Overview of the beverage industry
Before deeper involvement in details about features of each beverage type and how competitive it is, we need to have some pieces of information as the basement.
Considering carefully three dimensions:
Evolution of the beverage industryDespite the early appearance of these beverages, including these ancient sorts like wine or beer, this industry only has developed in recent decades. This growth can be illustrated by the increasing number of manufacturers, various design and packaging, production process and the final market-ready products.
The beverage industry: Establishing for a long time but need right time for shining and booming of the market segment.
From the beginning, in the early 1900s, the beverage market was a pretty modest equipt by some regional manufacturers that only had a capacity of supplying for local markets. However, this industry has seen giant cooperation and trade internationally.
Furthermore, for the time being, beverage manufacturers can adapt mass production with advanced techniques and guarantee high quality by longer shelf life and inventory methods.
Economic importance of beverage market
It is noticeable that the beverage industry nowadays has created many benefits for business owners, consumers, and society.
To be more specific, the beverage market includes alcoholic and non-alcoholic drinks, generating an annual revenue reach of billions of dollars and helping several millions of people escape from unemployment.
Characteristics of beverage workforceAlthough the ingredients and production process vary according to each typical type of drink, the strict requirements, but commonalities, there are significant reasons for a great profit margin for the beverage segment.
Besides, thanks to technology and modernization, automated and mechanized operations make it much more effective in manufacturing and reduce the burden for beverage employees.
Not only is it simple in production, but the soft drink industry also takes advantage of the easy delivery process from transportation to skills required with drivers as well. It often looks for standard vehicles such as trucks, small vans, or fork-lift operators.
Most of them can even be trained online or on on-the-job instruction, which is simpler except for specific industrial engineers, quality assurance technicians or manufacturing managers.
Is the beverage industry growing?
We would like to discuss some outstanding primary studies for classifying the growth of beverage market size.
According to the Statista Research Department statistics, from 10 years from 2009 to 2018, global beverage market volume witnessed a constant increase of more than 300 million liters in sales (from 696.1 to 994.1).
This number rises and will continue to grow in the future with one of the most significant market shares among businesses. The beverage industry contains two main categories, and each of them forecasts to reach a positive number in market value:
- Non-alcoholic segment: USD 1.60 trillion by 2025 (according to Intrado GlobalNewswire, 2020)
- Alcoholic segment: USD 647.7 billion in 2023 (according to Grand view research, 2017)
In 2020, Businesswire published a research report that the beverage market will see growth by approximately 6 billion USD during the forecast period 2020-2024, processing over 3% of CAGR (Compound annual growth rate).
Consumption and growth trend
Non- Alcoholic beverage
Being aware of the importance of a healthy diet, beverage customers pay more attention to the non-alcoholic product lines. Moreover, the rise in this category has a more significant amount compared to the alcoholic segment.
Some trendy products should be listed, such as juice, bottled water, carbonated soft drinks, coffee, or tea. As can be seen, most of them possess a menu of necessary nutrients, health benefits or a typical function for clients’ health development.
Despite the considerable number increasing during the years, the alcoholic beverages industry accounts for a booming consumption in some countries, especially in South-est Asia. Three leading countries are Vietnam, China and India, made up of 11.3% to nearly 90% during the given period.
By contrast, there is a slight decrease in the average liters consumed by a person in the developed countries such as Australia (-14.4%), Canada (-10.8%) and the United Kingdom (-7.3%).
Impacts of Covid-19 epidemic on the beverage market
From the beginning stage of Covid-19, the beverage industry had to deal with both the plummet in consumption in almost all categories and the disrupted supply chains. The in-house consumption has increased considerately. However, the out-of-home consumption, which brought the largest profit margin, decreased.
Restaurants are rapidly losing their business, and it is predicted that over ⅓ of all restaurants will not succeed in the long term post-COVID-19. Those who remain open now make a mere 20% of their typical sales via takeout and delivery.
In 2020, it is estimated that one-third of food and beverage owners lost their businesses in the epidemic time. Among them, a lot of companies had been interrupted or closed by themselves. The left could only be made up with 20% compared with usual typical sales.
Nevertheless, there is still a positive increase in some specific favorite products that we inform below.
Beverage Market by Segment
The beverage industry’s products are incredibly diverse regarding classification, with a wide range of servings for customers regardless of age or health statement. There are some common ways and the beverage market can be broken up. It can be the geographic factor, function or product lines.
Nevertheless, according to segments, they are divided into two main categories, consisting of 8 popular sub-groups.
Let’s clarify all these outstanding features with talkable statistics below:
As one of the age-old alcoholic beverages, the beer industry contributed the most significant profit among many categories.
After 52 weeks up to the ending of May 2020, the beer market in the US accounted for approximately $40 billion, illustrating a 10% increase while the sale reached the top of 1.5 billion US dollars. Apart from the growth in general net sales, the beer industry had broadened the horizontal market size, from local to worldwide.
Produced mainly from grapes, wine-making has involved various activities and a wide range of methodology. Nowadays, wine industries can improve the quality of alcoholic products because of the advanced refrigeration of large quantities and double-jacketed cooling tanks.
It is reported that the US wine market increased by 6.4 percent and reached $11.2 billion in sales revenue. Being the dominant segment with the largest market share among alcoholic beverages, the wine industry feels confident in leading the profit margin. By December of 2019, due to the adverse effects of the Covid-19 epidemic, wine products seem to be softening, obtaining the peak percentage at 2.2 yearly growth in the dollar.
More noticeable, the statistics of 2020 tend to observe a current look of growth to 7% in sales compared to the previous year and will increase gradually and constantly.
Do you know?
2020 witnessed a booming growth in sales cases, constituting 374 percent, while beer and wine were up 242 percent. As a result, this product line became an opponent of two long-aged drinks and identified a significant role in generating the profit margin for the owner and the economy.
During five recent years, the spirits market values $67 billion, showing strong growth and be forecasted to positive change by 2024. Day by day, spirit products to be widened by not only market size but also the sales. Statement of gaining $8.4 billion in sales made nearly 15% growth by the end of May 2021.
Juice and Bottled WaterLet’s look at two tables of sales below:
It can be informed that Juice and Bottled water were two segments that have the most dramatic growth even during the Covid-19 epidemic. We can explain this situation due to the benefits that they bring to human health. Providing customers with daily required water and nutrients or vitamins, these kinds of non-alcoholic beverages account for an outstanding market share.
Due to the specific soft drink features, somehow are not suitable for the client’s health, regular soft drinks showcased had seen the most modest growth among non-alcoholic beverage categories. Its sales rose 1.8 percent by the last week ending March 8, 2020.
On the other hand, the unhealthy perception of carbonates leads to a falling in consumption rates. Therefore, it is not surprising when low-calorie soft drinks were still on the favorite list, marking a 10.1 percent increase.
The coffee market is up-and-coming, with an estimated growth of 22.7% in 2024, reaching $18.5 billion and containing a 4.2% yearly growth rate. In a potential market like the US, coffee contributed sales of $487 million in total. This number was recorded approximately 20% increasing compared to the previous year.
It is a fact that though ground coffee experienced a reduction recently, this segment registered a growth of 1.7 percent in dollar sales, gaining $4 billion in IRI measured channels.
Here are three typical coffee with numbers for sales and market, giving you a clear look at potential growth.
How competitive is the beverage industry?
In general, is the competition in the beverage industry high?
Yes, it is.
The simple reason is that every fat land will attract a vast number of farmers. So does the profitable beverage industry.
There are wide dimensions for the beverage business to compete with others. They can originate from:
- The invention of new flavors and an
- Additional function
- Different marketing strategies
- Distribution plan
Furthermore, competition is divided into horizontal and vertical ways (same product lines or same industry but different product types).Putting yourself in the customer’s shoes, you’ll see that the two most important factors to compete successfully are the flavor and taste of products. Providing a quality segment with the satisfaction of the client’s needs means that you can achieve the core value, the primary function of the product by itself.
A better recommendation for you:
“Establish your product value first, do marketing, distribution and pricing later to create a firm foundation for your sustainable development.”
Despite the density of your rivalry, it does not mean there is no room for your business and beverage ideas.
Top 3 striking beverage industry trends in 2021
1. Shopping habits
With the appearance of the virus Corona in the early months of 2019, the global economy witnessed a big negative change over all the business segments, including customer behaviors. So does the beverage industry.
Because the government enacted some laws of distance regulation and encouraged people to stay at home, they cannot go out or have meals at restaurants. Nevertheless, humans need food and beverage to survive. As a result, online shopping has climbed on-trend with dramatic growth for both diversity and convenience.
Look at this!
The statistics informed that there was a rise at 140% for clients interested in online purchasing for grocery in 2020, creating a shopping online case for gastronomy peak at 787% on average.
2. Dining out
Post epidemic, would beverage consumers prefer going back to dining habits?
When the epidemic situation is much better, restaurants tend to be alive one more time. People started to come back to their favorite restaurants or shops to buy the goods directly. However, being aware of Covid-19 danger, they still choose take-away services for coming home and enjoy the beverage.
3. Healthy food is on top
The more developed economies, the more people concern about their health, especially in an epidemic situation. Good health can help us to reduce the potential of getting diseases. To be more specific, apart from some dimensions meeting their taste requirements, they are looking for some products having the ability to serve them with necessary nutrients and needed vitamins.
They have come up with some common thinking:
- Feeling good satisfied everything
- More energy in daily life
- Additional nutrients and vitamins are good
Bonus: You can get more customers’ concerns if your products are related or originating from nature and somehow being environmentally friendly.
ConclusionTo sum up, despite the high mutual competitiveness among segments, the beverage industry is considered a potential market with a promising future. As can be clarified above, we have provided you a general overview of the beverage industry by related statistics for sales revenue, market share, and estimated growth. From that, you can get the entire picture of both current and future product trends to obtain the purpose of satisfying customers and maximizing their great experiences.
Tan Do is a global beverage ODM/OEM manufacturer and supplier located in Vietnam. Since 1996, we have built trust and credibility not only throughout Vietnam but also in many parts of the world. Leveraging state-of-the-art technology, we have crafted thousands of products that align with ISO, HACCP, HALAL, FDA, and many other standards.