Carbonated Beverages Market

Market Overview

The global carbonated beverages market size was valued at USD 460.95 billion in 2022. It is estimated to reach USD 660.63 billion by 2031, growing at a CAGR of 4.08% during the forecast period (2023–2031). In recent years, there has been a surge in the demand for functional beverages that offer health benefits. Thus, the key players are launching carbonated beverages with functional benefits, expected to drive the global market. Moreover, the key players are involved in product innovation and introducing different unique flavors of carbonated beverages as per the consumer's preferences, thereby creating opportunities for market growth.

Carbonated beverages, commonly called fizzy beverages or sodas, are fluids that contain carbon dioxide gas dissolved in them. Carbonation generates bubbles, imparting a bubbly or effervescent characteristic to the beverage. Carbon dioxide is dissolved into the liquid through pressurization, and upon release of pressure (e.g., when opening a can or bottle), the gas is emitted, resulting in a distinctive fizz.

Carbonated beverages can be both sweetened and flavored and available in diverse varieties and flavors. Common examples of sodas include colas, lemon-lime sodas, root beer, ginger ale, and different fruit-flavored sodas. Certain carbonated beverages are additionally offered in diet or sugar-free variations. The carbonation process is commonly linked to invigorating and hydrating characteristics, making these beverages favored by individuals searching for bubbly and flavorful beverages.

Market Dynamics

Global Carbonated Beverages Market Drivers

Rising Demand for Functional Drinks

The increasing demand for functional drinks is a significant factor driving the carbonated beverages market. Consumers seek beverages with health advantages, such as hydration, energy, immunity, and digestion. According to a poll conducted by Nielsen, over 47% of customers globally are willing to pay additional money for products that have non-GMO ingredients. This emphasizes a substantial demand for natural and healthier options in the market.

Carbonated beverage producers are introducing new products targeting these customer demands, including vitamin-infused water, probiotic soda, and natural sweeteners. For instance, Koios Beverage Corp. will commence manufacture of a new range of functional beverages called 'Fit Soda' in the first quarter of 2019. The company aimed to create a beverage that would provide customers with the enjoyment of a high-quality soda while offering some health benefits. Fit Soda will be made exclusively from organic materials and manufactured using processes without artificial preservatives, colors, or flavors.

Rising Penetration through E-Commerce

In recent years, there has been a significant increase in the adoption of e-commerce and online delivery platforms for carbonated beverages. Consumers are shifting from conventional retail channels to online platforms, where they can conveniently access various products, compare prices, and take advantage of discounts and deals.

Online platforms facilitate the convenient ordering and doorstep delivery of carbonated beverages for consumers. Carbonated beverage makers are partnering with internet platforms to expand their distribution and access new customers. In November 2023, Coca-Cola India, a major beverage company, became an Open Network for Digital Commerce (ONDC) member and introduced its online marketplace on the Coke Shop platform. These factors contribute to the expansion of the market.

Global Carbonated Beverages Market Restraint

Negative Health Impacts

A significant limitation of the carbonated beverages market is the increasing consumer consciousness regarding health. Consumers are more aware of the adverse consequences of consuming excessive sugar, artificial sweeteners, caffeine, and preservatives, typically in carbonated beverages. These components have the potential to contribute to obesity, diabetes, dental decay, and various other health complications.

The Beverage Marketing Corporation's analysis revealed that the average individual consumption of carbonated soft drinks in the United States decreased from 51 gallons in 2006 to 38.5 gallons in 2019. Moreover, the World Health Organization (WHO) advises that daily consumption of added sugar should be restricted to less than 10% of total energy intake from free sugars. This is equivalent to 50 g (or approximately 12 level teaspoons) for an individual with a healthy body weight who consumes around 2000 calories daily. However, limiting added sugar intake to less than 5% of total energy intake is preferable for additional health advantages. Therefore, consumers choose healthier substitutes like water, juice, tea, and milk.

Global Carbonated Beverages Market Opportunities

Product Innovation

Consumer preferences for novel and distinctive flavors drive product innovation in the carbonated beverages market. Businesses frequently create novel flavors to attract and retain customers. For instance, in January 2023, PepsiCo introduced STARRY, a soda with a delightful lemon-lime flavor that provides the desired crisp and refreshing taste that consumers have desired in the lemon-lime soda market. STARRY's Regular and Zero Sugar variants are now widely accessible at shops and food service establishments across the United States.

Additionally, in March 2023, Nestlé is expected to introduce a soft drink that combines coffee and lemonade. The company has applied to register the name 'Coffeenade' with the Intellectual Property Office. The application is for class 30, which includes coffee-based beverages and iced coffee, and class 32, which covers lemonades and fizzy beverages with coffee flavor. Nestlé is creating its version of mazagran, an Algerian beverage consisting of espresso, ice, and fresh lemon juice, also well-liked in Portugal. Therefore, these product advancements are expected to create opportunities for market expansion.

Regional Analysis

Based on region, the global carbonated beverages market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global carbonated beverages market shareholder and is expected to expand substantially during the forecast period. The North American carbonated beverages market is well-established, with the dominant presence of leading industry participants. The regional market is experiencing a rapid expansion of e-commerce and online delivery platforms, offering consumers convenience, a wide range of options, and discounted prices. Moreover, carbonated beverage market players are implementing strategies such as introducing new products, emphasizing higher quality, and expanding their product range to maintain their market position and appeal to new customers. For instance, in October 2021, Living Essentials, LLC, the manufacturer of 5-hour ENERGY® shots, introduced a fresh carbonated energy drink packaged in a 16-oz can. The firm unveiled the beverage with concurrent displays and activities at the National Beer Wholesalers Association (NBWA) convention in Las Vegas and the National Association of Convenience Stores (NACS) convention in Chicago. The next 16-oz can beverage will be delivered nationwide through independent beverage distributors and several other ways. These factors are projected to stimulate market expansion.

Furthermore, as the number of health-conscious people in the region rises, so does the demand for functional and healthful beverages. Thus, prominent participants in the industry are introducing carbonated beverages that offer health advantages. For instance, in August 2023, Tilray Brands, Inc., a prominent international corporation specializing in cannabis and consumer packaged goods, introduced two new fizzy beverages under its high-quality cannabis wellness brand, Solei. Solei presents Mango Passionfruit and Dragonfruit Watermelon Sparkling CBD Beverages, which combine CBD's non-intoxicating effects and essential advantages with a low amount of THC and a vibrant array of tropical flavors. The beverages are now accessible in Ontario, Quebec, and Alberta. As a result, this is expected to increase market growth in the region.

Asia-Pacific is witnessing the highest growth rate and is the most dynamic market for carbonated beverages. The increasing population, higher income levels, urbanization, and evolving lifestyles propel the carbonated beverages market. Moreover, there has been an increase in government measures aimed at facilitating the quick expansion of carbonated beverages in this region. According to Bloomberg, carbonated beverages containing fruit juice, classified separately from conventional colas or aerated drinks, now incur a 40% tax. This tax includes a 28% goods and services tax (GST) and a 12% compensation cess. The IBA has proposed reducing the GST rate to 12% or 18% to stimulate the growth of the non-alcoholic beverage industry. The IBA is discussing with the Food Safety and Standards Authority of India (FSSAI) to specify distinct criteria for sugar-free and sugary beverages.

Moreover, advancements in packaging, such as the availability of user-friendly and environmentally sustainable options, significantly impact consumer preferences. In October 2023, Coca-Cola, a prominent beverage company, launched carbonated beverages packaged in PET bottles made entirely from recycled materials. This initiative aligns with the principles of the circular economy. The company has launched recycled rPET (polyethylene terephthalate) bottles in pack sizes of 250 ml and 750 ml in several marketplaces in India. These factors propel the growth of the carbonated beverages market.

Segmental Analysis

The global carbonated beverages market is segmented by product type, flavor, and distribution channel.

Based on product type, the global market is divided into soft drinks, carbonated water, sports and energy drinks, and others. 

The soft drinks segment dominates the global market. A soft drink is a beverage mainly composed of water, flavored with various ingredients, and may or may not have carbonation. It is commonly sweetened with additional substances. The flavors utilized may be either natural or synthetic. Possible sweeteners include sugar, high-fructose corn syrup, fruit juice, sugar substitutes, or a combination thereof. Typical varieties of carbonated beverages include colas (such as Coca-Cola and Pepsi), lemon-lime sodas, root beer, ginger ale, and assorted fruit-flavored sodas.

Soft drinks are widely consumed beverages that are popular globally and are typically supplied in cans, bottles, or fountain drinks at restaurants and fast-food establishments. Moreover, the prominent participants in this sector are exploring novel approaches to enhance their market dominance. For instance, in August 2023, Barr Soft Drinks introduced a new energy brand called Pwr-Bru, expecting to expand the market for large-sized energy drinks. This is anticipated to stimulate the expansion of the segment.

Based on flavor, the global market is bifurcated into cola, fruit-based, and others. 

The cola segment owns the highest carbonated beverages market share. Cola-flavored carbonated beverages are bubbly beverages with a taste profile reminiscent of conventional colas. It is a carbonated beverage that is sweetened and flavored using ingredients such as carbonated water, high-fructose corn syrup or other sweeteners, caramel color, phosphoric acid, natural flavors, and caffeine. The specific components may differ across various brands. A blend of sweetness, carbonation-induced acidity, phosphoric acid, and a noticeable caramel undertone define the taste of cola.

Moreover, several well-known cola brands, like Coca-Cola and Pepsi, include exclusive formulas that contribute to their distinct flavor. Beverages with a cola flavor are trendy and are available in different variations, such as regular, diet, and zero-calorie options. They are frequently savored independently or employed as additives in drinks.

Based on distribution channels, the global market is divided into hypermarkets and supermarkets, convenience stores, food service outlets, transport terminals, and online stores and D2C.

Supermarkets and hypermarkets are retail businesses that provide various products, including groceries, home items, and often other commodities. A supermarket retail facility uses a self-service concept and offers various food and non-food products. In general, supermarkets are smaller in size compared to hypermarkets. On the other hand, a hypermarket is a larger retail institution that combines elements of a supermarket and a department store. Hypermarkets are characterized by their extensive range of merchandise, including groceries, clothing, electronics, household goods, and more. The segment growth is expected to be driven by the vast array of items, competitive pricing, and accessible locations provided by supermarkets and hypermarkets.

Recent Developments

• October 2023- Breville, a renowned brand of kitchen appliances, is entering the market of carbonated beverages by introducing its state-of-the-art InFizz range through the creative agency, The General Store. The series features two new items, namely the InFizz Fusion and the InFizz Aqua, which provide consumers with a novel way to express their creativity during summer.
• May 2023- Bisleri International, a packaged drinking water firm, announced the expansion of its range of carbonated beverages. This move is in response to the increasing demand for cool drinks in India due to rising temperatures. The company has introduced additional options and variations within its Bisleri brand, encompassing carbonated cola, orange, and jeera (cumin) flavors, marketed as Rev, Pop, and Spyci Jeera sub-brands, respectively.