SMALLER CATEGORIES STILL SAW GROWTH
AS THE U.S. LIQUID REFRESHMENT BEVERAGE MARKET SHRANK BY 2.0% IN 2008 BEVERAGE MARKETING CORPORATION REPORTS

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Energy drinks and enhanced waters advanced; carbonated soft drinks again declined

NEW YORK, NY, 30 March 2009: In challenging times, the U.S. refreshment beverage market contracted by 2.0% in 2008, according to Beverage Marketing Corporation. This represented the first volume downturn on record. The weakened economy affected the market during the year. However, beverages still performed better than many other industries, such as automobiles and the financial sector. Indeed, several beverage types continued to shine.

During the first several years of the 21st century, newer beverage categories have been principally responsible for what growth has occurred in the non–alcoholic marketplace. Carbonated soft drinks accounted for close to half of total liquid refreshment beverage volume. However, their market share eroded slightly, as it has for several years. Although the marketplace as a whole lost volume in 2008, energy drinks, enhanced bottled waters and ready to drink coffee grew. While conventional carbonated soft drinks remain the most popular category on a volume basis, innovative and functional beverages altered the industry landscape in recent years.

Carbonated soft drinks held five of the top ten positions in the rankings of trademarks by volume. Those were joined by three bottled water trademarks, including Nestlé Pure Life in the Nestlé Waters North America (NWNA) brand's debut on the list of leading brands. The biggest sports beverage in the United States ranks as the fifth biggest liquid refreshment beverage trademark. The sole fruit beverage trademark in the group stood in seventh place in terms of volume.

Although bottled water had three trademarks among the top ten in 2008, up from two the previous year, the category also registered an unprecedented decline in volume. Looking for ways to reduce spending, some consumers may have refilled water bottles with tap water instead of buying new ones.

The performances of the leading companies' liquid refreshment beverage portfolios reflected the downward tendency characterizing the marketplace as a whole. Coca-Cola's total volume dipped by 2% in 2008, while Pepsi's was off by 5% compared to the previous year. However, even in the hard hit carbonated soft drink category, some brands had strong showings. The Coke Zero trademark grew by 25%, for instance, and Pepsi Max enlarged by 45% in 2008.

The big companies have the leading refreshment beverage trademarks; Pepsi–Cola (with five brands), Coca–Cola (with three), the Dr Pepper Snapple Group (with one) and NWNA (with one) account for all of the top-ten trademarks. Nestlé Pure Life achieved by far the fastest growth among leading trademarks in 2008. Indeed, Pepsi's Mountain Dew was the only other trademark to realize enlargement during the year. Aquafina and Gatorade (from Pepsi) and Dasani (from Coke) were the fastest growing leading trademarks in 2007, but each declined in 2008. The Coca–Cola trademark (including all brand variations) held the top spot among liquid refreshment beverages. However, its volume, like the standard carbonated soft drink market as a whole, declined.

"In today's uncertain climate, consumers seek value," said Michael C. Bellas, chairman and CEO, Beverage Marketing Corporation. "Responsive beverage companies are looking for ways to give it to them."

Some smaller categories, especially those emphasizing functional benefits, saw solid growth in 2008. Energy drinks volume increased by 9.0%. Flavored and enhanced water grew by 8.3%. The ready–to–drink coffee segment also advanced. However, none of these categories has a brand big enough to stand among the top ten.

New York City-based Beverage Marketing Corporation is the leading research, consulting and financial services firm dedicated to the global beverage industry.

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