Soft drinks ‘turning to emerging markets’ as US consumption falls

From:FoodBev

Soft drinks manufacturers are increasingly turning to emerging markets such as Mexico, Brazil and Africa to bolster their global performance and compensate for falling consumption in the US.

Sales of carbonated drinks are expected to increase in Latin America, Asia Pacific, Africa and the Middle East during the next three years, as companies such as Coca-Cola and PepsiCo expand their reach across the world.

Investing more than $40bn in emerging markets is critical to Coca-Cola’s growth, as it aims to double its revenues between 2010 and 2020. The company expects to invest $17bn across all of Africa and $12.4bn in Mexico, where consumption of soft drinks is among the highest in the world at 135 litres per person. Likewise, PepsiCo plans to invest $5bn in the Mexican market over five years.

Coca-Cola will invest $4bn in China by 2020. © Coca-Cola

Coca-Cola will also invest a further $4bn in China during the next two years, having already spent $3bn on improving its performance in the country between 2009 and 2011. Chinese sales of carbonated drinks are expected to grow to $16.2bn by 2018 – an increase of 30% on 2013 levels.

“It’s our third-largest global market,” Coca-Cola chairman and CEO Muhtar Kent said in 2011, “growing in double digits.”

PepsiCo, which controls around 27% of the Chinese market, recently invested $2.5bn over a three-year period.

Coca-Cola also plans, by 2020, to have invested $7.6bn in Brazil, $5bn in India and $1.2bn in the Philippines, where Coca-Cola Femsa earlier this month revealed plans to invest $800m in the expansion of its bottling operation in the country.

And, discussing Coca-Cola’s plans to refranchise all of the North American bottling territories still under its ownership by 2017, Kent continued: “We are in constant discussion with potential partners who are excited about investing in the future of the Coca-Cola system in our flagship market as well as in other markets around the world.”

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