Market saturation in soft drink land
Operators in the soft drink manufacturing industry have struggled with rising health consciousness as most soft drink products are perceived as unhealthy. IBISWorld expects industry revenue to grow by a subdued annualised 0.2% over the five years through 2017–18 to reach $4.2 billion.
One player not reaching this growth rate is Coca-Cola Amatil (CCA) as the company’s soft drink-related revenue has declined over the past five years.
Adding to CCA’s woes, Woolworths has announced that it will not stock the recently launched Coca-Cola No Sugar product. Reflecting market saturation, Woolworths cited already ample low- and no-sugar cola options, including Coke Zero, as its primary reason for not stocking the new product.
Coca-Cola No Sugar was launched in early June 2017, with CCA giving away two million cans of the new beverage and running an extensive free-to-air advertising campaign.
The new No Sugar product is intended to be positioned as a healthier alternative to Coca-Cola Classic, with a flavour that CCA states is closer to its classic cola than Coke Zero. Coca-Cola No Sugar will gradually replace Coke Zero on Australian shelves by the end of 2018.
CCA has contended with a traditionally unhealthy image as consumers have progressively moved towards healthier diets. Its products are often associated with high sugar content, which has prompted the company to introduce new zero- and low-sugar lines. The company launched Coca-Cola Life in April 2015, which had 30% less sugar than traditional Coca-Cola. However, low sales resulted in this product being discontinued in early 2017. CCA subsequently released Coca-Cola with Stevia to draw greater attention to its low sugar content, which is 50% lower than its standard Coca-Cola Classic.
Find out more about the soft drink market in Australia in IBISWorld’s recently released report: Soft Drink Manufacturing in Australia.
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