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Michael C. Bellas

Chairman & CEO

Beverage Marketing Corporation

The Beverage Forum 2019

2020s VISION:LOOKING AHEAD

TO THE NEXT BEVERAGE DECADE

2

THE 2010s DEFINED

Influence of Millennials

Growth of craft

Decline of many major brands

Constantly changing retail environment

Emerging technologies

3

THE 2020s AT HAND

Dramatic & disruptive change

Influence of Gen Z

Smart technologies

Beverage companies digitize

4

U.S. Total Beverage Market2014 – 2018

Volu

me C

han

ge

Source: Beverage Marketing Corporation

2014 2015 2016 2017 2018

1.1%

1.6%

2.0%

0.7%

1.1%

5

U.S. Beverage Market Revenues2014 – 2018


2014 2015 2016 2017 2018 14/18 CAGR

1.1%

1.6%

2.0%

0.7%

1.1%1.4%

2.7%

2.3%2.1% 2.1% 2.0% 2.1%

Volume Change

Revenue Change

6

U.S. Beverage Market2017 – 2018


1.8%

-0.7%-1.0%

1.7%

2.3%

-0.6% -0.6%

-1.3%

2017

2018

Tap Water Refreshment Beverages

Beverage Alcohol

Traditional Beverages

• Bottled Water

• CSDs

• Energy Drinks

• Fruit Beverages

• RTD Coffee

• RTD Tea

• Sports Drinks

• Value-Added Water

• Craft LRBs

• Beer

• Spirits

• Water

• Hot Coffee

• Hot Tea

• Milk

7

Bottled Water2017 – 2018


6.1%

5.0%

2017 2018

Bottled Water Growth Strong growth of 5%

Slightly lower rate than previous years

Ideal match for today’s consumer

87% of entire LRB growth

Domestic sparkling water fastest growing segment

8

RTD Coffee2017 – 2018


12.8%

7.4%

2017 2018

RTD Coffee Growth Growth slows a bit from 2017

Increase of 7.4% still healthy

Cold-brewed, nitrogenated and chilled drive growth

9

Energy Drinks2017 – 2018


3.7%

7.2%

2017 2018

Energy Drink Growth Growth measures 7.2%

Recovery boosted by Java Monster and Bang

Bang accounted for entirety of segment’s growth

10

Value Added/Enhanced Water 2017 – 2018


11.7%

18.3%

2017 2018

Value Added/Enhanced

Water Growth Volume increase vs. 2017 substantial

All types proliferating, gaining traction

Essential, Alkaline 88, Hint lead growth

11

Sports Beverages 2017 – 2018


-2.1%

3.7%

2017 2018

Sports Beverages

Growth A return to growth after 2017 decline

Body Armor leads the rise

Hottest brand doubles sales, captures half of category growth

12

RTD Teas2017 – 2018


1.1%

-0.1%

2017 2018

RTD Tea Growth Slight decline after decade of growth

Teas feel impact from sparkling and enhanced waters

Mealtime consumption is key

13

Carbonated Soft Drinks2017 – 2018


-1.3%

-0.6%

2017 2018

CSD Growth 14th consecutive year of volume decline

17th consecutive year per cap consumption drops

Decrease slows versus 2017

Diet CSDs lead relative upturn

14

U.S. CSD Volume and Wholesale Revenue

2014 – 2018


$51.4

$52.3$52.4

$52.9

$53.912.8

12.6

12.512.3

12.2

11.9

12.0

12.1

12.2

12.3

12.4

12.5

12.6

12.7

12.8

12.9

$49.6

$50.1

$50.6

$51.1

$51.6

$52.1

$52.6

$53.1

$53.6

$54.1

2014 2015 2016 2017 2018

Whole

sale

Dollars

(Billions)

Billio

ns o

f Gallo

ns

15

Fruit Beverages2017 – 2018


-4.0%

-2.2%

2017 2018

Fruit Beverages

Growth Dip of 2.2% an improvement over 2017

Long-term decline continues

Genuine innovation represents bright spot

16

Craft LRB Categories2017 – 2018

Category 2017 2018 2017/2018

Kombucha Tea $786.6 $930.2 18.3%

Protein Drinks 624.3 647.9 3.8%

Plant Waters 525.0 525.4 0.1%

Probiotics 306.2 330.5 7.9%

Cold Brew Coffee 183.2 243.0 32.6%

Essence Water 74.6 131.2 76.0%

Heathy Energy Drinks 90.5 101.8 12.5%

Functions Beverages 92.9 94.0 1.2%

Premium Mixers 62.4 71.7 15.0%

TOTAL $2,745.6 $3,075.8 12.0%


Millions of Dollars Change

17

Beverage Alcohol Market 2017 – 2018

Volu

me C

han

ge

-1.2%

2.7%

1.7%

-4.8%

-1.1%

2.2%

1.2%

7.6%

2017

2018

Cider Beer Spirits Wine


18

Beer 2017 – 2018


-1.2% -1.1%

2017 2018

Beer Growth Volume lost to wines and spirits

High-end beers a highlight

Imports and crafts have good years

Superpremium growth slows

FMBs led by hard seltzers

19

Beer 2017 – 2018


-1.2% -1.1%

2017 2018

Beer Growth High end 43% of volume and 50% of revenue

High end focus area of all brewers

Declining premiums and improving sub-premiums

Stabilizing declining categories an important challenge

20

Spirits2017 – 2018


2.7%

2.2%

2017 2018

Spirits Growth Growth off a bit from 2017

23 consecutive years of low-single digit growth

Whiskeys, Cognac, brandies drive progress

Tequila and Mezcal strong

21

Spirits2017 – 2018


2.7%

2.2%

2017 2018

Spirits Growth Premiumization affects all categories

Fastest growing categories consumed at slower pace

Craft continues to grow

22

Wine 2017 – 2018


1.7%

1.2%

2017 2018

Wine Growth Sales slow for third consecutive year

Category grows for 26th consecutive year

Sparkling wines lead growth

Table slowed, dessert declined, vermouth flattened out, specialty down

Premium, canned, direct-to-consumer all rise

23

Alcoholic Cider2017 – 2018


-4.8%

7.6%

2017 2018

Cider Growth Category rebounds after two off years

Rosé, regional, local brands shine

Category likely to soften in 2019

24

LRB Category Volume Growth Wholesale Dollar Growth

Value-Added Water +13.0% to +14.0% +16.0% to +17.0%

Craft LRBs +14.8% to 16.0% +13.0% to 15.0%

RTD Coffee +6.2% to +7.0% +8.2% to +9.0%

Bottled Water +4.2% to +5.0% +6.8% to +7.5%

Energy Drinks +5.8% to +6.6% +5.4% to +6.4%

Sports Drinks +3.0% to +4.0% +4.0% to +5.0%

RTD Tea +0.3% to +1.0% +2.3% to +3.1%

Carbonated Soft Drinks -0.7% to -0.2% +0.3% to +1.0%

Fruit Beverages -2.0% to -1.0% -1.0% to 0.0%

TOTAL +1.2% TO +2.0% +1.8% TO +2.6%

2019 LRB Category Projections

25

2019 Beverage Alcohol Category Projections

Category Volume Growth Wholesale Dollar Growth

Beer -1.0% to -1.5% +0.5% to +1.0%

Wine +0.5% to +1.0% +1.5% to +2.0%

Spirits +1.5% to +2.0% +2.0% to +3.0%

Cider -5.0% to -7.0% -4.0% to -6.0%

TOTAL ALCOHOL -0.5% to -0.9% +0.8% to +1.8%

26

MACRO FORCES IN THE DECADE

AHEAD

New generation of shoppers

Emerging business models

New technologies

27

GENERATION Z

Largest consumer base by 2030

Distinct from Millennials

Ethnically diverse and technologically connected

View the future through a prism of realism

28

GENERATION Z

True digital natives

Authenticity is signature value

Attribute-oriented and brand-agnostic

Open to relevant personalization

29

GENERATION Z

Support companies that share values

Commitment to social consciousness will be more

holistic

Multi-faceted transparency

Diversity, living wages, compensation, pricing and

true costs

30

HOW GEN Z SEES HEALTH &

WELLNESS

Physical fitness, healthy eating, mental well-being

interconnected

Focus: what’s in a beverage, how it’s made, benefits

it offers

Interest in functional beverages increases

31

DRINKS THAT DO SOMETHING

Cognitive support, stress relief, sleep enhancement

“Future-proof” against health concerns

Positive and functional nutrition

Opportunities for large declining brands to be

reinvented

“Mindful drinking” products

32

BEVERAGE PERSONALIZATION

Era of personal nutrition coming

Data and the consumer at heart of product

development

Improving health outcomes via individually tailored

beverages

We will “drink what we are”

33

BEVERAGE PERSONALIZATION

Growing knowledge base on genetic variants

Not “a product for each person” (not yet)

Ability to segment population into about a dozen

types

We’re on our way to beverage personalization by

2030

34

TECHNOLOGY’S IMPACT

Smart technologies will prevail everywhere

Homes will revolve around the smart refrigerator

Service Oriented Retailers will be better able to

efficiently fill orders

Marketers will create “the perfect brand

experience”

35

TECHNOLOGY’S IMPACT

Beverage companies will digitally reinvent themselves

Corporate digitization will integrate products and services

Everybody and everything will connect and coordinate

More agile, effective companies able to act and react

36

2020s VISION

Health-conscious Gen Z consumers

Personalized beverages

Smart homes

Service-oriented fulfillment retailers

Personalized marketers

Digitized beverage companies

37

2020s VISION

Unprecedented challenge

Unprecedented opportunity

On the cusp of true transformation

THANK YOU

Michael C. Bellas, Chairman & CEO

2020S VISION:

LOOKING AHEAD TO THE NEXT BEVERAGE DECADE

2020s vision: looking ahead to the next ... › ext › resources › events › tbf ›...

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