Home > Making a splash: Innovation in the soft drinks sector. Part One

Making a splash: Innovation in the soft drinks sector. Part One

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Soft drinks are some of the most popular and most talked about beverages on the market, but despite their dominance, innovation in the sector is starting to stall. 

Traditionally a fast moving and competitive market, new releases in the industry are falling, and analysts say after years of expanding influence, manufacturers may have reached their peak. 

According to a new report by Innova Market Insights, the soft drink industry represented a surprisingly small portion of new releases last year, and the dearth of new products may represent a break in the sector's traditional strength. 

"Despite their ongoing dominance in terms of market size, carbonated beverages accounted for just 14 percent of global new product activity in soft drinks in 2012," Innova research manager, Lu Williams, says. 

"This reflects a mature status, the fairly concentrated nature of the industry and the relatively limited innovation opportunities in comparison with some other parts of the market, such as fruit and juice drinks." 

But despite the fallbacks, research by Innova points to one new channel for the industry. 

Like other beverage makers, soft drink manufacturers have put their eye on developing healthier options for the market, with consumers increasingly concerned about their health and well-being. 

Sugar free alternatives have long been provided by soft drink makers, and if current leads are anything to go by, this trend is likely to continue. 

Not only in Australia but on the global scale as well, soft drink makers are looking to cut sugar in order to draw in a larger portion of consumers. 

"Interest in low calorie and reduced sugar lines is now well established and products using this type of claim accounted for 17.5 percent of global carbonate launches in 2012," the Innova report claims. 

"This percentage rises to nearer a quarter in the USA and Western Europe and falls to about 11 percent in Asia." 

But unlike the sugar free releases of yesteryear, these products have a new twist. 

Instead of cutting sugar altogether, brands are now looking toward increasing artificial sweeteners whilst lowering, but not removing, the sugar content. 

It's a subtle yet significant change for the industry, and while the early signs are promising, it's relatively new ground for some of the industry's biggest brands. 

New interest 
Because it has the largest soft drink market in the world, manufacturers have traditionally looked to the United States to lead innovation in the sector. 

But the dominance of the US market has also contributed to its demise, with large brands keeping upstarts in the market to a minimum.  

"Product development tends to be led from the US, although the very concentrated nature of the market, with the top three players accounting for 90 percent of sales, has served to limit innovation in some instances," Williams says. 

"This has also tended to stifle the development of new players and brands." 

Nevertheless the market is getting tighter and with this the industry has started to diversify, with more obvious differences emerging between products, particularly those released in Australia. 

Mid-calorie or low sugar drinks are now a big focus for soft drink brands, and the sugar free alternatives of previous years are playing second fiddle to these new developments. 

"A more recent trend aimed at regenerating interest in a mature and generally static market is that of mid-calorie products, positioned as a halfway house between the taste of full-sugar products and the health benefits of sugar free options," Williams says. 

This is the end of the first half of this investigation, to read the conclusion of the piece on innovation in the beverage industry, click here.

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