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Confidence is Rising in Europe’s Commercial Beverage Market

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Confidence is Rising in Europe’s Commercial Beverage Market

Confidence is Rising in Europe’s Commercial Beverage Market
June 30
11:43 2016

Although an early Easter was anticipated to boost European beverage sales in the first quarter of 2016, the general downward trend currently being observed in commercial beverage consumption was actually curtailed by the warmer-than-average weather which swept across the region over the period, according to leading market research firm Canadean.

According to the company’s latest Quarterly Beverage Tracker, both West and East Europe recorded flat performances versus the corresponding quarter of 2015.

Whilst not all of the economic news is positive, there are signs that some of the major European beverage markets are in more reassuring territory, with improving GDP growth projections, falling unemployment levels, and low interest rates raising consumer confidence and making for a more favorable spending environment. In East Europe, however, the ongoing economic and political upheaval in Russia and Ukraine has served to depress the regional average growth in beverage consumption, with Turkey’s muted performance also contributing as its economy and important tourism sector suffer from the latest violence.

Against this backdrop, the quarter saw increasingly aggressive pricing and promotional tactics, including sustained special offers and multi-pack promotions by the branded players in many markets. Antonella Reda, Product Development Manager at Canadean says: “This dampened opportunities for private label, but it was noticeable that brand loyalty was weakest in categories with a more commodity image such as packaged water and juice, or where the presence of discounters such as Lidl and Aldi is strong and they are offering branded products.”

Packaged water was the key driver of European soft drinks in quarter one, supported by the favorable weather and growing propensity for healthy hydration. Hot drinks were in danger of being depressed by the warmer temperatures, but the rising profile of hot coffee on the back of the coffee shop boom helped to sustain sales.

Dairy drinks saw contrasting results across the two regions, with the decline in white milk in West Europe, despite very low farm gate prices, disguising gains in flavoured milk and drinking yogurt driven by increasing innovation. Antonella Reda explains: “Dairy producers are looking to compensate for falling white milk consumption by tapping into the trend to convenience and added value products.”

In East Europe, the heaviest contraction was seen in other alcoholic drinks, attributable to the swingeing tax increases on spirits in Russia and the Ukraine.

Looking forwards, Canadean expects 2016 commercial beverage consumption in East and West Europe to remain on a par with 2015. Soft drinks and, in West Europe, beer, will be the main providers of incremental volume, buoyed by the European football championships and the Olympics. Promotional activities focused on these events by the major soft drinks and beer producers are already being witnessed, both in advertising and on packs.

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