Led by Bottled Water, Teas and Energy Drinks, the U.S. Liquid Refreshment Beverage Market Grew by 2.8% in 2006, Beverage Marketing Corporation Reports

NEW YORK--(BUSINESS WIRE)--The evolving U.S. refreshment beverage market enlarged by 2.8% in 2006, according to Beverage Marketing Corporation. Americans have extended their beverage repertoire, and leading brands in the market now includes carbonated soft drinks, sports beverages, bottled water, ready-to-drink tea and coffee, fruit beverages and energy drinks.

“Beverages offering functional benefits are growing two to three times faster than conventional refreshment beverages. As consumers increase their per capita consumption of beverages in these newer segments, they are putting pressure on carbonated soft drinks and juice as well as tap water.”

Carbonated soft drink trademarks hold five of the top ten positions – joined by two bottled water trademarks, two fruit beverage trademarks and one sports drink. The leading sports drink in the United States now stands as the fifth biggest liquid refreshment beverage brand, and bottled water brands continue to raise their profiles.

Refreshment beverage category developments ranged from the astronomical growth of energy drinks to the relatively flat performance of fruit beverages and carbonated soft drinks. Bottled water characteristically strong growth continued, but the small energy drink segment outperformed all other categories. Boundaries between beverage categories have blurred. The distinction between carbonated and not-carbonated beverages appears to be losing relevance for consumers, who now choose from a wide range of beverage types to meet a variety of need states.

Total Pepsi liquid refreshment beverage volume increased by 4.3% in 2006. Cadbury Schweppes volume grew by 0.4% and Coke by 0.2%. Both Coca-Cola and Pepsi experienced declines in traditional carbonated soft drink volumes but saw their energy drinks and non-carbonated beverages grow.

In contrast, Cadbury Schweppes was the sole major company to see growth in carbonated soft drink volume, but its non-carbonated beverage volume declined. All together, its 7UP, Dr Pepper and other soft drink brands experienced growth of 1.3% in 2006.

Big companies dominate the leading refreshment beverage trademarks; Pepsi-Cola (with five brands), Coca-Cola (with four) and Cadbury Schweppes’ Dr Pepper/Seven-Up (with one) account for all of the top-ten trademarks. The same companies also rank as the top three in U.S. refreshment sales. Pepsi led the list with nearly $9.6 billion in estimated revenues in 2006. Coca-Cola followed with $7 billion. Cadbury Schweppes’ U.S. beverage business generated $4.5 billion. Aquafina, Gatorade and Tropicana (all from Pepsi) and Dasani (from Coke) were the fastest growing leading trademarks, as they had been in the previous year as well. 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.

Although carbonated soft drinks remained extremely popular, accounting for more than half of total liquid refreshment beverage volume, other types of beverages are more successfully tapping into the spirit of the age, which is characterized by a greater emphasis on functional, healthy products.

“The liquid refreshment beverage market is being driven by the health and wellness trend,” said Michael C. Bellas, chairman and CEO, Beverage Marketing Corporation. “Beverages offering functional benefits are growing two to three times faster than conventional refreshment beverages. As consumers increase their per capita consumption of beverages in these newer segments, they are putting pressure on carbonated soft drinks and juice as well as tap water.”

Not surprisingly, then, beverage companies seeking to reinvigorate their conventional soft drink trademarks have turned to vitamin and mineral fortification. Cadbury Schweppes’ 7UP Plus (rolled out in 2004) as well as Diet Coke Plus and Pepsi’s Tava (both forthcoming in 2007) exemplify this effort.

Several of the leading non-carbonated liquid refreshment beverages, all of which are owned by the major soft drink companies, enjoyed exceptionally strong growth in 2006. A sports beverage, two fruit beverages brands and two bottled waters ranked among the top ten in 2006. All but one of these recorded double-digit volume growth during the year. As with the carbonated soft drinks, their totals include all iterations. For example, Aquafina’s volume includes the still, sparkling and flavored varieties. Aquafina increased by almost 22% in 2006, making it strongest growing top-ten liquid refreshment brand in 2006. (The still form accounts for the vast majority of the brand’s volume.) Gatorade, which like Aquafina is a PepsiCo brand, increased by more than 10% during the year, as did the company’s Tropicana trademark. Coca-Cola’s Dasani bottled water nearly matched category leader Aquafina with growth in excess of 20%.

The second largest beverage category by volume – bottled water – enlarged by close to 10% in 2006. The two bottled water brands among the top ten liquid refreshment beverages stood at the bottom of the list in 2006, but are poised to move up in the rankings.

Gatorade, the sole sports beverages among the major liquid refreshment beverages, has already achieved a major milestone, having displaced a carbonated soft drink to become a top-five trademark. Gatorade, which grew by 12% during 2006, became larger than Coca-Cola’s Sprite, which underwent a 3.5% volume reduction. Coca-Cola’s Minute Maid also contracted.

While sports drinks and bottled waters have established themselves among the top liquid refreshment beverages, other segments are also gaining ground. Energy drinks, led by the Red Bull and Monster brands, grew by more than 49% in 2006, while ready-to-drink tea volume enlarged by 26%.

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

LEADING LIQUID REFRESHMENT BEVERAGE TRADEMARKS* Volume, Change and Market Share 2005 – 2006

		Millions of Gallons		% Change	Share of Volume
Brand	Company	2005	2006	2005/06	2005	2006
Coca-Cola	Coca-Cola	4,848.2	4,727.0	-2.5%	16.8%	15.9%
Pepsi	PepsiCo	3,125.0	3,028.0	-3.1%	10.8%	10.2%
Mountain Dew	PepsiCo	1,309.1	1,324.8	1.2%	4.5%	4.5%
Dr Pepper	Dr Pepper/7UP	1,168.2	1,193.6	2.2%	4.0%	4.0%
Gatorade	PepsiCo	958.0	1,072.9	12.0%	3.3%	3.6%
Sprite	Coca-Cola	993.7	958.6	-3.5%	3.4%	3.2%
Tropicana**	PepsiCo	706.1	778.8	10.3%	2.4%	2.6%
Minute Maid**	Coca-Cola	672.0	614.9	-8.5%	2.3%	2.1%
Aquafina	PepsiCo	504.4	614.7	21.9%	1.7%	2.1%
Dasani	Coca-Cola	448.0	538.0	20.1%	1.6%	1.8%
Subtotal		14,732.6	14,851.3	0.8%	51.0%	50.0%
All Others		14,149.9	14,846.2	4.9%	49.0%	50.0%
TOTAL		28,882.5	29,697.6	2.8%	100.0%	100.0%

* Includes all trademark volume (e.g., all types of Coca-Cola, including Diet Coke, Caffeine-Free Coca-Cola, etc.).

** Includes both fruit beverage and carbonated soft drink volume.

Source: Beverage Marketing Corporation

U.S. LIQUID REFRESHMENT BEVERAGE MARKET Volume by Segment 2005 – 2006

	Millions of Gallons		% Change	Share of Volume
Segments	2005	2006	2005/06	2005	2006
CSDs	15,271.6	15,103.6	-1.1%	52.9%	50.9%
Bottled Water	7,537.1	8,253.1	9.5%	26.1%	27.8%
Fruit Beverages	4,119.0	4,020.1	-2.4%	14.3%	13.5%
Sports Drinks	1,207.5	1,348.8	11.7%	4.2%	4.5%
RTD Tea	555.9	701.5	26.2%	1.9%	2.4%
Energy Drinks	152.5	227.4	49.1%	0.5%	0.8%
RTD Coffee	38.9	43.0	10.4%	0.1%	0.1%
TOTAL	28,882.5	29,697.6	2.8%	100.0%	100.0%

Source: Beverage Marketing Corporation

LEADING U.S. REFRESHMENT BEVERAGE COMPANIES
Estimated 2006 Revenues

		Estimated
		Revenues
Company	Rank	(Millions)
Pepsi-Cola NA	1	$9,565
Coca-Cola NA	2	7,015
Cadbury Beverages NA	3	4,525
Nestle Waters/Beverages	4	4,180
Kraft Foods	5	3,200
Cott NA	6	1,340
Red Bull NA	7	1,050
Ocean Spray	8	780
D S Waters	9	760
Campbell NA	10	680

NA = North America

Source: Beverage Marketing Corporation