Globally the soft drink category is forecasted to grow by 2.3% over the next five years, in constant retail value terms. In contrast, the Middle East and Africa region will account for 10% of the total global retail value by 2022, growing at 5% over the same time period.
In recent times, Health and Wellness is the overarching singular trend dictating soft drink sales worldwide. The category has been impacted by the declining sales of carbonates especially in North America and Western Europe, due to consumers increasingly preferring other categories. This has resulted in iced teas, sports drinks, functional juices and flavored waters growing at a faster pace. Companies are accelerating their diversification not only in terms of categories, but geography, and the MENA region is high up on the agenda. Functional, reduced sugar and ‘superfruit’ juices are high value categories getting more attention in the region due to growing young population and middle class, with an affinity to buy modern exciting soft drinks. While demand in the region will be shaped by variety of brands on offer, it will also be increasingly sensitive to distribution efficiency, convenience and competitive prices over the coming years. The GCC will see shifting tides of the impact of excise taxes, but what remains to be seen is the mitigating impact of habit persistence within the impacted categories.
Globally, the hot drinks category is forecasted to grow at 2.9% over the next five years, in constant retail value terms. In contrast, the Middle East and Africa region will account for 11% of the total global retail value by 2022, growing at an impressive 5% over the same time period.
Premiumisation and the expansion of specialist coffee and tea shops drove value growth. Specialist coffee shops is a fast growing category in nearly every market targeting high income consumers in urban areas. This is effectively influencing how hot beverages are sold in other foodservice and retail outlets. The foodservice channel has a growing influence on retail coffee and tea trends, with increasing consumption occasions being driven by the channel. The MENA region is growing ahead of global averages due to its strong out of home eating culture. The strength of foodservice sales has a positive impact on retail, with consumers willing to pay extra to recreate the experience at home.
Hot drinks in the Middle East and Africa region is much akin to global indicators, driven by a focus on a quality luxury experience, while emphasizing flavor, health and functionality. In the coming years, value concentration will center around premium portioned coffee, fruit/herbal tea, green tea and loose black specialty tea.
*Source: Euromonitor International