West European beverages outlook optimistic

Beverage consumption in Western Europe will rise by 0.2% this year as lower inflation in key markets leads consumers to spend more of their disposal income on refreshment, believes Canadean.

The company’s Quarterly Beverage Tracker looked at Q4 last year to find it bringing some welcome news to the West European beverage industry with full year consumption only declining by a marginal 0.3% due to the mild Winter weather.

Beer saw the first uplift in recent years with an increase of nearly 1% while the rate of decline for soft drinks was less than 0.5%.

Canadean forecasts that beer will sustain its 2014 recovery, recording a small 0.3% growth this year. The Spanish on-trade market will contribute notably to this increase as the lowering of prices to pre-crisis (2008) levels and special offers are successfully boosting demand for beer.

Cider’s star will continue to rise in 2015 with growth predicted at around 1% driven by distribution expansion, line extensions and strong investment in branding by both brewers and traditional cider producers.

Canadean predicts that overall beverage consumption in West Europe will rise by 0.2% in 2015 – the best performance since 2011.

“This could be an indication that low inflation is encouraging consumers to spend more on non-essential purchases,” says Canadean Analyst Antonella Reda, “While the uncertain political situation in Russia could have an impact on Western European consumption – and we cannot rule out the risk of deflation – the 2015 outlook for the beverage industry appears to be more optimistic.”

Canadean predicts that packaged water sales will rise in 2015 supported by the increasing consumer awareness of health and hydration.

However the outlook for carbonates is less optimistic as the category adapts to a ‘new normal’ of contraction with juice now also falling victim to the sugar debate.

“Value rather than volume growth is increasingly how producers and retailers measure the market dynamic,” notes Antonella Reda, “Investment in niche categories that are in tune with lifestyle trends and offer attractive profit margins such as functional waters and premium pressed juices will play an important role in the development of the beverage industry in the coming years.”