Slowing demand from BRIC markets to affect Global Beverage Industry: Rabobank

Growth in the global beverages industry is expected to slow, according to a report published by Rabobank on 27 January, largely due to moderating demand from BRIC Markets, the bank's Food & Agribusiness Research team said in a report.    “Brazil, Russia, India and China have led the largest economic transformation in modern history, changed global commodity markets and created an entirely new ‘middle class,” stated Rabobank Analyst Ross Colbert in a statement. “Growth in the BRIC markets is now slowing and beverages companies must seek sustainable growth ‘beyond the BRIC road.’ The global beverages industry remains highly competitive and success can be achieved in markets smaller than those of BRICs. Strategic initiatives such as direct-to-consumer selling, co-manufacturing and developing more efficient distribution platforms can help mitigate the impact of softer volumes in BRIC markets.”   In the coffee and tea category, the bank predicts that the oversupply of global coffee that characterized 2013 is forecast to last well into 2014, with the expected bumper crop of 60 million bags from Brazil. With the outlook for lower prices, demand for coffee is expected to remain strong in the year ahead. It also said that instant coffee is expected to drive value and volume growth in 2014 in developed markets, such as Russia, which is already seeing an overall premiumisation trend across beverages. The bank noted there was also positive growth outlook in other subsector markets. In China, while fine wine consumption is on the decline, consumers have sought out lower-priced wines to maintain an overall positive outlook. It was noted that 2014 will see the effect of the upcoming World Cup manifest itself in growth volumes of carbonated soft drinks (CSDs) and beer in host country Brazil. Coca-Cola, for example, has made a massive investment in the immediate consumption channel that will help sustain growth in 2014 and beyond.  

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