taxes, European Union regulations, community-specific nutrition education programs, critical media reports, and the uptick in health consciousness during the pandemic all likely to force additional changes in the beverage industry, possibly in market-specific ways?
  • How have product labels and certifications become popular, albeit somewhat ambiguous or ineffective, tools in this industry-wide change?What are the costs and risks of label-based/marketing claims?
  • How are The Coca-Cola Company and PepsiCo leveraging the sales benefits of nostalgia and product placement simultaneously?
  • How are energy drinks being reformulated and repositioned?
  • How has the attempted CBD beverage category creation been delayed or deterred by production, distribution, and regulatory challenges?
  • How should beverage companies prepare to resume post-COVID, on-premise, high ROI opportunities?

Table of Contents

1. Introduction
1.1 Key Benefits of this Report
1.2 Target Audience
1.3 Companies Mentioned in this Report
1.4 Methodology

2. Executive Summary
2.1 Consumer Trends, meeting interests with strategies
2.2 Consumer Trends, pandemic-related
2.3 Consumer Trends, understanding time and timing
2.4 Consumer Trends, exercising flexibility and foresight
2.5 A Diversified Beverage Industry, the big picture
2.6 A Diversified Beverage Industry, strategic considerations
2.7 A Diversified Beverage Industry, lifestyle drivers
2.8 A Diversified Beverage Industry, policy drivers
2.9 A Diversified Beverage Industry, M&A
2.10 A Diversified Beverage Industry, the strategic framework
2.11 A Diversified Beverage Industry, global scale + localization
2.12 A Diversified Beverage Industry, from volume to value
2.13 Beverage Industry Strategies, executive considerations
2.14 Beverage Industry Strategies, marketing considerations
2.15 Beverage Industry Strategies, technical considerations

3. Consumer Trends
3.1 Categories are being redefined (by consumers, not companies)
3.1.1 Industry perspectives
3.2 Consumers care about the processes involved in a beverage
3.3 Local policies made alcoholic and non-alcoholic beverages more interchangeable
3.4 Some consumers are ready for energy drinks that fully deliver on flavor
3.5 Functional beverages are becoming lifestyle brands
3.6 Consumers are responding to colorful, lighthearted packaging and nostalgia
3.7 Cannabis-infused drinks aren’t taking off as some expected
3.8 Category change isn’t just about different products; it’s about different times
3.8.1 Many consumers’ days look very different now
3.8.2 Consumers are interested in functional beverage processes (depending on the time)
3.9 Adapting to consumer behaviors with both flexibility and foresight
3.9.1 The pandemic sharpened focus on individual health
3.9.2 Who exactly are you diversifying for?

4. A Diversified Beverage Industry
4.1 Why diversify?
4.2 Lifestyle drivers
4.3 Policy drivers
4.3.1 COVID-19
4.3.2 Sugar taxes
4.3.3 Energy drink regulations in Europe
4.3.4 Targeted educational programs based on social determinants
4.3.5 Healthful product certifications
4.4 M&A Activities
4.4.1 Coca-Cola
4.4.2 PepsiCo
4.4.3 Unilever
4.4.4 Nestlé
4.4.5 Managing the money & setting expectations
4.4.6 A macroeconomic possibility
4.5 A strategic framework for diversification
4.5.1 Issues/challenges
4.5.2 Unique strategic assets
4.5.3 Diversifying to gain knowledge
4.5.4 Diversifying to monetize knowledge
4.5.5 “Total Beverages”
4.6 Diversification varies from region to region.
4.6.1 Coca-Cola Coffee Plus
4.6.2 Coca-Cola with Dietary Fiber
4.6.3 Leveraging established regional brands
4.6.4 Org chart changes to enable local execution
4.6.5 Industry perspectives
4.7 Diversifying into Premium Beverages
4.7.1 The design of a premium beverage product
4.8 Diversification meets prioritization
4.8.1 A timeline of The Coca-Cola Company’s strategic statements on diversification
4.8.2 Tomorrow’s brands portfolio
4.8.3 The pandemic drives prioritization

5. Beverage Industry Strategies
5.1 COVID-19 disrupted planning and context, forcing adaptation
5.1.1 D2C145
5.1.2 Shifting to the suburbs
5.1.3 Remembering the big picture
5.1.4 Industry perspectives
5.2 Energy drinks must sometimes establish separate brand identities
5.3 Companies must assess market share channel by channel
5.3.1 Promotional offerings in the grocery industry’s “new normal”
5.3.2 Working with local bloggers
5.3.3 Industry perspectives
5.4 Coke’s “+1 Strategy”: Gaining Market Share in Daily Beverage Consumption
5.4.1 What do the consumption trends indicate?
5.4.2 Coke’s “plus one” strategy
5.5 Carefully manage bottling partner relationships and jointly plan growth
5.6 Invest in the decision-making process
5.6.1 Reorganizing and streamlining the decision-making process
5.6.2 Humility is an asset in decision-making
5.7 Stay loyal to core brand attributes
5.7.1 Industry perspectives
5.8 Be iterative
5.8.1 Experimental product launches
5.8.2 Learning from failure
5.8.3 Crisis management model
5.8.4 Inculcating the startup mindset
5.8.5 Key takeaways
5.9 Strategically consider product packaging
5.9.1 Industry perspectives
5.10 Improve diversity and inclusion for higher quality decision-making
5.10.1 Functional beverages and the female consumer
5.10.2 Fixing the problem
5.10.3 Industry perspectives
5.11 Find the right mixture of flavor and function
5.11.1 Texture and viscosity
5.11.2 Industry perspectives
5.12 Prepare to resume post-COVID, on-premise, high ROI opportunities
5.12.1 Why it matters
5.12.2 Dealmaking
5.12.3 Airports and Activation
5.12.4 Key takeaways

Companies Mentioned (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

  • The Coca-Cola Company
  • PepsiCo
  • Nestlé
  • Danone
  • Unilever
  • Glanbia
  • Karma Water/Karma Culture
  • Jolt Cola/Jolt Energy
  • GURU Organic Energy
  • ZOA Energy
  • Red Bull
  • Bang Energy
  • Monster Beverage Corporation
  • ZICO Rising, Inc. (PowerPlant Ventures)
  • KIND (Mars Inc.)
  • SPI West Port
  • Olipop
  • Drink Recess
  • DrinkMaple/DrinkSimple
  • Keurig Dr Pepper
  • Imbibe
  • Kerry Group
  • Enliven
  • Tetra Pak
  • Starbucks
  • Beam Suntory
  • Anheuser-Busch InBev
  • Molson Coors
  • Canopy Growth Corp. (Constellation Brands)