Beverages in Europe 2021
Regions in the Spotlight 12-23 April 2021
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Contents Size of the market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Soft drinks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Botanicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Functional beverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Alcohol alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Tea and coffee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Energy drinks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Key takeaways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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Regions in the Spotlight 12-23 April 2021
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Size of the market The European beverage market is varied, combining the preferences of diverse cultures within one relatively small continent. In general, Europeans are willing to spend their money on drinks that suit their tastes, preferences, and lifestyles. According to data from Foodtrending, Western Europeans consumed 224 billion litres of beverages in 2019, a market worth about USD558 billion – and beverages accounted for nearly a quarter (23%) of all food and drink spending.1 Despite this high level of spending, sales growth in the beverage sector is sluggish, standing at about 1.3% a year, while some subsectors are growing much more rapidly.2 Milk alternatives, nutritional beverages (protein shakes, energy drinks, functional beverages and meal replacements), and ready-to-drink tea and coffee are among the star performers, according to Jamie Rice, Director of Food Trends and Insight for Foodtrending.3
Growth in beverages by category Western Europe, CAGR 2017 - 2019 Milk alternatives
11,8%
Nutritional beverages
5,9%
RTD
3,9%
Soft drinks Milk shakes Hot beverages Alcohol
2,2% 1,6% 1,3% 0,9%
Source: Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?”3
At the recent Fi Europe CONNECT 2020 event, Jamie Rice said;
“What this means is that when we are looking for growth, the opportunities are small, but they are growing very, very rapidly. Interestingly, sales of these products have been boosted by the COVID-19 pandemic as consumers look for convenience and healthy drinks to consume at home.”4 According to Sai Swaroop, Project Manager at Kline & Company, also speaking at Fi Europe CONNECT 2020, many trends and innovations tend to primarily originate from smaller, independent companies before being taken up within the broader market.5 He stated that independent beverage companies were growing at around 45% a year, due to their innovative offerings and the targeting of younger consumers.6
Beverages in Europe 2021 | 3
Soft drinks Carbonated soft drinks that have a reduced sugar content, tend to drive higher sales within Europe, as according to Mintel.7 Its research found 37% of German consumers, for example, said that they were interested in low or no sugar options8 – and the industry has responded. The European soft drinks association, UNESDA, says beverage makers have cut added sugars in soft drinks by an average of 14.6% from 2015 to 2019, outpacing an EU target for a 10% reduction by 2020.9
“Consumers are shunning traditional carbonated beverages in favour of more natural, health-boosting alternatives,” said Rice.10
Botanicals Botanical flavours and ingredients are one answer. The percentage of new product launches containing floral ingredients grew from 7% in 2015 to 14% in 2020, while those with herbal and spice ingredients grew from 8% to 10% over the same period, according to Mintel.11
Brands are increasingly turning to botanicals Europe: select flavour component groups as a % of NPD in CSDs, Jul 2015 - Jun 2020 Flora Herbs & Spices 14%
14
% of launches
12%
12 11
10% 8%
10
8
8
7
7
8
8
6% Jul 2015 - Jun 2016
Jul 2016 - Jun 2017
Jul 2017 - Jun 2018
Jul 2018 - Jun 2019
Jul 2019 - Jun 2020
Source: Mintel GNPD12
Foodtrending also highlights the rise of ingredients based on herbs, spices and extracts, with sales expanding by 10% a year.13
“These are used to provide a less sweet, more sophisticated flavour, and they have the advantage of being seen as adding a positive health benefit,” Rice said.14
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The market for ingredients in beverages Western Europe, 2019 $m Natural flavours & flavourings
$1,277
Protien
$444
Sweeteners
$256
Prebiotics
$249
Herbs, spices & extracts Omega-3
$82 $71
Source: Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?”15
Growth in beverages by category Western Europe, CAGR 2017 - 2019 Prebiotics
16.7%
Natural flavours & flavourings
10.2%
Herbs, spices & extracts
10.0%
Omega-3
7.6%
Protien Sweeteners
7.3% 1.5%
Source: Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?”16
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Beverages in Europe 2021 | 5
Functional beverages Functional ingredients are also on the rise, particularly for immunity and mental wellbeing in light of the COVID-19 pandemic, according to Aurore de Monclin, Managing Partner, Healthy Marketing Team.17 At Fi Europe CONNECT 2020 she said that;
“COVID led to the opportunity to apply not only functional, but also natural immunity enhancing ingredients to new product innovations. (…) Consumers are linking gut health to immunity, but there is also an opportunity to combine vitamins and minerals with functional ingredients like botanicals and probiotics.”17
This is a trend that goes beyond small companies. For example, Alpro is a mainstream UK brand that has released an oat-based drink called Daily Immunity Support, featuring echinacea and fermented products, tapping into the idea that good gut health promotes good immunity.18
Source: Alpro.com18
Alcohol alternatives Meanwhile, a growing market for alcohol alternatives has led to some innovative products, including a burgeoning range of zero alcohol botanical spirits.19 Even budget supermarkets have introduced their own-brand versions: Aldi launched Kvist in 2020, flavoured with juniper, orange peel, herbs and spiced bitters,20 while Lidl launched CeroCero a year earlier, with juniper, coriander, hibiscus and lingonberry.21
Source: Aldi.co.uk22
Aurore de Monclin, Managing Partner, Healthy Marketing Team added that;
“There is definitely an opportunity here to be quite creative with the additional ingredients that will add some crafting and add some experience to those low and no alcohol drinks. When there are launches in supermarkets such as Aldi and Lidl, it really shows that it is a trend that is here to stay.”23
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Tea and coffee Tea and coffee are the third-biggest selling beverage category in Europe, following alcohol and soft drinks, accounting for USD71 billion in sales in 2019.24 Both coffee and tea are widely consumed, but coffee is preferred in most European countries.25 Although coffee consumption is high, it is not a dynamic market for innovation.26
Beverages expenditure by category Western Europe, 2019 $bm $303
Alcohol
$119
Soft drinks
$71
Hot beverages
$50
Nutritional beverages Ready to drink Milk shakes Dairy alternatives
$8,4 $4,1 $2,9
Source: Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?”27
However, the market for ready-to-drink tea and coffee is another story, as consumers increasingly seek premium products.28 Despite much lower sales, ready-to-drink tea and coffee products are booming, with 3.9% growth in 2019, well ahead of the 1.3% beverage industry average.29 The use of botanical ingredients is also expanding in ready-to-drink teas, as in soft drinks more broadly, and the Healthy Marketing Team also highlighted adaptogens as being promising ingredients for mental wellbeing, particularly in tea.30 These refer mainly to botanicals and fungi that are thought to help the body adapt to demands placed on it by internal and external stressors.31 Aurore de Monclin, Managing Partner, Healthy Marketing Team said that;
“We see that adaptogens are here to stay. A couple of years ago we would have talked about nootropics, but now we are talking about adaptogens because there is a strong tradition behind adaptogens, and now they are moving to the west.”32 Proponents suggest certain adaptogens for particular desired effects such as Asian ginseng,33 holy basil 34 and ashwagandha35 for long-term stress, while small studies have linked speciality mushrooms to immune response.36 Such ingredients are emerging as an important area for premium teas, often alongside other botanicals and in adaptogenic blends, or with CBD oil and ayurvedic ingredients.37 De Monclin added that:
“Credible ingredients with strong links to traditional herbal remedies, such as adaptogens, will have more mainstream appeal.”38 According to Transparency Market Research, adaptogens could reach a market value of about USD23.4 billion by the end of 2030.39
Beverages in Europe 2021 | 7
Energy drinks The European market for energy drinks is expected to reach USD169 billion by 2024, expanding at a CAGR of around 7.9% from 2018 to 2024.40 Energy drinks are a niche within the soft drinks market, accounting for just 1% of sales, according to trade association Energy Drinks Europe.41 However, it says Western Europeans consume about 2 billion litres of energy drinks each year, and Germany leads the world when it comes to innovation in this sector. Although big brands dominate, about 30% of the market is served by small and medium sized companies.42 Traditional brightly coloured, sugary energy drinks are beginning to make way for more natural ingredients, as consumer preferences shift. Natural caffeine sources like green tea, yerba mate, green coffee bean extract and guarana are on the rise as consumers may perceive such ingredients as a more natural way to boost alertness.43
Examples of energy drinks with guarana: Frusano Organic Energy Drink with Guarana
Source: Frusano.com44
The Organic Energy Project - OE2 Organic Energy Drink with Rhubarb, Guarana, Hibiscus and Beetroot
Source: organicdenmark.com45
Research from Mintel suggests that the majority of consumers across Europe would like to see more natural flavours and colours in energy drinks.46 Most recently, this trend is apparent in a rise in energy drink launches with a ‘no additives/preservatives’ claim.47
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Key takeaways • Beverages accounted for 23% of all Western European spending on food and drink in 2019 • Milk alternatives, nutritional beverages and ready-to-drink tea and coffee are the fastest growing sectors • Innovation and new trends tend to originate in smaller companies • Alternatives to alcohol offer opportunities for creative branding and use of ingredients • Reduced sugar and botanical ingredients are key areas for innovation in soft drinks • Functional ingredients are on the rise, particularly for immunity and mental wellbeing in light of COVID-19 • Adaptogens and ingredients based on traditional complementary medicines are gaining in popularity • The European energy drink market is small, but demand for natural energy is growing The information provided here was compiled with due care and up to date to the best of our knowledge on publication.
Sources Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 2 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 3 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 4 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 5 Sai Swaroop, Project Manager Kline & Company, presentation at Fi Europe CONNECT, “Indie brands revolutionize the food and beverages industry” 6 Sai Swaroop, Project Manager Kline & Company, presentation at Fi Europe CONNECT, “Indie brands revolutionize the food and beverages industry” 7 Mintel, A year of innovation in carbonated soft drinks, 2020 8 Mintel, A year of innovation in carbonated soft drinks, 2020 9 https://www.unesda.eu/wp-content/uploads/2020/11/UNESDApress-release_Sugar-reduction-November-2020.pdf 10 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 11 Mintel, A year of innovation in carbonated soft drinks, 2020 12 Mintel, A year of innovation in carbonated soft drinks, 2020 13 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 14 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 15 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 16 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 17 Aurore de Monclin, Managing Partner, Healthy Marketing Team, presentation at Fi Europe CONNECT 2020, “Shifts in motivations and purchasing behaviours in beverages” 18 https://www.alpro.com/uk/products/drinks/oat-drinks/alprodaily-immunity-support-oat-and-echinacea/ 19 https://store.globaldata.com/report/cs1916sf--success-casestudy-seedlip-alcohol-free-spirit/ 20 https://www.thedrinksbusiness.com/2020/07/new-non-alcoholic-spirit-set-to-challenge-pricing-in-the-af-category/ 21 https://www.delish.com/uk/food-news/a29532744/lidl-nonalcoholic-spirit/ 1
https://www.aldi.co.uk/kv%C3%AEst-rosa-non-alcoholicspirit/p/702991344099900 23 Aurore de Monclin, Managing Partner, Healthy Marketing Team, presentation at Fi Europe CONNECT 2020, “Shifts in motivations and purchasing behaviours in beverages” 24 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 25 https://www.researchgate.net/publication/226091108_The_ worlds_of_tea_and_coffee_Patterns_of_consumption 26 https://www.cbi.eu/market-information/coffee/trends 27 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 28 https://www.cbi.eu/market-information/tea/trends 29 Jamie Rice, Director of Food Trends and Insight for Foodtrending, presentation at Fi Europe CONNECT 2020, “Which ingredients are trending in beverages?” 30 Aurore de Monclin, Managing Partner, Healthy Marketing Team, presentation at Fi Europe CONNECT 2020, “Shifts in motivations and purchasing behaviours in beverages” 31 https://naturalfactors.com/articles/an-in-depth-look-at-adaptogens/ 32 Aurore de Monclin, Managing Partner, Healthy Marketing Team, presentation at Fi Europe CONNECT 2020, “Shifts in motivations and purchasing behaviours in beverages” 33 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5628357/ 34 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4296439/ 35 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3573577/ 36 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4684115/ 37 https://www.specialtyfood.com/news/article/the-republic-oftea-introduces-13-innovative-teas-at-the-2019-winter-fancyfood-show-125608/ 38 Aurore de Monclin, Managing Partner, Healthy Marketing Team, presentation at Fi Europe CONNECT 2020, “Shifts in motivations and purchasing behaviours in beverages” 39 https://www.transparencymarketresearch.com/adaptogensmarket.html 40 https://www.researchandmarkets.com/reports/4659455/ europe-energy-drink-market-analysis-2018-2024 41 https://www.energydrinkseurope.org/ 42 https://www.energydrinkseurope.org/facts/history-of-energydrinks/ 43 Mintel, A year of innovation in sports and energy drinks, 2020 44 https://www.frusano.com/en/products/fructose-free-beverages/natural-refresh-drink.html 45 https://www.organicdenmark.com/the-organic-energyproject-2 46 https://www.mintel.com/press-centre/food-and-drink/half-ofeuropeans-want-to-see-more-naturally-flavoured-energy-drinks 47 Mintel, A year of innovation in sports and energy drinks, 2020 22
Beverages in Europe 2021 | 9
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