Global soft drink trends

Global soft drink trends

Powered by: Regions in the Spotlight 12-23 April 2021

Learn more about Fi Global CONNECT Regions in the Spotlight

Contents Introduction and Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Consumers continue to demonstrate concerns about excessive sugar intake . . . . . . . . .

6

The war on sugar will intensify because of COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The beverage industry must take note of the attitude/behavior gap that exists when it comes to sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

Consumers are not necessarily reducing sugar intake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Consumers are not seeking out products that contain natural sweeteners . . . . . . . . . . . . . . . . . . 10

Consumers want beverages that offer a natural and sustained energy boost . . . . . . . . . 12 Consumers are feeling tired and fatigued and are struggling to get through the day . . . . . . . . . . . . 12

Consumers want products that offer a natural and sustained energy boost . . . . . . . . . . 14 Consumers will also want beverages that help aid relaxation . . . . . . . . . . . . . . . . .

15

Consumers want beverages that they deem to be green and clean . . . . . . . . . . . . .

17

Consumers want products that they deem to be 100% natural . . . . . . . . . . . . . . . . . . . . . . . . . 17

Consumers want beverages that have a minimum impact on the environment . . . . . . . . 19 The importance of beverages being green and clean will intensify because of COVID-19 .

21

Consumers want experimental flavors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23

Consumers want genuine experiences when it comes to beverages . . . . . . . . . . . . . . . . . . . . .

23

Consumers still want new flavors in a recessionary environment . . . . . . . . . . . . . . . . . . . . . . . .

25

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

2

| L earn more about Fi Global CONNECT: Regions in the Spotlight

Introduction and Methodology This report examines key trends in the global soft drinks market, with a specific focus on regional trends. The report covers five key tends that are influencing consumer attitudes and behaviors in 2020 and beyond, providing data and insight from FMCG Gurus proprietary data and insights.

The report has a specific focus on health and wellbeing, examining issues that exist in the non-alcoholic beverage market, sugars and sweeteners, energy and relaxation, and the demand for green and clean products. The focus on health is not surprising given that this is a trend that has dominated conversation within the industry over the last decade and beyond. However, as consumers continue to improve their health and adopt a broader approach when it comes to what makes a product better-for-you, it is important to understand how consumer needs are evolving when it comes to the topic. Additionally, the report also looks at the appeal of new and experimental flavors, highlighting how consumers are continuing to seek out small moments of indulgence, irrespective of concerns about their health and wellbeing or finances.

The report also provides context on how these trends are being shaped by COVID-19 and what this means for the industry.  

Global soft drink trends | 3

Executive Summary Sugar remains the number one dietary evil amongst consumers and this is something that will continue in 2020 and beyond, especially as consumers become more conscious about their waistlines because of the increased number of comfort-orientated eating and drinking occasions. As such, consumers will continue to say that they are making conscious efforts to reduce their intake of sugar. However, the industry should be cautious about this as consumers can often display an attitude/behavior gap when it comes to moderation, especially as reformulating products so that they have less sugar can be expensive and impact on taste and enjoyment.

The industry also needs to address the attitude/behavior gap that exists when it comes to natural sweeteners. Indeed, consumers have favorable perceptions of these sweeteners at a time when they are conscious about excessive sugar intake, but this does not mean that they are necessarily seeking such products out. A key reason for this it that consumers can have negative perceptions towards taste when it comes to sweeteners. Again, consumers are not willing to compromise on this, irrespective of health concerns.

Whether real or perceived, consumers feel increasingly that time is scarce as they look to cram as many activities into the day as possible. Moreover, they can often struggle to relax and unwind in the evenings.

As a result of this, consumers are interested in products that offer a natural and sustained energy boost.

This creates a real opportunity for the beverage industry and is a reason why sports nutrition beverages have become increasingly mainstream over the last five years. When it comes to such products, it is crucial that the energy boost given is seen to be natural, especially as consumers have had concerns about the energy boosting category historically.

At the other end of the spectrum, high levels of uncertainty are resulting in consumers struggling to switch off and relax, something that is impacting on mental wellbeing and cognitive health. As consumers adopt a holistic approach to health and believe all issues of wellbeing are interlinked, this is something that they are looking to address. Again, when it comes to such products, reassurance around natural formulation is crucial.

Natural remains one of the most popular claims amongst consumers when it comes to soft drinks. At the same time, consumers can be skeptical about natural claims, because of levels of overall distrust that they have when it comes to the practices and policies of brands. Given the level of subjectivity that can exist when it comes to natural claims, it is crucial that brands offer validation and transparency when making such claims so that they are seen as genuine. Simplified labeling and technological innovations are a way of helping facilitate this.

4

| L earn more about Fi Global CONNECT: Regions in the Spotlight

Demand for beverages deemed green and clean will also continue to grow, especially as consumers simultaneously become more concerned about their health and more optimistic that damage done to the environment is repairable. This is something that will drive demand for products that carry locality and sustainability claims, as well as products that are formulated with plants. Again, given the subjectivity that can exist when it comes to such claims, it is important that brands offer maximum transparency so that they are not seen to be misleading consumers.

Flavor sensation is something that is of high importance to consumers, even when it comes to everyday products such as beverages. Consumers with high levels of self-entitlement like products that push the boundaries of sensory appeal and offer a genuine experience. At the same time, consumers are becoming more difficult to impress than ever before, and continuous flavor innovation is something that can help address this. The importance of new and unusual flavors will be of high importance in a recessionary environment brought about by COVID-19, as consumers look for moments of small and affordable indulgence to escape daily pressures.  

Bringing the global food and health ingredients industry together digitally

Regions in the Spotlight 12-23 April 2021

Health Ingredients in the Spotlight 14-18 June 2021

Plant-Based Ingredients in the Spotlight 13-17 September 2021

Global soft drink trends | 5

Consumers continue to demonstrate concerns about excessive sugar intake The war on sugar will intensify because of COVID-19 Sugar has long been the number one dietary evil amongst consumers because of the association with rising levels of obesity and diabetes across the globe. Moreover, there has been a high level of scrutiny towards the level of sugar in soft drinks over the last decade, especially in product categories such as carbonates and energy drinks because products are associated with offering no nutritional value whilst being high in 'bad' ingredients. This is something that appears to have resonated with consumers. FMCG Gurus research shows that at any one time, around four in ten consumers are trying to lose weight. When it comes to strategies taken to address excessive waistlines, sugar reduction is one of the most popular strategies adopted alongside increasing intake of fruit and vegetables and reducing snacking. This shows how consumers have a negative attitude towards sugar.

Proportion of consumers whowhoare currently Proportion of consumers are currently trying to trying lose weightto lose weight Global: 39%

Africa/ME: 35%

Asia-Pacific: Europe: Proportion of 44% consumers who are currently trying 37% to lose weight

North America: 45%

South America: 42%

Global: 39%

who are looking to lose weight by reducing sugar intake Africa/ME: Proportion of consumers Asia-Pacific: Europe: North America: Consumers who are trying to lose37% weight 35% 44% 45%

South America: 42%

Proportion of consumers who are looking to lose weight by reducing sugar intake Africa/ME: Asia-Pacific: South America: Consumers who are trying Europe: to lose weight North America: Proportion of consumers 61% 51%who are looking to lose weight 51%by reducing sugar intake 50% 36%

Global: 52%

Consumers who are trying to lose weight

Global: 52%

Africa/ME: 61%

ProportionAsia-Pacific: of consumers who actively tryingEurope: to improve their diet 51% 51%

North America: 50%

South America: 36%

Global: 57%

Africa/ME: 66%

Asia-Pacific: Europe: Proportion of consumers who actively trying to improve their diet 56% 55%

North America: 52%

South America: 58%

Africa/ME: Europe:to avoid added sugars North America: Proportion of consumers whoAsia-Pacific: say that they make conscious attempts in products 66% 56% 55% 52%

South America: 58%

Source: Country Profile survey Q1 2019/Q1 2020 Global: 57%

Concern about excessive sugar intake is something that will intensify in importance in 2020 and beyond Global:

Africa:

Asia-Pacific:

Europe:

North America:

South America:

of consumers is who say49% that they make conscious added sugars inof products 51% of COVID-19. Proportion 58% pandemic 52% to avoid 60% 48% because The something that has attempts created high levels uncertainty amongst

consumers and created significant disruption to daily lives. In turn, this is something that has had a Proportion of consumers who say a product is healthy if it carries a zero sugar claim

Global: Africa: Asia-Pacific: Europe: America: America: significant impact on mental wellbeing, as consumers worry about a variety ofNorth issues such as theSouth health 51% 58% 49% 52% 60% 48%

and wellbeing of themselves and the state ofEurope: the economy and the ability to deal Global: Africa/ME:and loved ones, Asia-Pacific: North America: Southwith America: 47%

40%

Proportion of consumers who say a product is healthy 45% if it carries a zero sugar claim 48% 46%

daily living costs. All of this has led to consumers seeking out comfort food and drink for moments of

56%

escapism, something which has led to consumers increasing their sugar intake as when it comes to such Global:

Africa/ME:

Asia-Pacific:

47% 40% less attentive to 46% occasions, they tend to be nutritional intake.

Europe: 45%

North America: 48%

South America: 56%

Now the pandemic has peaked but many fear a second wave, they are re-evaluating their eating and drinking habits closely in order to maximize their health and wellness and minimize their vulnerability to disease and illness; something that will increase their monitoring of sugar intake, at least in theory.

6

| L earn more about Fi Global CONNECT: Regions in the Spotlight

Over the period April-July 2020, FMCG Gurus conducted three waves of surveys across eighteen countries to understand attitudes and behaviors towards COVID-19. The research found that over the period, there was a significant increase in the proportion of consumers who said that they were concerned about their waistlines, whilst a growing proportion of consumers also say that they plan to eat and drink healthier.

Proportion of consumers who say that they have become more conscious PPrPorropopoporotrritotiiononnoofofcfo um m eeresrrsw sw w hhohoosassayayythtthahatatthttheheyeyywhw ilalivlm lem abkaeekceaotm atteetm em m potpsrtetsoctostnsastyaciyhoehuaeslatahlbtiheoirueitrntinhtheteihre Proportion of consumers who say that they w ccononsnussum about their fw ufteuweight uitgruehrteaasasasaarerreseas u O COO VVIVDIID-D1--19199of COVID-19 future as a result ssulutltlota ofofCfCresult

ehyeyhahvaevebebceocm om e emm oroerecocnosncsicoiuosuas baobuotuthtehier ir rseuslut lot foCf O CO VIVDI-D1-919

April April May May July July April May July

May May July July

April 94% 93% 93%94%

48% 48%

%1%

c

36% 36% 36%36% 26% 26%

39% 39% 24% 24%

88% 86% 86%88% 85% 82% 84% 84% 50% 83% 83%84% 82% 82%85% 82% 82% 82%84% 81% 48% 81% 79% 78% 78%79% 77% 77% 77% 77% 75% 75% 73% 73% 42% 39% 37% 36% 36% 33% 33% 33% 32% 31% 26% 24% 23% 21% 21% 21% 21% 18% 14% 10% 10% 10%

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America

Global Global Global

Africa/Middle Africa/Middle Asia-Pacific Asia-Pacific Africa/Middle Asia-Pacific East East East

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America Europe North AmericaSouth America

77%

83% 84%

Global

77%

82% 85%

82%

Proportion of consumers who say that they will make attempts to stay healthier PPrProorpopopororttrioitoinonnoofofcfcocononsnsusum umm eererssrw sww hhohoossasayayytthh tahatattthh teheyeyywww ililillm lmm aakakekeeaatatteetm emm pptptssttstootosststaatyayyhheheaealatlthlh tiheieirerirninintthh tehee in the future ffuuftutuu trureereaasasas asaarreersa esusulutlresult tlotofofCfCO COO VVIVD Iof DI-D-11-919COVID-19 9 April April April May May May July July July

May May May July July July

%1% %

cc

88% 88% 86% 86% 86%88% 85% 85% 82% 84% 84% 83% 83% 83%84% 82% 82% 82% 82%85% 82% 77% 77% 77% 77% 77% 77%

48% 48% 48% 36% 36% 36% 36% 36%36% 26% 26% 26%

39% 39% 39% 24% 24% 24%

94% 94% 93% 93% 93%94% 84% 84% 82% 82% 82%84% 81% 81% 81% 79% 79% 78% 78% 78%79% 75% 75% 75% 73% 73% 73%

33% 33% 33% 21% 21% 21% 10% 10% 10%

Europe Europe Europe North North NorthAmericaSouth AmericaSouth AmericaSouthAmerica America America

Global Global Global

Africa/Middle Africa/Middle Africa/Middle Asia-Pacific Asia-Pacific Asia-Pacific East East East

86% 88%

Africa/Middle Asia-Pacific East

heheyeyyhhahavaveveebbebececocom omm eeem mm oororeereccocononsnscscicoioiuoususasababobouoututtthh teheieririr ersesusulutltlotofofCfCO COO VVIVD IDI-D-11-9199

Europe Europe Europe North North NorthAmericaSouth AmericaSouth AmericaSouthAmerica America America

Source: COVID-19 survey, 2020

When it comes to plans to eat and drink healthier, the most popular answer given was to eat more fruit and vegetables. This shows how consumers are looking to turn to products that they believe contain real and authentic ingredients, that offer nutritional value and are free from artificial ingredients. This is something that could be problematic for the beverage industry, especially as some categories already had negative images. After this, the second most popular action planned by consumers is to reduce sugar intake. Given that consumers are more conscious about their health as they fear a second wave of the virus is inevitable, it implies that more consumers will take a proactive approach to looking to reduce sugar intake over the near future.

Global soft drink trends | 7

Ma

73

Proportion of consumers who plan to eat and drink more healthy as a result of COVID-19 Proportion of consumers who plan to eat and drink more healthy as a result of COVID-19 (April –(April July, – July,aggregated) aggregated) Global: 79%

Proportion of consumers who plan to eat and drink more healthy as a result of COVID-19 (April – July, aggregated) Africa/ME: Asia-Pacific: Europe: North America: 80% 81% 76% 77%

South America: 82%

Global: 79%

Africa/ME: Asia-Pacific: Europe: North America: 80%Proportion of consumers who 81%plan to eat and drink more healthy 76% 77% by reducing sugar intake

South America: 82%

(April – July, aggregated) Proportion of consumers who plan to eat and drink more healthy by reducing sugar intake Consumers who plan to eat and drink more healthily Proportion of consumers who plan to eat and drink more healthy by reducing sugar intake (April –(April July, aggregated) – July, aggregated) Consumers who plan to eat and drink drink more healthily Consumers who plan to eat and Global: Africa/ME: Asia-Pacific: Europe: more healthily North America: South America:

56%

54%

55%

54%

60%

57%

Global: 56%

Africa/ME: 54%

Asia-Pacific: 55%

Europe: 54%

North America: 60%

South America: 57%

Source: COVID-19 survey, 2020

Whilst this chapter so far has focused on weight loss, it must be remembered that concerns towards excessive sugar intake are not limited to those consumers who are actively trying to lose weight. Indeed, over the last couple of years, consumers have increasingly embraced two concepts: holistic health and healthy ageing.

• Holistic health relates to consumers recognizing that all aspects of health are interlinked and impact on each other, and as such should not be treated in isolation. This is true for both physical and mental health. As a result of this, consumers have adopted a broader approach to what constitutes a healthy diet, with focus no longer on moderation and avoidance of ingredients deemed detrimental to health.

Instead, consumers associate a healthy diet with one that helps address a variety of health issues and is high in an array of functional ingredients. This proactive approach to health also means that plans to improve dietary habits are not just restricted to those trying to lose weight. This means that a considerable proportion of consumers who deem themselves to be fit and active are also trying to reduce their intake of sugar.

•H ealthy ageing relates to consumers trying to stay fit and active until as late in life as possible. There are two key reasons why consumers are looking to do this. Firstly, they want to maintain a forever young ethos and are actively looking to break stereotypes associated with senior consumers and ageing, realizing that good health is central to this. Secondly, consumers also recognize that disrupted life-cycle patterns and reduced levels of financial security also mean working till later in life is a real possibility. At the same time, consumers can be concerned that current diets are something that may increase the risk of health problems later in life. As such, consumers are adopting a prevention over cure approach to health and ageing, again looking to make improvements to their diets even if they are not suffering from health problems.

insights.figlobal.com 8

| L earn more about Fi Global CONNECT: Regions in the Spotlight

Proportion of consumers who are currently trying to lose weight

In

Global: 39%instances, both

Africa/ME: 35% consumers

will

ProportionAsia-Pacific: of consumers who are currentlyEurope: trying to lose weight North America: 44% 37% 45% As place a strong emphasis on looking to avoid sugar.

South America:

the research42% shows

Global: Africa/ME: Europe: America: America: ProportionAsia-Pacific: oftrying consumers are currentlytheir trying to lose weight below, the volume of consumers currently towho improve diets is higherNorth than those trying South to lose 39%

35%

44%who are looking to lose weight 37%by reducing sugar intake Proportion of consumers

45%

42%

weight, and this is a key reason why half ofConsumers all consumers that they make conscious attempts to avoid who are tryingsay to lose weight Global: Africa/ME: Asia-Pacific: Europe: North America: added sugars or that zero sugar claims make a product healthy.

Proportion of consumers 39% 35% 44%who are looking to lose weight 37%by reducing sugar intake 45% Global: 52% Global: 52%

Africa/ME: 61%

who are looking to lose weight by reducing sugar intake Africa/ME: Proportion of consumers Asia-Pacific: Europe: North America: Proportion who are actively trying todiet improve Consumers who are trying trying to loseto weight Proportion of consumers who actively improve their 61% of consumers 51% 51% 50%their Asia-Pacific: Europe: Proportion Asia-Pacific: of consumers who actively tryingEurope: to improve their diet 51% 51% 56% 55%

South America: South42% America:

North America: 50%

36%

diet

South America: 36%

Global: Global: 52% 57%

Africa/ME: Africa/ME: 61% 66%

North America: North50% America: 52%

South America: South36% America: 58%

Global: 57%

Africa/ME: Asia-Pacific: North America: Proportion of consumers who actively tryingEurope: to improve their diet 66% 55% to avoid added sugars in products 52% Proportion of consumers who say56% that they make conscious attempts

South America: 58%

Global: 57% Global: 51%

Proportion of consumers who say that they make conscious attempts Africa/ME: Asia-Pacific: Europe: North America: to avoid added in products Proportion of consumers whoAsia-Pacific: say56% that they makesugars conscious attempts to avoid added sugars in products 66% 55% 52% Africa: Europe: North America: 58%

49%

52%

60%

South America: South58% America: 48%

Global: 51%

Africa: of consumers who Asia-Pacific: Europe:to avoid added sugarsNorth America: Proportion say that they make conscious attempts in products Proportion of consumers who say a product is healthy if it carries a zero sugar claim 58% 49% 52% 60%

South America: 48%

Global: Global: 51% 47%

Africa: Asia-Pacific: Europe: North America: who say a product is healthy if it carries a zero sugar claim Africa/ME:Proportion of consumers Asia-Pacific: Europe: North America: 58% 49% 52% 60% 40% 46% 45% 48%

South America: South America: 48% 56%

Proportion Global: 47% Global: 47%

Asia-Pacific: Europe: Consumers who are trying to lose weight 51% 51%

of consumers who say a product healthy it carries aAmerica: zero sugar claim Africa/ME:Proportion Asia-Pacific: Europe: North South America: of consumers who say a product isis healthy if it carriesifa zero sugar claim 40%

46%

45%

48%

56%

Africa/ME: 40%

Asia-Pacific: 46%

Europe: 45%

North America: 48%

South America: 56%

Source: Country Profile survey Q1 2019/Q1 2020

Global soft drink trends | 9

The beverage industry must take note of the attitude/behavior gap that exists when it comes to sugar Consumers are not necessarily reducing sugar intake One of the most important things to take into consideration when it comes to the war on sugar is that despite decades of consumers looking to reduce their intake of sugar, rates of obesity and diabetes continue to grow across the globe. Ultimately, this indicates that attempts to improve health are not proving successful, irrespective of what consumers state.

When it comes to healthy eating and drinking, this is something that despite efforts to do otherwise, attempts to improve diets are often short-term. This is because consumers can struggle to stick to dietary plans in the long-term. One of the reasons for this is that healthier eating and drinking is associated with compromise and sacrifice. Irrespective of the health goals they have, consumers also have high levels of self-entitlement and as such, do not want to compromise on these moments of indulgence. Linked to this, consumers can often find healthier food and drink to be bland and boring. Again, this is an attitude that continues to resonate with consumers irrespective of attempts made by the industry to try and convince consumers otherwise.

It also must be remembered that whilst consumers say that whilst they check nutritional labeling, it is something that is too time consuming to do for every product, whilst issues such as out-of-home drinking occasions makes it difficult to monitor nutritional intake. This means that often, consumers do not know how much sugar they are consuming on a daily basis, meaning that even if they believe they are improving their diets this may not necessarily be the case and excessive sugar intake is still occurring.

Irrespective for the reasons given, it is important not to over-estimate the extent that consumers are cutting down on sugar.

Consumers are not seeking out products that contain natural sweeteners Proportion of consumers who believe natural sweeteners are a healthy alternative to sugar Proportion of consumers who believe natural sweeteners are a healthy alternative to sugar

Global: 57%

Global: 57% Global: 32%

Global: 32%

Africa/ME: Asia-Pacific: Europe: North America: 64% 62% 54% 61% Proportion of consumers who believe natural sweeteners are a healthy alternative to sugar Proportion of consumers make conscious attempts to seek out products that contain natural sweeteners Africa/ME: Asia-Pacific: Europe: North America: 64% 62% 54% 61% products Proportion of consumers Asia-Pacific: make conscious attempts to seek out Africa/ME: Europe: North America: 31% 33% 33% 34% that contain natural sweeteners Proportion of consumers make conscious attempts to seek out products that contain natural sweeteners Africa/ME: 31%

Asia-Pacific: 33%

Europe: 33%

Source: Country Profile survey Q1 2019/Q1 2020

10 | L earn more about Fi Global CONNECT: Regions in the Spotlight

North America: 34%

South America: 57%

South America: 57% South America: 28%

South America: 28%

Overall, consumers have favorable perceptions of natural sweeteners. This is not surprising given that consumers have unfavorable perceptions of sugar, with 57% of global consumers believing natural sweeteners to be a healthy alternative. However, as stated already when it comes to the issue of health and wellness and sugar, the attitude/behavior gap needs to be taken into consideration, and natural sweeteners are no exception to that. Whilst nearly six in ten consumers say that they have favorable perceptions of natural sweeteners, only one third of consumers say that they make attempts to seek out products that contain such ingredients.

This data point needs to be taken into context as it does not state that one third of consumers seek out natural sweeteners all the time. Instead it says that they keep a look out for such ingredients, meaning they will buy these products occasionally. This means that overall, consumers are not proactive when it comes to seeking out natural sweeteners.

There are several reasons why this can occur, such as routine and inertia when shopping and concerns that natural sweeteners may command a premium price. However, one of the biggest issues is that consumers can have concerns about the aftertaste of such ingredients, notably stevia. Around a decade ago, much attention was given to beverage brands using stevia in products, including that of major brands such as Coca-Cola and PepsiCo. The launch of this ingredient was in response to concerns about excessive sugar intake. However, there were two issues that the industry faced. Firstly, consumers lacked awareness about what stevia was and secondly, there was concerns about the taste of the products by those who sampled it. FMCG Gurus research conducted nearly ten years later shows that consumers are still conscious about the taste of this natural sweetener.

Again, it must be remembered that irrespective of any health concerns consumers may have, they are not willing to compromise on the taste and enjoyment element of beverage consumption.

Proportion of consumers who think the following types of products taste inferior when they contain stevia compared to normal sugar

Source: Country Profile survey Q1 2019/Q1 2020

Global soft drink trends | 11

Consumers want beverages that offer a natural and sustained energy boost Consumers are feeling tired and fatigued and are struggling to get through the day Consumers feel increasingly time scarce as they look to cram as many activities into the day as possible.

As consumers juggle and struggle with these personal and professional obligations, it is something that can directly impact on their ability to relax and unwind, something that directly impacts sleeping patterns and related to this, energy levels. When it comes to evaluating the busy lives of consumers, it must be questioned whether this time scarcity is something that is an unfortunate consequence of the modern world or something that is self-inflicted. On one hand, consumers are traveling further to work and back than ever before whilst the concept of the average working day continues to evolve with many working longer hours and taking fewer breaks than ever before. However, on the other hand, consumers can often be distracted by the wealth of personal opportunities that exist from a technological perspective, with habits such as spending time on social media and binge watching television and movie streaming services also having an impact on relaxation time.

Irrespective of the reasons, FMCG Gurus research shows that consumers can often feel tired and fatigued on a regular basis, something that can be linked to consumers feeling time-scarce and linked to this, stressed.

Proportion of consumers who say that they often do not have enough Proportion of consumers who say to that get they often do not havethe enough energy to get through the day energy through day

Global: 48% Global: 48%

Proportion of consumers who say that they often do not have enough energy to get through the day Africa/ME: Asia-Pacific: Europe: North America: 46% 52% 46% 46% Proportion of consumers who say that they often do not have enough energy to get through the day Africa/ME: Asia-Pacific: Europe: North America: 46% 52% 46% 46% Africa/ME: Asia-Pacific: Europe: North America: Proportion of consumers who say that they suffer from sleep-related health problems 46% 52% 46% 46%

Global: 53%

Africa/ME: 54%

Global: 48%

South America: 54% South America: 54% South America: 54%

Proportion of consumers who say that they suffer from sleep-related health problems

Global: 53% Global: 53% Global: 57% Global: 57% Global: 57%

Proportion of consumers who say that they suffer from sleep-related health problems Asia-Pacific: Europe: North America: 56% 52% 55% Proportion of consumers who say that they suffer from sleep-related health problems Africa/ME: Asia-Pacific: Europe: North America: 54% 56% 52% 55% Africa/ME: Asia-Pacific: Europe: North America: Proportion of consumers who say that they suffer from stress 54% 56% 52% 55% Africa/ME:

Proportion of consumers who say that they suffer from stress Asia-Pacific: Europe: Asia-Pacific: 63% Asia-Pacific: 63%

Europe: 55% Europe: 55%

South America: 44% South America: 44%

North America:

South America: 61%

North America: 56% North America: 56%

South America: 61% South America: 61%

36% 63% 55% 56% Proportion of consumers whowhosay that theyfromsuffer Proportion of consumers say that they suffer stress from stress Africa/ME: 36% Africa/ME: 36%

South America: 44%

Source: Country Profiles survey Q1 2019/Q1 2020, Cognitive Health survey Q4 2018/Q3 2019

Levels of tiredness and fatigue are something that will impact on cognitive focus and ability to perform tasks, something that will further create feelings of stress and anxiety. Additionally, feelings of stress and anxiety are something that will intensify in 2020 and beyond because of the uncertainty of the impact of COVID-19.

12 | L earn more about Fi Global CONNECT: Regions in the Spotlight

• As consumers adopt a holistic approach to health, cognitive health and mental wellbeing is something that is deemed just as important to consumers as physical health. For instance, when it comes to cognitive health and the ability to concentrate and focus, consumers will recognize that this is something that can impact on overall quality of life and performance at work. Moreover, it is something that can also create more serious problems, for instance consumers driving safely whilst feeling tired and fatigued.

• Over the period April-July 2020, there has been a noticeable increase in the proportion of consumers who say that they are conscious about their mental wellbeing. This is because consumers have faced severe disruption to daily life and also have high levels of concern when it comes to the future, such as the health and wellbeing of loved ones, the state of the economy and whether there will be a second wave of the virus. Given that issues such as stress and anxiety and sleep-related health problems were common before the pandemic, poor levels of mental wellbeing are something that will intensify in the future, especially as consumers believe that the virus will continue to impact on daily lives for at least twelve months.

• Additionally, it is also worth noting that consumers feel that their energy levels have also been impacted

by COVID-19. This is something that will be linked to potential feelings of lethargy that have occurred because of restrictions on movement. It is something that can also be linked to high levels of uncertainty and stress draining consumers of their energy. This highlights the somewhat vicious circle that can exist when it comes to the need for energy and relaxation simultaneously.

As such, consumers will look to take a proactive approach to seeking out products that offer an energy boost. In addition, they will also have favorable perceptions of products that they believe help them relax and unwind and improve their sleeping habits, something that the beverage industry can capitalize on.

Proportion of consumers who say that they have become more conscious about their ooo pprootrritotiin oonnofoofcfoccn oosnnussm uum hhoosassyaayythttahhtaatthtte hhyeeyywhw PrPPorrp m ereesrrsw sw w ho ilalivlm lem abkaekceaotam ttetem em ptopsrtetsotcoo stnsatsyacyhioehuaeslatahltbiheoireuirtnitnthhetehire Proportion of consumers who say that th mentalmewellbeing nftu afltuuw efosCfuresult fI-D C1O ID-1COVID-19 9 truerlelabsaeasinargeraseas ussluat lotra O CltO VoIVD -91V9of daily energy levels a

yeyhahvaevebebceocm om e emm oroerecocnosncsicoiuosuas baobuotuthtehier ir uslut lot foCf O CO VIVDI-D1-919

April April May May July July April May July

May May July July 48% 48% 36% 36% 36%36% 26% 26%

39% 39% 24% 24%

April

94% 93% 93%94% 88% 86% 86%88% 60% 85% 82% 84% 84% 84% 83% 83%84% 82% 82%85% 82% 82% 82% 81% 81% 79% 78% 78%79% 77% 77% 77% 77% 52% 75% 75% 52% 73% 73% 49% 46% 43% 42% 43% 39% 38% 39% 33% 33% 38% 39% 36% 36% 36% 34% 27% 21% 21%

30%

28% 27%

25%

22%

24

10% 10% N/A

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America

Global Global Global

Africa/Middle Africa/Middle Asia-Pacific Asia-Pacific Africa/Middle Asia-Pacific East East East

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America Europe North AmericaSouth America

N/A

Global

N/A

Africa/Middle Asia-Pacifi East

Source: COVID-19 survey, 2020

Global soft drink trends | 13

Proportion of consumers who say that they have become more conscious about their PPrroPoprpoooprrtotio uusm eakcaeokm riotninoonoffoccfoocnnossn m uem errsesrww shw hoohsosaaysyatythhatahttatthhetehyyehywaw ivlelilm lbm eate attem tm eom prtepstctsotnosstcsatiyoayu hsehaaelbathlotiu hetiretirh nientihrtehe daily energy uaslutrelota O CoO VfIVD -D1V -91ID 9of daily enfu efrtugutlevels yruelreeavsaeaslsaraersseas sfouCfltresult CIO -19COVID-19

roem ehb yeeyhcahovam evebebmceocm eceo mnm osrcoeiroecuocsnoasnb csiocouiuotsutashbaeobiruotuthtehier ir 91-919 selutslo ut flotCfoOCf V O CIO VDIV-D1I-D

July May May July July

43%

%

April May July April April May May July July

49% 36% 36% 36% 36% 38% 39%

26% 26%

52%

60% 48% 48%

52%

39% 39% 39%

24% 24%

88% 86% 86%88% 85% 82% 84% 83% 83%84% 82% 82%85% 82% 77% 77% 77% 77% 30%

28% 27%

33% 33%

94% 93% 93%94% 43% 84% 84% 82% 82% 81% 81% 79% 78% 78%79% 75% 75% 37% 73% 73% 30%

29%

25%

22%

24%

25%

23%

21% 21% 10% 10% N/A

urope North AmericaSouth America c Europe Europe North NorthAmericaSouth AmericaSouth America America

N/A

Global Global Global

N/A

Africa/Middle Africa/Middle Asia-Pacific Asia-Pacific Africa/Middle Asia-Pacific East East East

N/A

N/A

N/A

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America Europe North AmericaSouth America

Source: COVID-19 survey, 2020

Consumers want products that offer a natural and sustained energy boost A re-occurring theme throughout this report, consumers indicate that they are taking a more proactive approach to improving all aspects of their health and wellness. The importance of addressing energy levels and mental wellbeing in a pandemic will be a priority for consumers for two reasons. Firstly, reduced levels of job security means that consumers will be especially conscious about their cognitive performance in the workplace because of worries about losing their jobs. Secondly, consumers recognize that poor energy levels and mental wellbeing is something that can impact on health beyond simply influencing mood, such as having a direct impact on immune health for instance. As such, they will want products to address this.

Historically, consumers have had reservations when it comes to the energy boosting category. This is because of the association of the category with ingredients that are not deemed beneficial to health, such as sugar and taurine. Such has been the extent of these concerns at a country level that in recent history there has been some bans and restrictions regarding the consumption of energy drinks. At a time when consumers are more concerned about the ingredients used in products than ever before, this is something that can remain a challenge for the energy drink market. As will be highlighted in the next chapter, consumers are placing a high level of importance on products being 100% natural. This is because consumers want products that they believe contain real and authentic ingredients that offer nutritional value and are not detrimental to their health. As such, if energy drinks are to target consumers, they need to reassure consumers that products will not cause any potential side-effects. When it comes to making natural claims, transparency and validation of claims is key.

At the same time, consumers will also want products that offer a sustained energy boost. This is because at least in the short-term, consumers will continue to get up earlier, go to bed later and try to cram as many activities into the day as possible. As such, they will want to ensure that they stay fresh and reinvigorated so that they are energized and focused to carry out these tasks to the best of their ability. It must be noted that consumers will not be willing to trade-off between the desire for natural ingredients and the desire for a sustained energy boost, and products must be seen to do both.

14 | L earn more about Fi Global CONNECT: Regions in the Spotlight

This is a key reason why sports nutrition beverages will continue to become increasingly mainstream, with high protein beverages not just being sought out by regular gym goers but also everyday consumers who associate high protein/low sugar beverages with offering a natural and sustained energy boost.

Proportion of consumers interested in products that offer a natural energy boost Proportion of consumers interested in products that offer a natural energy boost

Global: 63% Global: 63%

Africa/ME: 86%

Asia-Pacific: Europe: North America: Proportion of consumers interested in products that offer a natural energy boost 65% 57% 64%

Africa/ME: Asia-Pacific: Europe: North America: 86% 65% 57% 64% Proportion of consumers who are interested in products that keep them constantly energized throughout the day

South America: 68% South America: 68%

Proportion of consumers who are interested in products that keep them constantly energized throughout the day Global: Africa/ME: America: South America: Proportion of consumers who areAsia-Pacific: interested in products that keepEurope: them constantly energizedNorth throughout the day

61%

86%

64%

53%

64%

62%

Global: 61%

Africa/ME: 86%

Asia-Pacific: 64%

Europe: 53%

North America: 64%

South America: 62%

Source: Country Profile survey, Q1 2019/Q1 2020

Consumers will also want beverages that help aid relaxation Whilst consumers will want to maximize their energy levels to cram as many activities into the day as possible in the short-term, they will also realize that is not the healthiest approach to wellbeing in the long-term. As a result of this, consumers will also look to address their mental wellbeing and make more conscious attempts to relax.

Prior to the pandemic, consumers were not happy with their work/life balance. This is something that can be attributed to the changing nature of work, with many experiencing long commute times and long working hours. This is something that has resulted in consumers often having to take work home with them and not taking their full holiday allowance. This is something that can result in consumers feeling constantly fatigued.

At the same time, consumers are taking a holistic approach to health as discussed earlier in the report. This means that they are recognizing that mental wellbeing is just as important to overall wellbeing as physical health, and that negative emotions are something that can directly impact on other areas such as heart health and immunity. This is something that consumers will want to avoid in a pandemic environment as they look to maximize their health and reduce their vulnerability to illness.

However, COVID-19 is something that will intensify problems that were already common prior to the pandemic. As mentioned, poor sleep health, stress, and anxiety are already common amongst the globe.

For instance, consumers can often worry about a variety of issues such as the state of the economy and household bills, the health and wellbeing of loved ones and wider issues that can disrupt daily life. These are worries that will intensify in 2020 and beyond. FMCG Gurus research conducted in 2019 for example showed that sleeping habits across the globe were already in need of improvement.

Global soft drink trends | 15

Proportion of consumers who say that they find it difficult to get to sleep once they get into bed Proportion of consumers who say that they find it difficult to get to sleep once they get into bed

Proportion of consumers who say that they find it difficult to get to sleep once they get into bed Africa/ME: Asia-Pacific: Europe: North America: 28% 32% 35% 34% Africa/ME: Asia-Pacific: Europe: North America: 28% 32% 35% 34%

Global: 33% Global: 33%

South America: 31% South America: 31%

Proportion of consumers who say that they typically get less than five hours sleep in the average night

Proportion of consumers who say that they typically get less than five hours sleep in the Proportion of consumers who say that they typically night get less than five hours sleep in the average night average Global: Africa/ME: Asia-Pacific: Europe: North America: South America: 25% Global: 25%

33% Africa/ME: 33%

20% Asia-Pacific: 20%

27% Europe: 27%

23% North America: 23%

23% South America: 23%

Source: Sleep and Stress Management survey, Q3 2019

As a result of this, consumers were already demonstrating an interest in products that help them rest and relax, improve sleep quality, and help them wake up feeling refreshed.

Proportion of consumers who say that they are interested in food and drink products that help Proportion of consumers who say that they arerelax interested in foodunwind and drink products that help them relax and unwind them and Proportion of consumers who say that they are interested in food and drink products that help them relax and unwind Global: 62% Global: 62% Global: 62% Global: Proportion 62% Global: 62% Global: 62% Global: 62% Global: 62%

of

Proportion of Global: 64% Global: 64% Global: 64% Global: 64%

Africa/ME: Asia-Pacific: Europe: Northrelax America: South America: Proportion of consumers who say that they are interested in food and drink products that help them and unwind 83% 68% 55% 64% 60% Africa/ME: Asia-Pacific: Europe: Northrelax America: South America: Proportion of consumers who say that they are interested in food and drink products that help them and unwind 83% 68% 55% 64% 60% Africa/ME: Asia-Pacific: Europe: North America: South America: 83% 68% 55% 64% Africa/ME: Asia-Pacific: Europe: North America: South60% America: Proportion of consumers say that that theythey are interested food and drink products that improve sleep quality consumers who who say are ininterested in food and that 83% 68% 55% 64%drink products 60% Proportion of consumers who sayimprove that they are interested in food and drink products that improve sleep quality sleep quality

Africa/ME:of consumers who say Asia-Pacific: North America: South America: Proportion that they are interested in foodEurope: and drink products that improve sleep quality 78% 65% 55% 68% 70% Africa/ME:of consumers who say Asia-Pacific: North America: South America: Proportion that they are interested in foodEurope: and drink products that improve sleep quality 78% 65% 55% 68% 70% Africa/ME: Asia-Pacific: Europe: North America: South America: 78% 65% 55% 68% 70% Africa/ME: Asia-Pacific: Europe: North America: South America: Proportion of consumers who say that they are interested in food and drink products help reduce stress 78% 65% 55% 68% 70% Proportion ofwho consumers whothat say thatthey they areare interested in food and drink reduce stress products help consumers say interested inproducts foodhelp and drink Africa/ME: Asia-Pacific: Europe: North America: Proportion of consumers who say that they are interested in food and drink products help reduce stress reduce stress 85% 64% 58% 67% Africa/ME: Asia-Pacific: Europe: North America: Proportion of consumers who say that they are interested in food and drink products help reduce stress 85% 64% 58% 67% Africa/ME: Asia-Pacific: Europe: North America: 85% 64% 58% Africa/ME: Asia-Pacific: Europe: North67% America: Proportion of consumers who say that they are interested in food and drink that helps them wake up feeling fresh 85% 64% 58% 67% Proportion of consumers who say that they are interested in food and drink that helps them wake up feeling fresh

South America: 70% South America: 70% South America: South70% America: 70%

Global: Africa/ME: Asia-Pacific: Europe: Northup America: South America: Proportion of consumers who saythat that they are interested in food and drink that themand wake feeling fresh Proportion of consumers who say they are interested in helps food drink that helps them 67% 88% 70% 61% 70% 65% Global: Africa/ME: Europe: Northup America: South America: Proportion of consumers who sayAsia-Pacific: that they are interested in food and drink that helps them wake feeling fresh wake up feeling fresh 67% 88% 70% 61% 70% 65% Global: 67% Global: 67%

Africa/ME: 88% Africa/ME: 88%

Asia-Pacific: 70% Asia-Pacific: 70%

Europe: 61% Europe: 61%

North America: North70% America: 70%

South America: South65% America: 65%

Source: FMCG Gurus Country Profile survey Q1 2019/Q1 2020

Again, when it comes to beverages that help aid relaxation, it will be crucial that products are deemed natural and free from chemicals. This is because consumers will want to avoid products that they feel carry long-term health implications to address short-term health issues. Furthermore, transparency is something that will be also of high importance to consumers when it comes to nutritional labeling. This is something that will drive demand for botanical ingredients that consumers associate with being natural and aiding relaxation.

It must be noted that when it comes to relaxation, consumers do demonstrate some interest in the ingredient CBD. However, the mainstream appeal of this ingredient is something that will be undermined by consumers have concerns about the risk of side-effects from such an ingredient.

16 | L earn more about Fi Global CONNECT: Regions in the Spotlight

Consumers want beverages that they deem to be green and clean Consumers want products that they deem to be 100% natural In recent years, there has been much attention given to the increased demand for products that are deemed to be clean label. However, the reality is that clean label remains something of an industry-led term rather than something that is consumer driven. As such, simply labeling a product as clean label is something that will not significantly influence consumer behavior when it comes to buying beverages.

Instead, it is important to understand what the underlying trend is when it comes to the clean label movement and relate this to what evolving need states are driving consumption patterns.

Clean label is the evolution of consumers wanting products that they deem to be 100% natural. This is because consumers associate beverages that are 100% natural with a variety of benefits.

Proportion of consumers who deem it important that food and drink is 100% natural Proportion of consumers who deem it important that food and drink is 100% natural Global: 72%

Africa/ME: Asia-Pacific: Europe: North America: Proportion of consumers who deem it important that food and drink is 100% natural 80% 71% 72% 62%

South America: 71%

Global: 72%

Africa/ME: 80%

South America: 71%

Asia-Pacific: Europe: North America: 71% 72% 62% Why is it important that products are 100% natural. Products are‌. important that products are that 100% natural.

Products are‌.

Consumers who believe it is important products are 100% natural

Why is it Consumers whoAfrica/Middle believe it is important that products areSouth 100% natural Global East Asia-Pacific North America America Why is it important that products areEurope 100% natural.

Products are‌.

Consumers who believe it is important that products are 100% natural

55%

55%

51%

51%

55%

55%

57%

57%

62%

51%

51%

51%

51%

Global 45%

45%

48%

48%

Africa/Middle East 44%

44%

45%

45%

43%

43%

41%

41%

Asia-Pacific 46%

46%

44%

47%

44%

47%

Europe 45%

45%

50%

50%

46%

46%

North 52% America53%

South America 53%

50%

49%

42%

62% 52%

53%

50%

53%

49% 42%

50%

47% 39%

40%

39%

40%

38% 50%

47%

Better-for-me

More sustainable

Better quality

Healthy

Tasty

Better-for-me

More sustainable

Better quality

Healthy

Tasty

38%

Source: FMCG Gurus Clean Label survey, Q1 2019/Q1 2020

However, whilst consumers have favorable perceptions towards products that are deemed to be 100% natural, they are also becoming more skeptical of claims and questioning whether products can be 100% natural. This relates to wider trust issues that consumers have towards brands, especially larger multinationals. Indeed, consumers are becoming increasingly skeptical of the practices and policies of brands, often believing that they do not have the best interests of the consumer at heart and that they are focused purely on profit maximization. Related to this, consumers can often feel that brands can make misleading claims around topics such as health and sustainability to charge a premium price. These suspicions are something that are the result of high-profile cases where brands have seen to make such claims, only for these claims to later be undermined. Unfortunately for the industry, in times of uncertainty, these levels of skepticism are something that tend to intensify.

Global soft drink trends | 17

As such, the demand for clean label products is effectively the evolution of the demand for natural products, with consumers wanting maximum transparency when it comes to such claims. Consumers want products that they deem to contain real and authentic ingredients that they believe offer nutritional value and are not detrimental to their health. In addition, consumers want products that they believe to be environmentally friendly. This is especially important as consumers adopt the notion of Good for Me, Good for the Earth and believe that the topics of health and sustainability are interlinked. Something that will be discussed later in this chapter, whilst health has become more important to consumers in a pandemic environment, so has the environment, meaning consumers want products that are good for them and the wider environment.

When it comes to natural claims, it is important to remember that it is a phrase that is subjective in nature and can mean many different things to consumers, meaning it is important for brands to validate what they mean by such claims.

What does the word 'natural' mean to you when it comes to food and drink?

Source: FMCG Gurus Clean Label survey, Q1 2019/Q1 2020

Given that the word natural is something that can mean many different things to different consumers, it increases the risk of consumers believing that a product is natural for one reason, when actually the brand has labeled it natural for another reason. Such misconceptions are something that will increase levels of skepticism towards claims in the long-term. Highlighting the need for maximum transparency when it comes to labeling a product as natural.

2020 in shifts the demand for health ingredients | 18 the in Spotlight 18 | L earn more about Fi Global CONNECT: Regions

When it comes to offering maximum transparency when it comes to natural claims, there are two steps that the beverage industry can look to adopt: • Consumers will appreciate nutritional labeling that is as simplified as possible. One of the reasons why consumers have become more skeptical towards claims made by brands in recent years is because consumers can believe that brands make nutritional labeling deliberately confusing in order to try and disguise certain ingredients used in product formulation. A prime example of this is the issue of hidden sugars that consumers believe are a real issue in products. As such, consumers want nutritional labeling to be as simple and easy to understand as possible. This is especially true given that consumers are conscious about ingredients that sound chemical and can make conscious efforts to avoid ingredients that they have not heard of. • In the long-term, brands can look to become early adopters of blockchain technology, offering consumers maximum transparency when it comes to natural claims (and environmental initiatives along the supply chain). In Q3 2019, FMCG Gurus surveyed twenty-six countries about blockchain technology.

The research found that across the globe, only 18% of consumers said that they had heard of such technology. However, when given a definition, a total of 50% said that they would be likely to use such technology, at least some of the time. Given how consumers are becoming increasingly tech-savvy, it highlights new opportunities to communicate product claims in a transparent way to enhance credibility claims when it comes to natural formulation.

Proportion of consumers who want nutritional labeling to be as simplified as possible Proportion of consumers who want nutritional labeling to be as simplified as possible

Global: 69%

Africa/ME: 90%

Asia-Pacific: 64%

Europe: 64%

North America: 82%

South America: 69%

Source: FMCG Gurus Country Profile survey, Q1 2019/Q1 2020

Consumers want beverages that have a minimum impact on the environment For many years, consumers have felt that the environment is at something of a tipping point, with many feeling that levels of damage done is irreversible. This negative sentiment is something that has been driven by firsthand exposure to the destruction of natural resources, as well as consumers witnessing more adverse weather conditions that they attribute to the consequences of globalization and industrialization. As a result of this, consumers are becoming increasingly fearful of the impact that a deteriorating environment will have on the quality of life of the current and future generations.

Something that will also be touched upon later in this chapter, one of the few positive sentiments to arrive from the COVID-19 pandemic is the renewed sense of optimism that consumers have towards the environment. This is due to consumers witnessing natural resources begin to replenish themselves relatively quickly because of lockdowns and restrictions on movements. As a result, consumers are becoming more optimistic that damage done to the environment is reversible, something that will increase the appeal of products that are deemed to be green and clean in the future.

Global soft drink trends | 19

Historically, protecting the environment has been seen as something that is more the responsibility of big businesses than the individual. After all, consumers attribute damage done to the environment to globalization and can feel that simply changing their behavior is less impactful compared to large companies changing their policies. However, in recent years, this attitude has evolved, and consumers now associate protecting the environment as being a collective effort between brand and individual. This is something that is having a direct impact on eating and drinking habits, with 45% of consumers across the globe saying that they have changed their diets in the last two years to behave in a more sustainable manner.

Proportion of consumers who say that they have changed their diets in the last two years in Proportion of order consumers to wholead say that they have changed their diets in the last two years in order to lifestyle lead a more environmentallya more environmentally-friendly friendly lifestyle

Global: 45%

Africa/ME: 65%

Asia-Pacific: 47%

Europe: 38%

North America: 36%

South America: 57%

What steps have you taken?

Consumers who have made changes to their diets

What steps have you taken?

Global Africa/ME Asia-Pacific Europe Consumers who have made changes to their diets

North America

South America

Reduced/eliminated eating meat

33%

29%

33%

35%

31%

29%

Reduced/eliminated eating/drinking dairy

42%

41%

38%

48%

37%

38%

Reduced/eliminated eating fish

14%

15%

13%

13%

16%

15%

Followed a vegetarian diet

22%

27%

22%

19%

28%

21%

Followed a vegan diet

10%

14%

10%

10%

10%

10%

Turned to more local food and drink

46%

47%

44%

47%

54%

38%

Made greater attempts to reduce food waste

48%

28%

42%

57%

53%

41%

Eaten less processed food

22%

37%

23%

18%

23%

14%

Eaten more fresh food and drink

42%

39%

36%

43%

54%

45%

Made greater attempts to check out the environmental credentials of products before buying

30%

28%

28%

31%

46%

21%

Other

9%

7%

10%

9%

8%

8%

Source: FMCG Gurus Sustainability survey, Q3 2019

To lead a more environmentally friendly lifestyle, consumers have taken a variety of steps, something which will especially increase the appeal of the following types of beverages: • Plant-based beverages. Across the globe, consumers are adopting vegan, vegetarian and flexitarian diets as they look to moderate or eliminate their intake of animal produce. As well as the related sustainability benefits, consumers also associate reduced intake of animal produce with being healthier.

This is something that will drive demand for plant-based beverages over the next couple of years as an alternative to dairy for instance, or products that are high in plant-protein and are touted as being functional as well as sustainable. Like many other trends, this is something that will intensify in importance over the next twelve months because of COVID-19. FMCG Gurus research for instance shows that over the period April-July 2020, 23% of consumers said that they plan to increase their intake of plant-based food and drink products because of the virus. • Locally produced beverages. Consumers have favorable perceptions of products that they deem local, associating such products with being natural and more environmentally friendly as well as more trustworthy. This is because consumers associate small-scale farmers and suppliers with having more artisan production techniques and being more likely to have the best interests of the consumer heart,

2020 in shifts the demand for health ingredients | 20 the in Spotlight 20 | L earn more about Fi Global CONNECT: Regions

meaning they can offer greater quality as well as health and sustainable benefit. As such, consumers will have favorable perceptions of beverages with shortened supply chains, especially because of COVID-19 and consumers becoming more conscious about the country of origin of products.

Again, when it comes to claims such as locality it must be remembered that such phrases can be subjective in nature and as such, consumers want maximum validation when it comes to such claims. This is also an area where simplified nutritional labeling and blockchain technology can be especially useful.

The importance of beverages being green and clean will intensify because of COVID-19 COVID-19 is having a significant impact of the beverage habits of consumers because they are becoming more health conscious and more environmentally focused. Whilst much attention has been given to consumers becoming more health conscious in this report, attitudes to the environment are also evolving.

FMCG Gurus research for instance conducted over the period April-July 2020 shows that because of the virus, a growing proportion of consumers say that they are becoming more conscious about the long-term implications of the environment. This is because consumers have a renewed sense of optimism that the environment can be improved meaning a proactive response from brands is required – especially as this is related to health.

PrPorPporoporoptrioo ressay ohohsthat aosyasytahytahttthey illw rsnttseconcerned tael trinotinonfocfoocfnowho csnousnm usm uem reswrw shw ahtahtehtyehyw ewill yw ilblielm lm akaoekreamore tacto tetn m ecm petp odtosatsb atyoauyhteheaen latvhltiirheoirenirm niabout nethnteh yeyhahvaevebebceocm om e emm oroerecocnosnProportion csicoiuosuas baobuotuthtehierof ir consumers be sIs-De1-d919 fiusfstuutreuafter esreasfataserareCCOVID-19 rseOusVlutIlD ot -fo1Cf9O CpO VaIVD uslut lot foCf O CO VIVDI-D1-919 issues passed

April April May May July July

May May July July

94% 93% 93%94% 80% 88% 86% 86%88% 85% 82% 84% 84% 84% 75% 83% 83%84% 82% 82%85% 82% 82% 82% 81% 81% 79% 71% 77% 78% 78%79% 77% 77% 77% 69% 68% 68% 69% 75% 73% 73% 66% 75% 65% 62% 61% 59% 58% 57% 55% 51% 33% 33% 48% 47%

48% 48% 36% 36% 36%36% 26% 26%

environmental

39% 39% 24% 24%

21% 21% 10% 10%

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America

Global Global

Africa/Middle Africa/Middle Asia-Pacific Asia-Pacific East East

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America

Source: COVID-19 survey, Q1 2019/Q1 2020

Global soft drink trends | 21

As a result of this, the demand for clean label style beverages will increase in importance over the next few years, as consumers put more importance on brands carrying natural claims and related to this, locality, and sustainability claims. If consumers believe that a beverage is genuinely 100% natural and carries over favorable product traits it is something that will significantly influence purchasing behavior. However as stressed already in this report, it is important that beverage brands validate such claims.

Proportion of consumers who say that they are being more attentive to natural ingredient claims as a result of COVID-19 Proportion of consumers who say that they are being more attentive to natural ingredient claims as a result of COVID-19 – July,aggregated) aggregated) (April –(April July, Global: 56% Global: 56%

Proportion of consumers who say thatAsia-Pacific: they are being more attentive toEurope: natural ingredient claims asNorth a result of COVID-19 Africa/ME: America: 67% 56% (April – July, aggregated) 53% 57%

South America: 64%

Africa/ME: America: South America: Proportion of consumers who say thatAsia-Pacific: they are being more attentive toEurope: natural ingredient claims asNorth a result of COVID-19 Proportion they(April are being attentive53% to locality claims as a result of57% COVID-19 67% of consumers who say that 56% 64% – July,more aggregated) (April – July, aggregated) Proportion of consumers who say that they are being more attentive to locality

Global: Global: 56% 50%

claims as a result of COVID-19 Africa/ME: Asia-Pacific: Europe: North America: Proportion of consumers who sayAsia-Pacific: that they are being more attentive to locality claims as a result ofAmerica: COVID-19 Africa/ME: Europe: North 67% 56% 53% 57% – July,aggregated) aggregated) 50% (April July, 54% 51% –(April 47%

South America: South64% America: 51%

Global: 50%

Africa/ME: Europe: North Proportion of consumers who sayAsia-Pacific: that they are being more attentive to locality claims as a result ofAmerica: COVID-19 Proportion of consumers who say that they are being more attentive to nutritional benefit claims as a result of COVID-19 54% 51% (April – July, aggregated) 50% 47% (April – July, aggregated)

South America: 51%

Global: Global: 50% 69%

Africa/ME: North America: Proportion of consumers who say that Asia-Pacific: they are being more attentive to Europe: nutritional benefit claims as a result of COVID-19 Africa/ME: Asia-Pacific: Europe: North America: 54% 51% 47% 71% 68% (April – July, aggregated) 50% 67% 73%

South America: South America: 51% 77%

Proportion of consumers who say that they are being more attentive to nutritional benefit claims asbeing a result of COVID-19 Global: Africa/ME: North America: South America: Proportion of consumers who say that Asia-Pacific: they are more attentive to Europe: nutritional benefit claims as a result of COVID-19 69% 71% 68% (April – July, aggregated) 67% 73% 77% (April – July, aggregated) Global: 69%

Africa/ME: 71%

Asia-Pacific: 68%

Europe: 67%

North America: 73%

South America: 77%

Source: COVID-19 survey, 2020

2020 in shifts the demand for health ingredients | 22 the in Spotlight 22 | L earn more about Fi Global CONNECT: Regions

Consumers want experimental flavors Consumers want genuine experiences when it comes to beverages Something already stated earlier on in this report, consumers have high levels of self-entitlement and want genuine occasions when it comes to products, even everyday economical offerings such as beverages.

These levels of high entitlement can be attributed to many factors, such as consumers being exposed to more product choice than ever before, being more exposed to global and regional cuisines than ever before and brands redefining the boundaries of premium in product categories. All of this has made consumers more difficult to impress when it comes to products because of the desire for a genuine experience.

As a result of this, consumers are deeming themselves to be adventurous and experimental when it comes to seeking out new products.

Proportion of consumers who say that they have become more experimental with their choice of grocery products over thewithlast years Proportion of consumers who say that they have become more experimental their five choice of grocery products over the last five Global: 57% Global: 57%

Proportion of consumers who say that they have become more years experimental with their choice of grocery products over the last five years Africa/ME: Asia-Pacific: Europe: North America: 64% 63% 53% Africa/ME: Asia-Pacific: Europe: North57% America: 64%

63%

53%

57%

South America: South63% America: 63%

Proportion of consumers who consider themselves to be adventurous when it comes to food Proportion of consumers who consider themselves to be adventurous when it comes to food and drink products drink Proportion of consumers who considerand themselves to be products adventurous when it comes to food and drink products Global: 54% Global: 54%

Africa/ME: 62% Africa/ME:

Asia-Pacific: 61% Asia-Pacific:

62%

Europe: 49% Europe:

61%

North America: North50% America:

49%

50%

South America: South60% America: 60%

Proportion of consumers who say that they like food and drink products with new and unusual flavors

Source: FMCG Gurus Country Profile survey Q1 2019/Q1 2020

Proportion of consumers who say that they flavors 57% like food and drink products with new and unusual 57% 50%

57%

48%

44%

57%

50% Another reason for the demand for 43% adventurous and experimental products, even when it comes to 48% 44%

43%

everyday offerings such as drinks, is something that can also be attributed to self-expression. Consumers increasingly deem themselves to be sophisticated and mature. Moreover, they want to express these attributes onto their social circle and wider society, and adventurous and experimental products are seen to help achieve this. Social media is also something that has influenced this attitude, with the Global

Africa/Middle East

Asia-Pacific

Europe

North America

South America

Global

Africa/Middle East

Asia-Pacific

Europe

North America

South America

rise of websites such as Instagram meaning that consumers can picture themselves trying experimental products online to enhance a profile of themselves.

This is something that is driving demand for new and alternative flavors across the beverage industry, as consumers look for new experiences.

This is true across all product categories, even economical options such as cordial/squash. Such attitudes will also be influenced by many consumers believing that mainstream brands are bland and boring and do not reflect their current attitudes and outlook on life.

To respond to this, the industry needs to launch new and exciting flavors that not only offer a genuine experience but also enable some form of social identity for the individual.

Global soft drink trends | 23

Proportion of consumers who say that they have become more experimental with their choice of grocery products over the last five years Global: 57%

Africa/ME: 64%

Asia-Pacific: 63%

Europe: 53%

North America: 57%

South America: 63%

Proportion of consumers who consider themselves to be adventurous when it comes to food and drink products Global: 54%

Africa/ME: 62%

Asia-Pacific: 61%

Europe: 49%

North America: 50%

South America: 60%

Proportion of consumers who say that they like food and drink products with new and unusual flavors Proportion of consumers who say that they like food and drink products with new and unusual flavors 57%

50% 43%

Global

57% 48%

Africa/Middle East

Asia-Pacific

Europe

44%

North America

South America

Source: FMCG Gurus Country Profile survey Q1 2019/Q1 2020

Brands can look to respond to this in several ways. For instance: • Brands can launch alcoholic flavors into soft drink categories. Consumers want products that push the boundaries of premium and alcoholic flavors can help achieve this, especially as it means that beverages are targeted at adults and not children. Moreover, this is something that will also appeal to consumers who are looking to abstain from or moderate alcohol intake but find alcoholic beverage substitutes to be expensive.

• Flavor fusions. This is something that will also appeal to consumers by pairing new and unusual flavors together. Such a strategy is effective for pushing the boundaries of premium in a cost-effective manner.

Flavor pairings can also look to fuse flavors which would not normally be put together, something that can help improve stand out appeal.

• Regional flavors. Consumers are exposed to more choice and flavors from around the globe than ever before. As such, it is not enough for a product to be from a specific country. Instead, the beverage industry can look to promote region-specific flavors from different countries across the soft drinks market.

This will appeal to consumers who want to replicate occasions they may have experienced whilst holidaying or traveling at home.

• F lavors not synonymous with a category. For instance, brands can look to launch savory flavors in product categories synonymous with sweet flavors or vice versa. When it comes to such strategies it is important that such novel offerings are not being done just because the brand can but instead because it will offer some form of sensory experience.

2020 in shifts the demand for health ingredients | 24 the in Spotlight 24 | L earn more about Fi Global CONNECT: Regions

Consumers still want new flavors in a recessionary environment Whilst much attention has been given to consumers being concerned about their finances in 2020 and beyond because of the fear of recession brought about by COVID-19, consumers are still wanting to see new and novel flavors.

are being PPrrPoorppoooprrottiriootn ssnuusm eerresssay aasyyatythhtaahttthey eillinlm attostetsantmore inoo noffoccfoocnnowho m um rw w s hw hoohsosthat atthhteehyyeaywrw lom awkanow ebkeaitn attegtm em m potprsettso yatiyhvehaetloathltniheattentive irw eirnfilnathvto ehres yhahvaevebebceocm om e emm oroerecocnosncsiProportion coiuosuas baobuotuthtehier irof consumers IDO 1D9I-D1-919 fas uftuutarua esrearesult sareas saruerlsteusolutfof lC ot O foCfVCOVID-19 O C V-IV slut lot foCf O CO VIVDI-D1-919 April May July April April May May July July

May May July July

94% 93% 93%94% 88% 86% 86%88% 85% 82% 84% 60% 82% 84% 84% 57% 83% 83%84% 58% 82%85% 82% 82% 82% 57% 81% 81% 79% 55% 78% 78%79% 77% 77% 55% 77% 77% 75% 75% 53% 51% 73% 50% 49% 49% 49% 73% 49% 48% 48% 48% 44% 39% 33% 33%

48% 48% 36% 36% 36%36%

26% 26%

to new flavors

39% 39% 24% 24%

21% 21% 10% 10%

Europe Europe North NorthAmericaSouth AmericaSouthAmerica America

Global Global Global

Africa/Middle Asia-Pacific Africa/Middle Africa/Middle Asia-Pacific Asia-Pacific East East East

Europe North AmericaSouth America Europe Europe North NorthAmericaSouth AmericaSouthAmerica America

Source: COVID-19 survey, 2020

This shows that even in times of uncertainty, consumers want to enjoy moments of small indulgence. This is something that can be linked to consumers wanting moments of escapism to deal with the pressures of everyday life. When it comes to such products, affordability is something that will be crucial for consumers.

Nevertheless, this is important for the soft drinks industry as it shows the importance of offering consumers new and novel flavors in times of uncertainty.  

Global soft drink trends | 25

Conclusions The war on sugar is something that will intensify in 2020, as consumers becoming increasingly concerned about their waistlines because of the disruption to daily lives caused by COVID-19. At the same time, brands should be cautious when evaluating whether consumers will actually change their consumption habits because of these concerns. For instance, there have been high profile cases where better-for-you alternatives of flagship products with reduced sugar content has failed. This is because consumers struggle to stick to plans to reduce sugar intake in the long-term. This can be attributed to many reasons, such as consumers not having the time to regularly monitor sugar intake or associating better-for-you offerings with compromised taste. As such, brands should treat the idea of reducing sugar from products with caution, as consumers will not want indulgence to be compromised.

At the same time, the industry should look to address the issue of natural sweeteners within the industry.

After all, consumers have favorable perceptions of such ingredients but do not tend to seek them out. One of the main reasons for this is that sweeteners such as stevia can be associated with compromised taste.

Irrespective of the health concerns that they have, consumers are unwilling to compromise on sensory appeal. As such, brands should look to invest in alternative sweeteners – such as monk fruit for instance – to help position beverages as better-for-you without being seen to compromise on taste.

Beverage brands also need to capitalize on the demand for consumers wanting products that offer a sustained energy boost, especially as consumers are struggling with their work/life balances and struggling to switch off and relax. These behavioral traits are something that will intensify in 2020 and beyond because of the levels of uncertainty brought about by COVID-19 impacting on the mental wellbeing of consumers.

At the same time, consumers have historically had concerns about the energy boosting beverage market because of the association with ingredients such as sugar and taurine. As such, it is crucial that beverages are seen to offer consumers a natural energy boost.

At the other end of the spectrum, high levels of uncertainty brought about by COVID-19 is something that will also drive demand for beverages that aid relaxation and help improve sleeping patterns. Indeed, issues such as stress, anxiety, and disrupted sleeping patterns were already common amongst consumers prior to the pandemic. Given the high levels of uncertainty faced by consumers, mental wellbeing is something that will continue to be impacted. At a time when consumers adopt the notion of holistic health and recognize that poor cognitive health and mental wellbeing can have a significant impact on health, there will be high demand for products that help address sleep and stress management.

Again, reassurance around natural formulation is something that will be critical to consumers.

2020 in shifts the demand for health ingredients | 26 the in Spotlight 26 | L earn more about Fi Global CONNECT: Regions

Consumers want beverages to be 100% natural. At the same time, they can be increasingly skeptical of natural claims made by brands. This is due to consumers not believing brands have their best interests at heart and being prone to making misleading claims around issues such as health and sustainability. If brands are to reassure consumers about natural claims, they need to offer maximum transparency. There are two ways of doing this. Firstly, brands can ensure that nutritional labeling is as simplified as possible so that consumers do not believe it is intentionally misleading and secondly, consumers can look to adopt blockchain technology to validate practices and policies along the supply chain.

In recent years, consumers have adopted the notion of Good for Me, Good for the Earth, believing that the issues of health and sustainability are interlinked. As a result of COVID-19, consumers are simultaneously becoming more conscious about their health whilst being more optimistic that damage done to the environment can be addressed. As a result of this, they will increasingly seek out products that they deem green and clean, driving demand for beverages in the industry that are positioned around locality and sustainability claims, as well as plant-based claims. Again, when it comes to such claims, validation and transparency is crucial.

Consumers deem themselves to be experimental and like products that offer genuine experiences, this is true even when it comes to everyday economical products such as soft drinks. At the same time, exposure to more product choice than ever before can also make consumers increasingly difficult to please.

To respond to this, the beverage industry needs to launch new and innovative flavors that challenge perceptions within the industry and create stand out appeal. This can be done through strategies such as flavor pairing, launching regional flavors as well as global ones and launching flavor types that are not synonymous with categories. When it comes to such strategies, it is important that products are seen to be premium as well as novel.

New flavors will be of appeal to consumers because of the recession that is brought about by COVID-19.

This is because in times of uncertainty, consumers like moments of small and affordable indulgence to escape the pressures of daily live, especially when they are having to reduce spend on big ticket items. As such, beverage brands should be encouraged to launch new and exciting flavors even in a recessionary environment.

 

Powered by: FMCG Gurus provides market research and insight into consumer attitudes and behaviours across the food, beverage and supplement markets around the world.

Global soft drink trends | 27

Appendix FMCG Gurus used the following survey series for this report: • Beer survey series (conducted Q 2019) – 25,000 respondents – 25 countries • Country Profile survey series (conducted Q1 2019/Q1 2020) – 43,000 respondents – 43 countries • Clean Label and Naturalness survey series (Conducted Q1 2019/Q1 2020) – 43,000 respondents – 43 countries • COVID-19 survey series (conducted April, May, and July 2020) – 46,000 respondents – 18 countries

Demographics

Male Female 18-24 25-34 35-44 45-54 55-64 65+

Beer survey

51% 49% 13% 18% 17% 17% 15% 21%

Country Profile

50%

50%

16%

21%

17%

16%

15%

17%

Clean Label and Naturalness 50% 50% 14% 21% 18% 17% 14% 16% COVID-19

50% 50% 13% 21% 16% 16% 13% 21

2020 in shifts the demand for health ingredients | 28 the in Spotlight 28 | L earn more about Fi Global CONNECT: Regions

Countries Beer

Country Profile

Clean Label and Naturalness

COVID-19

Argentina Australia Brazil Canada China Denmark France Germany Indonesia Italy Japan Malaysia Mexico The Netherlands Nigeria Poland Serbia Slovenia South Africa South Korea Spain Turkey UK USA Vietnam

Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Croatia Czech Republic Denmark Egypt France Germany Hungary India Indonesia Italy Japan Kenya Malaysia Mexico The Netherlands Nigeria Philippines Poland Portugal Romania Russia Saudi Arabia Serbia Slovakia Slovenia South Africa South Korea Spain Sweden Thailand Turkey UK USA Vietnam

Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Croatia Czech Republic Denmark Egypt France Germany Hungary India Indonesia Italy Japan Kenya Malaysia Mexico The Netherlands Nigeria Philippines Poland Portugal Romania Russia Saudi Arabia Serbia Slovakia Slovenia South Africa South Korea Spain Sweden Thailand Turkey UK USA Vietnam

Australia Brazil Canada China Denmark France Germany Italy Japan Mexico The Netherlands Poland South Africa South Korea Turkey UK USA Vietnam

Global soft drink trends | 29

Learn more about Fi Global insights:

insights.figlobal.com