THIRSTY ASIA A MARKET ANALYSIS Presentation by Richard Hall Chairman, Zenith International Ltd AUSDRINKS 21 March 2016, Sydney
Contents Global drinks consumption 1-2 Global drinks markets 3-4 Global drinks regions 5-7 Global soft drinks markets 8-11 Global soft drinks regions 12-14 Asia drinks consumption 15-18 Asia key countries 19-23 Global soft drinks challenges, opportunities 24-29 Global drinks outlook 30-32
1 GLOBAL DRINKS CONSUMPTION 2005-15 72 countries, index 2005=100 140 Volume 130 120 110 Population 100 2005 2007 2009 2011 2013 2015
2 GLOBAL DRINKS SECTORS 2005-15 72 countries, 000 million litres 800 Soft 600 Hot 400 200 Alcohol Milk 0 2005 2007 2009 2011 2013 2015
3 GLOBAL DRINKS GROWTH MARKETS 2010-15 72 countries, extra 000 million litres over 5 years Bottled water +97 Tea +55 Milk Coffee Still drinks Beer Carbonates Iced tea Fruit drinks Spirits +19 +18 +15 +12 +11 +10 +10 +5 0 20 40 60 80 100
4 GLOBAL DRINKS MARKETS 2010-15 72 countries 2010 2015 Others 18% Tea 22% Others 19% Tea 22% Coffee 10% Beer 10% Bottled water 14% Beer 9% Coffee 10% Bottled water 17% Carbonates 13% Milk 13% Carbonates 11% Milk 12% 1,664 billion litres 1,942 billion litres
5 GLOBAL DRINKS GROWTH REGIONS 2010-15 72 countries, extra 000 million litres over 5 years Asia Pacific +205 L America Africa M East W Europe N America E Europe +34 +20 +13 +4 +2 0 0 50 100 150 200 250
6 GLOBAL DRINKS REGIONS 2010-15 72 countries Others 15% 2010 2015 Others Asia Pacific 15% 42% Asia Pacific 46% L America 13% L America 13% W Europe 15% N America 15% W Europe 13% N America 13% 1,664 billion litres 1,942 billion litres
7 GLOBAL DRINKS COUNTRIES 2010-15 72 countries 2010 2015 Others 36% China 18% Others 36% China 22% Germany 4% Japan 4% Pakistan 4% Mexico 4% 1,664 billion litres Brazil 6% India 10% USA 14% Germany 3% Japan 3% Pakistan 3% Mexico 4% Brazil 6% 1,942 billion litres India 11% USA 12%
8 GLOBAL SOFT DRINKS MAIN MARKETS 2005-15 72 countries, 000 million litres 250 Carbonates 200 Water retail 150 Water bulk 100 50 0 2005 2007 2009 2011 2013 2015 Fruit drinks Dilutables Still drinks Iced tea
9 GLOBAL SOFT DRINKS OTHER MARKETS 2005-15 72 countries, 000 million litres 25 Juice 20 15 Nectars Flav milk Sports 10 5 Flav water Energy Iced coffee 0 2005 2007 2009 2011 2013 2015
10 GLOBAL SOFT DRINKS GROWTH MARKETS 2010-15 72 countries, extra 000 million litres over 5 years Water - bulk Water - retail Still drinks Carbonates Iced tea Fruit drinks Dilutables Flav milk Nectars Energy Sports +5 +4 +3 +3 +2 +15 +11 +10 +10 +49 +48 0 10 20 30 40 50
11 GLOBAL SOFT DRINKS MARKETS 2010-15 72 countries 2010 2015 Others 10% Still drinks 4% Iced tea 4% Fruit drinks 5% Dilutables 5% Water 38% Others Iced tea 10% 5% Still drinks 5% Dilutables 5% Fruit drinks 5% Water 42% Carbonates 34% 635 billion litres 795 billion litres Carbonates 28%
12 GLOBAL SOFT DRINKS GROWTH REGIONS 2010-15 72 countries, extra 000 million litres over 5 years Asia Pacific +116 L America +21 M East Africa +11 +9 E Europe W Europe N America +1 0 +2 0 20 40 60 80 100 120
13 GLOBAL SOFT DRINKS REGIONS 2010-15 72 countries 2010 2015 Others 16% Asia Pacific 29% Others 15% Asia Pacific 38% W Europe 16% W Europe 13% L America 17% N America 22% L America 16% N America 18% 635 billion litres 795 billion litres
14 GLOBAL SOFT DRINKS COUNTRIES 2010-15 72 countries 2010 2015 Others 45% USA 21% Others 40% China 23% China 16% USA 17% Germany 4% Brazil 6% Mexico 8% Germany 4% Indonesia 4% Brazil 5% Mexico 7% 635 billion litres 795 billion litres
15 ASIA DRINKS PER PERSON 2005-15 13 countries, litres per year 400 300 World - all Asia - all 200 100 World - soft Asia - soft 0 2005 2007 2009 2011 2013 2015
16 ASIA SOFT DRINKS PER PERSON 2005-15 Litres Australia 15 05 211 221 Japan 15 165 05 China 15 134 133 05 41 Indonesia 15 124 05 49 India 15 18 05 7 0 50 100 150 200 250
17 ASIA SOFT DRINKS MARKET 2005-15 000 million litres China 15 183 05 54 Indonesai 15 32 05 11 India 15 24 05 8 Japan 15 05 Philippines 15 05 21 17 10 6 0 50 100 150 200
18 ASIA SOFT DRINKS COUNTRIES 2005-15 13 countries Others 17% Australia 4% 2005 2015 China 47% Japan 7% Others 11% Australia 2% China 61% India 7% India 8% Indonesia 10% Indonesia 11% Japan 15% N America 18% 113 billion litres 302 billion litres
19 THIRSTY CHINA 2005-15 000 million litres 150 Tea 100 50 Beer Water - bulk Still drinks Water - retail 0 2005 2007 2009 2011 2013 2015
20 THIRSTY INDIA 2005-15 000 million litres 150 Tea 100 50 Milk 0 2005 2007 2009 2011 2013 2015 Water - bulk Water retail Carbonates
21 THIRSTY INDONESIA 2005-15 000 million litres 20 Water bulk 15 10 5 Water retail Tea Coffee Iced tea 0 2005 2007 2009 2011 2013 2015
22 THIRSTY JAPAN 2005-15 000 million litres 20 15 Tea 10 Coffee 5 Iced tea Water - retail Carbonates 0 2005 2007 2009 2011 2013 2015
23 THIRSTY AUSTRALIA 2005-15 000 million litres 3 Milk 2 Carbonates Coffee Beer Tea 1 0 2005 2007 2009 2011 2013 2015
24 GLOBAL SOFT DRINKS CHALLENGES - CONSUMERS Question of consumer balance Individual Society Choice Natural Affordable Convenient Calories in Healthy Functional Sustainable Cost Activity out
25 GLOBAL SOFT DRINKS CHALLENGES - INDUSTRY Question of consumer freedom Permission Regulation Advertising Promotion Claims Choice Convenience Recycling Pricing Restriction Tax Evidence Traffic lights Size control Levies Caps
26 KEY CHALLENGE 1 OBESITY How to avoid soft drinks being demonised Reduce excess serving sizes Clear front of pack labelling for all products Improve mid, low and no calorie taste Ensure low sugar outpaces regular Self-regulation on promotion to young Lead balanced public debate Healthier innovation
27 KEY CHALLENGE 2 ENVIRONMENT How to neutralise public concern Local where possible Lightweight/rightweight Improve recycling and re use Press governments to act on best practice Develop new materials Promote initiatives Consider environment impact labelling Declare recycled content
28 KEY CHALLENGE 3 TRUST How to safeguard popular respect Accept measure of responsibility Lead before being pushed Engage in public debate Only scientific evidence based claims Embrace self-regulation on advertising Set sound targets and beat them
29 GLOBAL SOFT DRINKS OPPORTUNITIES Natural low calorie sweetening Water based products Tea based products Functional products Craft, local, personalised, premium Technology eg self manufacture, home dispense, online
30 GLOBAL DRINKS CONSUMPTION 2005-20 72 countries, index 2005=100 170 Volume 160 150 140 130 120 Population 110 100 2005 2010 2015 2020
31 GLOBAL DRINKS GROWTH MARKETS 2015-20 72 countries, extra 000 million litres over 5 years Water - bulk Water - retail Tea Milk Still drinks Coffee Carbonates Iced tea Fruit drinks Beer +24 +24 +21 +19 +17 +17 +16 +64 +75 +90 0 20 40 60 80 100
32 GLOBAL SOFT DRINKS GROWTH COUNTRIES 2015-20 72 countries, extra 000 million litres over 5 years China Indonesia India Brazil Mexico Vietnam Saudi Arabia Turkey Russia Japan +25 +19 +11 +10 +6 +5 +4 +4 +4 +151 0 50 100 150
UK SOFT DRINKS TAX ANNOUNCEMENT Effective April 2018 to encourage reformulation. Based on total sugar content at 2 levels. 5g/100ml, expected 0.18 per litre. 8g/100ml, expected 0.24 per litre. Excludes dairy, juice, small producers. Anticipated first year revenue of 520 million. Tax will fund school sports.
UK SOFT DRINKS TAX COMMENT Obesity today, yet tax delay of 2 years. Not part of obesity strategy, recently postponed. Declared direct link between sugary drinks and disease. Rates and revenue not substantiated. Tax could double some prices. Yet so many other sugary products excluded. Reformulation will rise up industry agenda. Obesity still needs broader action. Soft drinks tax could prove illusory diversion. More on bevblog.net
zenithinternational specialist consultants to the food and drink industries worldwide For more information on this presentation or on any of Zenith s services, please contact: Richard Hall rhall@zenithinternational.com www.bevblog.net Or telephone Zenith s head office on +44 (0)1225 327900 www.zenithinternational.com