PepsiCo’s Q2 2021 success highlights potential growth for the overall non-alcoholic beverage category in the long-term

After what has been a dismal year for sales of some non-alcoholic beverage categories across the globe due to COVID-19 restrictions to on-premise trade and social gatherings, PepsiCo’s announcement that its beverage division grew by double-digits in volume highlights the start of recovery for the non-alcoholic drinks segment, says GlobalData, a leading data and analytics company.

Holly Inglis, Beverages Analyst at GlobalData, comments: “Identifying the slump in carbonated soft drinks, which as a category saw volumes fall by 4.2%* globally in 2020, PepsiCo has taken pains to diversify its portfolio, as seen with its acquisition of Rockstar Energy in North America and Pioneer Food Group Ltd in South Africa. The company also strengthened its core brands in 2021, with new innovative launches – Mtn Dew melon flavor in the US, salted caramel flavored Pepsi Baishi Kele in China and Tropicana Essentials Energise in the UK – that emphasize unique flavor profiles that will attract a wide variety of consumer groups.”

In GlobalData’s Q2 2021 consumer survey, consumers highlighted that the top motivators to try new flavors in non-alcoholic drinks most predominantly comes from curiosity (29%)** and recommended by friends and family (27%). Brand trust and familiarity and a positive sampling experience were also rated highly, emphasising that producers should engage in promotional sampling and brand development to engage the consumer base, which positions as potential room for growth for the remainder of 2021.

Inglis continues: “PepsiCo is highlighting to other beverage producers that even in challenging market conditions, volume growth is still accessible, provided that continued development and innovation to production processes and methods is prioritised. Consumers across the globe are seeking both unique flavored products, that also tag health/wellness claims.”

It should be noted that on-going COVID-19 restrictions across parts of the globe have potential to weigh heavily on the performance of the overall beverage sector for the remainder of 2021. In the same GlobalData consumer survey, 20%*** of global consumers are still extremely concerned eating out at a restaurant because of COVID-19 risk with another 19%** highlighting the same for visiting shops/stores. If this sentiment continues, it will be unlikely that volumes for the overall sector will be able to return to pre-COVID-19 performance.

Inglis concludes: “Although PepsiCo have established that growth is possible even in an unfavorable climate, there is potential that on-premise restrictions, driven by COVID-19, will continue to impact the soft drinks market negatively, so it is up to producers to engage the consumer base in driving traffic towards these consumption locations.”

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