Non-Alcoholic Drinks Market: Key Factors at Play in Developed and Developing Economies

Consumption patterns in developed and developing countries are typically distinct, owing to a difference in the socio-economic status of consumers here. This difference is highly visible in the global non-alcoholic drinks market. A beverage is considered to be ‘non-alcoholic’ if it has 0.5% or less alcoholic content (this ratio is calculated by volume). For example, beer and wine are available in non-alcoholic variants. In some countries, non-alcoholic drinks are popularly referred to as ‘virgin’ drinks. Other examples of such beverages are: tea, coffee, soft drinks, ready-to-drink beverages, energy drinks, and bottled water.

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Global market figures indicate growth, both in terms of non-alcoholic drinks market revenue and volume. However, a closer look at the regional dynamics reveals that the growth graph of non-alcoholic drinks’ consumption in developed countries (especially in the United States) and developing countries is anything but similar. Globally, the non-alcoholic drinks market is poised to exhibit a compounded annual growth rate (CAGR) of 4.3% in revenue terms, for the period 2014 to 2020. In the same period, by volume, the market is estimated to grow at a CAGR of 4.9%.

The State of the Non-Alcoholic Drinks Market in Developing Economies

In developing economies, new jobs are being created in developing sectors such as construction, information technology, utilities, and automotive. The impact of these new jobs can be felt in the form of increased disposable income and resultant changes in consumer lifestyle. With new-found affluence comes demand for novel varieties of food and beverages. This bodes well for the non-alcoholic drinks market, as an increased per-capita income is translating into higher consumption of beverages without alcohol.

In a number of developing countries, the demand for non-alcoholic drinks is expected to remain relatively strong in the long run. The presence of millions of young consumers is an important factor that works in the favor of the non-alcoholic drinks market. By tailoring products to suit the local tastes of consumers and launching intelligently-designed market campaigns, market players can squeeze the most from the non-alcoholic drinks market globally.

Countries such as China, Singapore, and India are expected to drive a large chunk of the overall growth of the non-alcoholic drinks market in the next five to six years. The CAGR figures of the Asia Pacific region are estimated to be higher than the global figures.

Factors Slowing Down Growth of Non-Alcoholic Drinks in Developed Markets

North America has, for several years, been the most important region for non-alcoholic drinks companies. It is the largest market for non-alcoholic beverages, trailed only by the Asia Pacific region. However, as consumers in this region become more aware of health issues, and strive to maintain a healthy lifestyle, there has been a noticeable dip in the overall demand for non-alcoholic drinks in this region. A similar trend is being observed in the developed economies of Europe.

Consumers are clearly moving toward beverages such as bottled water or juices over sparkling or carbonated drinks. Interestingly, the younger population in the United States is now showing a decreased inclination toward beverages that are perceived as being ‘unhealthy’. Because of this reason, the overall growth prospects of the non-alcoholic drinks market in the North America region do not seem exciting, but they are not entirely discouraging. Scope for growth is being observed in segments that promise to not offer high-calorie, sugar-laden drinks. Opportunities have thus been created in sectors such as diet drinks and zero-sugar beverages.

From the global standpoint, growth in the non-alcoholic drinks market is being spurred by inherent changes in consumer preferences. Manufacturers, on their part, have been consistently introducing new product variants in a myriad of flavors to beat the competition and gain a wider consumer base. Going forward, the market for non-alcoholic beverages is expected to constantly remain in a state of change and growth.

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