The non-alcoholic beverages market maintains a value of ca. PLN 17bn at retail prices, despite rapid turbulence related to the pandemic and legislative changes in 2021. The three largest categories are invariably bottled water, carbonated drinks and juices and fruit drinks (including smoothies).
The year 2020 has brought us all pandemics. Some industries have benefited from it, others have lost out. In soft drinks, the main impact of the pandemic was the loss of many consumption opportunities. Suddenly we stopped going to the gym or swimming pool, schools were closed, universities, offices and public transport were deserted. This meant not only a diversion of consumer traffic between sales channels or packaging formats. It has meant a dramatic fall in consumption in some market segments. All products in small packages have suffered. In both water and fruit juices and drinks, the decline in small packs was responsible for more than 80% of the total decline. In addition, per capita consumption fell as a result of people staying indoors and being less active.
When the industry was already recovering from this challenge - it recorded another shock: the introduction of the sugar levy. This change caused a storm in carbonated products and in the flavoured waters segment. Some manufacturers decided to reformulate their products, offering healthier, but differently tasting products. Others have decided to downsize their packaging to make the price shock to consumers a little smaller. Others have simply increased their prices. As a result, sales volumes of both sweetened carbonated drinks and flavoured water fell by double digits in 2021.
As if these challenges were not enough - supply inflation has arrived. The rapidly rising prices of petroleum products have hit the prices of PET packaging - without which the market for water or carbonated beverages today practically does not exist. The level of price rises and their impact on consumption is not yet known - but it is certainly another big challenge for the industry.
If we want to talk about consumer trends today - we cannot consider their impact on the market in isolation from rapid inflationary and legislative changes. The world is changing and consumer habits will change with it.
The first direction is certainly towards health.
The pandemic has not prevented an increase in juice consumption. Poland is still below the European average with a consumption of less than 15 litres per head. The European average is around 17 litres, and our neighbours Germany drinks around 27 litres of juice per capita. Consumption of juices and nectars (with a juice share of over 25%) is rising steadily. The consumer today does not expect innovations in taste or packaging in this part of the market, but looks for trustworthy brands and clarity of labelling.
The other direction is convenience.
The pandemic stopped the growth of the small pack market - but this trend is coming back. We want to have our favourite drink with us at all times. We need small, convenient, safe and elegant packaging. We have our preferences and often each member of the household drinks something different. We need several drinks, from several segments, several brands non-stop available at home. That is why smaller packs will grow. Convenient packaging for the road, backpacks and handbags will also conquer more and more of the market.
Finally, a change in eating habits.
Snacking, but a healthy one. We must not forget that fruit and vegetable juices are made from fruit and vegetables. Properly served, they can replace a meal. The market for smoothies (thick puréed juices) and fruit mousses is growing rapidly. Expanding into other categories based on one's own competence is a natural development path for everyone.
Bottled water has considerably less opportunity to grow through innovation, but here too we see all three trends. First of all, minerals. Mineral waters are doing better than spring waters. The consumer is interested in the composition and wants to know why he or she should pay for bottled water when good quality tap water is increasingly available. Minerals in water are a substitute for supplements. And here the brand is important. The pandemic exposed the weakness of private labels in water. Consumers were looking for water they could trust.
With the current level of per capita consumption, it seems inevitable to focus on the development of small packaging, packaging that is convenient for travelling, at the gym or at work.
Innovation in water is likely to go in two key directions. Firstly, in improving the functionality of water, entering the area of isotonic and perhaps even so-called energy drinks. Secondly, pleasure. Flavoured waters without sugar, without sweeteners, without preservatives, without calories - there is no pleasure without consequences.
A major challenge for the industry in the coming years will be the legislative changes around packaging, the introduction of a deposit system and the imposition of the use of recyclates for packaging. In themselves - especially if well prepared and announced - these challenges are not dangerous for the industry. However, the accumulation of changes over the last two years and the simultaneous need to face new challenges may constitute an insurmountable barrier for many companies. Bottled water market in Poland is fragmented. Increased market consolidation in the next few years is becoming very likely.
Piotr Chęcielewski
Chief Marketing Officer
Hortex / Jurajska
A major challenge for the industry in the coming years will be the legislative changes around packaging, the introduction of a deposit system and the imposition of the use of recyclates for packaging.
