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BrandZ™ Category Analysis: Soft Drinks

Health concerns weaken

category’s Vital Signs

 

The BrandZ™ Vital Signs of the soft drinks category are weak. The category scores average in Innovation and Brand Experience, slightly above average in Communications and Love, and below average in Brand Purpose. Brand Purpose is the foundation for Innovation and other Vital Signs, and weak Brand Purpose makes brand building more difficult.

 

These results are not surprising, since carbonated soft drinks (CSDs) declined for the twelfth consecutive year in the US. Over that period, however, category leader Coca-Cola increased 103 percent in value and its Vital Signs average 123 compared with 101 for the BrandZ™ Soft Drinks Top 15. Coca-Cola also scored 121 on Love. An average score is 100.

 

Twelve years ago, CSDs (colas and other carbonated soft drinks) comprised 95 percent of category value. Today, CSDs comprise just over two thirds of value, as the category addresses consumer health concerns and shifts to non-carbonated beverages like coffee and tea. However, reflecting a tension within the category, the healthier options increased more slowly as a proportion of Top 10 value than did energy drinks, which provide a functional benefit to an audience less concerned with ingredients.

 

On the strength of the Coca-Cola and Pepsi-Cola brands and their communications, the cola segment of the category grew 124 percent in brand value over 12 years, while other CSDs increased only 28 percent. Because of changing consumption habits, non-carbonates increased 117 percent in value.

 

Brands across the category segments have mostly sustained Meaningful Difference over time, but they have not improved it. Coca-Cola still scores 136, but that is down from 146 10 years ago. Nespresso scores 114, about the same as 10 years ago. Red Bull has declined to 101, about average, probably because it faces more competition.

 

Brand Implications

Despite a structural shift in the soft drinks category, as health concerns reduce consumption of carbonated soft drinks, the brand strength of the leaders—Coca-Cola and Pepsi-Cola— drove significant value growth. The structural shift in the category will continue because the transition to healthier options is inexorable. But it takes time to build these new businesses and brands. Brand strength buys time, and is a sustaining force in the face of a considerable threat.

 

 

 

CSDs produce declining proportion of Top 10 value…

Twelve years ago, CSDs (colas and other carbonated soft drinks) comprised 95 percent of category value. Today, CSDs comprise just over two thirds of value.

 

 

 

 

… But strong communications sustain colas

The cola segment of the category grew 124 percent in brand value, while other CSDs increased only 28 percent. Reflecting changing consumption habits, non-carbonates increased 117 percent in value.