Beverages Up, Soft Drinks Down in 2012

The U.S. liquid refreshment beverage market grew by 1 percent in 2012, according to preliminary data from Beverage Marketing Corp. This marks a third year of growth after two consecutive declining years. It also represents faster growth than occurred the year before. Total liquid refreshment beverage volume approached 29.8 billion gallons in 2012.

Carbonated soft drinks remained by far the biggest category, but lost both volume and market share during 2012. Volume slipped by 1.8 percent from 13.6 billion gallons in 2011 to 13.3 billion gallons in 2012, which lowered that category's market share to less than 45 percent.

While the segment faltered, certain soda trademarks, such as Coke Zero and Dr Pepper, did achieve growth. Moreover, the soda category accounted for four of the 10 biggest beverage trademarks, with Coca-Cola and Pepsi-Cola retaining their usual first and second positions.

Niche categories outperformed traditional mass-market categories. Premium beverages such as ready-to-drink (RTD) tea and coffee and especially energy drinks advanced particularly forcefully during 2012. Aggressive pricing contributed to the sizeable increase in bottled water volume. Larger, more established segments such as carbonated soft drinks and fruit beverages failed to grow once again.

Energy drinks moved forward faster than all other segments with a 14.3 percent volume increase in 2012. Nonetheless, the segment accounted for a relatively small share of total liquid refreshment beverage volume. Indeed, the only liquid refreshment beverage types with smaller shares of volume were RTD coffee, which charted the second fastest surge, growing by 9.5 percent, and value–added water, which contracted during the year. Not surprisingly, no energy drink, RTD coffee or value-added water brand ranked among the leading trademarks by volume.

Sports beverages, in contrast, had Gatorade (including all brand variations) as the fifth largest beverage trademark during the year, and the category it led grew faster than the overall liquid refreshment beverage market. The brand topped 1 billion gallons for the first time in 2011 and remained above that level in 2012 despite declining. Its chief rival, Powerade, moved muscularly enough for the overall category to grow.

"Beverages showed gathering strength in 2012," said Michael C. Bellas, chairman and CEO, Beverage Marketing Corporation. "While an improving economy remains the key impetus for beverage category success, the vitality of premium products like energy drinks and RTD coffee shows that Americans' thirst for both functional and fun products is strong."