The bottled water market is fairly well represented by both smaller, regional players, as well as large, established suppliers. In addition to local players, there is an element of imported volumes, where these brands are seen predominantly within on-consumption outlets.
Available in a variety of formats, including still, sparkling, flavoured and enhanced water variants, still water maintains the lion’s share of the market volumes. From a packaging point-of-view, glass and plastic bottles are dominant for bottled water.
Category growth plummets after boom
From 1998 to 2007, the bottled water market averaged a volume growth rate of 27% per annum. This was a result of the category being fairly new and becoming established within the South African market. The growth in popularity of bottled water was exceptional.
However, following this boom, category growth plummeted. From an exceptional growth of 30,4% in 2007, the volume increase recorded for 2008 was a limited 4,9%. The years to follow were much the same, with increases of 3,3% and 4,2% recorded for 2009 and 2010 respectively.
It is believed that the tapering off of the growth rate was a result of a few collective issues. Firstly, the recession translated into a decline in demand for bottled water as it is generally viewed as a non-essential item. Secondly, a few players who had entered the market were forced to close as the market became more competitive. Thirdly, with the growth in variant offerings, coupled with the saturation level, the user-pool stagnated. And lastly, it is believed that the extreme growth rates could not be maintained once the category became established and, with bottled water volumes reaching market saturation, volume growth naturally leveled off.
Value growth has outstripped volume growth for many years, with cost-pull inflation pushing up bottled water prices. While per capita consumption grew steadily per annum, throughout the historical analysis, this has come to a halt in recent years.
It is believed that the market will remain fairly competitive with more share movement between players rather than an overall growth in market size.
The expected volume increase for 2011 is limited to 4,6%, in line with alternative food and beverage category increases.
Dairy juice blends
Dairy juice blends are a combination of fruit juice and dairy beverages, either milk- or yoghurt-based, produced in a variety of flavours. The product is not shelf stable and needs the cold chain to be maintained to ensure freshness. Dairy juice blends, packaged in cartons, are the exception as these have been UHT treated and retain freshness in ambient temperatures.
Packaging within this category includes cartons and plastic bottles.
Dairy juice blends weather the recession
Dairy juice blends contributed 0,03% to the Gross Domestic Product (GDP) in 2010, remaining constant from its 2009 contribution. This beverage category is relatively smaller than other healthy, ready-to-drink beverages such as fruit juice.
The market performed well during the economic downturn, unlike other dairy beverages such as drinking yoghurt. Dairy juice blends experienced 1,3% volume growth in the base year while the value of the market shrunk by a marginal 0,4%.
The negative value growth was primarily because of marginal price increases seen over the past year, as well as the result of packaging shifts. 2010 saw volume reductions in the 500ml and 350ml pack volumes, which in turn led to value decline as smaller packs are relatively more expensive than larger ones on a per litre basis.
Larger pack sizes such as the 950ml/one-litre pack experienced good growth, which further contributed to value decline, as these are sold at a lower Rand/litre price.
International trends for dairy juice blends include convenient packaging for on-the-go consumption, the introduction of functional nutrients, as well as the use of organic milk and fruit in manufacturing. Other trends include marketing of the category as a guilt-free indulgence with low calorie, low fat products, and the introduction of exotic flavour combinations.
FABs recover lost ground
Overall, flavoured alcoholic beverage (FAB) volumes have seen some volatility year on year, with annual growth rates ranging between -2,7% and 14,4%.
The market recovered lost ground during 2010, following a loss in volumes in 2009. The FAB market was one of the casualties of the global economic meltdown that saw volumes decline by 1,6%.
2010 was a more positive year for FABs, with the introduction of new ciders bolstering consumer demand in this competitive market. The category saw a growth of 2,5% and recovered the volumes previously lost.
The FAB market is expected to be in the ‘green’ for the next few years with growth anticipated for the short term. Expected restrictions on alcohol beverage advertising are expected to intensify point of purchase competition between brand owners for FABs.
Exceptional performance for malt beer
Malt beer is a well-entrenched beverage in the South African market, and currently holds the largest volume share within the alcoholic sector. This share increased in 2010, despite good performance from competing alcoholic beverages.
Malt beer volumes increased by a substantial 9,0% during the base year, an exceptional performance for the category. This is on the back of a decline the previous year, as well as the recession putting the category under pressure.
Malt beer maintains a larger contribution to GDP than most other beverage categories, and in 2010, comprised 1,5% of the country’s GDP.
Pricing for the category has traditionally seen healthy increases, year on year, having only slowed down somewhat during the 2007/2008 season. Since 2009, good increases have again been recorded, with 2010 (14,3%) noting the second highest increase across the historical analysis for malt beer.
This market consists of an array of large and small players of ambient and chilled categories, within which exist the pure, nectar and fruit drink s categories.
The fruit juice market is perceived as a healthier alternative to other non-alcoholic beverages because of its natural aspect, as well as its vitamin and nutritional value available to the consumer.
Packaging within this market ranges from glass to sachets, with almost all forms of beverage packaging used for this diverse market. Popular packaging materials include cartons, glass, plastic and sachet packaging.
Fruit juices make a steady recovery
In 2010, RTD (ready to drink) fruit juice recovered from volume losses seen during the economic downturn. The market is expected to reach 2007 levels by the end of 2011, as consumers free up more disposable income for luxury items like fruit juice.
Regional distribution of RTD juice remained fairly constant from the pattern seen in 2009, with Gauteng and the northern provinces continuing to dominate. Channel distribution, on the other hand, changed significantly with a notable skew towards retail and wholesale as the smart shopping trend continues to gain popularity.
Pure fruit juices remained the most popular juice type, with nectars and fruit drinks distant second and third choices, respectively. Fruit drinks lost significant share to pure fruit juices while nectars maintained fairly similar share levels.
The long- versus short-life split was almost 50/50, as long-life juice continues to gain popularity with consumers’ changing shopping habits.
In future, growth in the RTD juice market is expected to continue to be driven by the health trend. Widespread introduction of the following is expected to rejuvenate growth in this industry: increased manufacture of premium 100% fruit juices and smoothies made from natural, organic fruit; super fruit and exotic fruit flavours; the addition of probiotics, phytosterols and fibre; vitamin fortification; and unsweetened juices.