Global Drinking Culture Enters New Era of Diversity

Certain drinks are synonymous with specific countries. It might be tea in China, wine in France, coffee in Italy or Tequila in Mexico. But, our traditional perceptions of how the world drinks have been challenged over the past decade, and this is reflected by a new generation of dynamic niche categories, notably functional drinks, flavored milk, soy beverages, drinking yoghurt as well as RTD tea, coffee and premixes.

These types of drinks were virtually non-existent on the global stage ten years ago, but they are now a significant collective force, accounting for around $1 in every $8 we spend on our liquid intake, according to Euromonitor International. Crucially, it is a participation forecast to bulge over the next five years.

The rapid expansion of supermarkets, especially in the emerging economies, has been an important platform for showcasing wider beverage choice, driving the expectations of a burgeoning and increasingly inspirational middle-class. Stronger pressure on products to rotate has also brought pricing to the forefront of the operating environment.

As consumption culture evolves from single- to multi-profile categories, so we are also seeing significant revisions in category hot spots. Western Europe, for example, has traditionally been the hub of bottled water culture, but a combination of weaker purchasing power and consumer rebellion against throwaway plastic bottles has cost the sector dearly.

Over the next five years, the top ten countries of forecast absolute growth in bottled water are all emerging markets, according to Euromonitor International, namely China, Mexico, India, Indonesia, Iran, Brazil, Turkey, South Korea, Argentina and Hungary. CSD (carbonated soft drinks) culture too, and the investment behind it, is necessarily expanding beyond its traditional markets.

In the alcoholic drinks market, vodka is under the couch in its biggest cultural base, Russia. Yet, the category is thriving in India, the US and Germany, where it has developed a growing prestige among a new generation of spirits consumers. Premium vodka, in particular, has become a popular down trade from deluxe Scotch whisky during the recent period of consumer belt-tightening. As for Scotch, new consumer hot spots are identified as China, Mexico, Brazil and the United Arab Emirates, offsetting contractions in traditionally high-profile markets such as Spain and the UK.

The key lesson of this rapidly changing beverage playing field is that ambitious companies can no longer rely on limited portfolios, much less on consumption safe havens. The past decade has shown us that drinking culture is liable to sudden periods of correction, with bubbles bursting and new buds blooming. This has created a challenging and multi-dimensional competitive environment, in which there is a fair measure of risk but also an ocean of opportunity. Hitting the right strategic agenda has never been more important.