Major soft drinks companies are under pressure to respond to changing consumer preferences and regulatory environments. Thus, they develop products with less sugar, intriguing flavors, and functional qualities to differentiate themselves and adapt to the new market reality.
Demand for soft drinks has remained weak, but performance slightly improved in 2019, mainly driven by the good performance of the diet segment. Despite continued decrease of the carbonates market, the diet and flavor segments showed positive growth.
Soft Drinks Industry Size 2018-2022
The global soft drinks industry was valued at 710 billion USD in 2018. In the next five years, it grew at a compound annual growth rate (CAGR) of 2.71% per year to reach 790 billion USD. Until 2028, it is forecast to grow at a CAGR of 5.86% per year and reach 1.13 trillion USD.
The global soft drink industry is categorized into carbonated soft drinks, non-carbonated soft drinks, and energy and soft drinks. In 2022, carbonated soft drinks accounted for the largest share at 44.3% of the total industry value. Non-carbonated soft drinks and energy and sports drinks followed with shares of 33.8% and 21.9%, respectively.
North America, Northeast Asia, and Europe were the three largest regional markets in 2022. They accounted for 27.8%, 22.9%, and 16.4% of the total value, respectively. Asia Pacific, Africa, and South and Central America followed with shares of 11.1%, 9.7%, and 5.9% of the total value, respectively. The Middle East and the CIS countries accounted for 4.3% and 2%, respectively.
Top 10 Soft Drink Brands
In 2022, the top ten soft drink brands in the world accounted for 43% of the total soft drinks industry’s value. Coca Cola held the largest market share in value terms, accounting for 17% of the total soft drinks industry in 2022. It was followed by Red Bull, Gatorade, Pepsi, and Fanta with shares of 5%, 4%, 4%, and 3%, respectively.
The rest of the top 10 soft drink brands in 2022 include Sprite, Del Valle, Monster, Powerade, and 7UP with shares of 3%, 2%, 2%, 2%, and 1%, respectively. That left 57% of the industry value to all other soft drink brands.
Note: The chart above does not include bottled water, hot drinks, and juice. If you are interested in the top companies for these segments, you can read the non-alcoholic beverages industry article.
Soft Drinks Industry Trends
Less Sugar, More Flavor
Numerous countries implemented taxes on sugar-sweetened beverages (SSBs) to address public health concerns such as obesity and diabetes. According to the World Bank's Global SSB Tax Database, 119 national-level taxes are in effect across 117 countries and territories, covering approximately 57% of the global population.
Furthermore, the World Health Organization (WHO) reports that, as of July 2022, excise taxes were applied at the national level to at least one type of SSB in at least 108 countries. These taxes vary in structure and rate, reflecting each country's policy objectives and economic context.
In Europe, countries such as the United Kingdom, Ireland, France, Portugal, and Hungary have implemented SSB taxes. For instance, Hungary introduced a broad "health tax" in 2011 targeting products with high sugar and salt content, including soft drinks. In September 2024, Slovakia's parliament approved a tax on sweetened soft drinks, set to commence in January 2025, as part of efforts to reduce the national budget deficit.
In the Middle East, Saudi Arabia and the United Arab Emirates have imposed taxes on sugary beverages. Saudi Arabia introduced a 50% tax on soft drinks and a 100% tax on energy drinks in 2017, later extending the 50% tax to all sugary drinks in 2019.
In the Asia-Pacific region, countries like Malaysia and Thailand have implemented SSB taxes. Thailand, for example, introduced a tax on sweetened beverages in 2017 as part of its "War on Sugar."
In the Americas, Mexico enacted a tax on sugary drinks in 2014, leading to a significant reduction in consumption. Similarly, Barbados implemented a sugar-sweetened beverage tax in 2015, which contributed to the development of policies regarding NCD prevention and control.
These measures reflect a global trend toward utilizing fiscal policies to promote healthier dietary habits and reduce the burden of non-communicable diseases.
Premium Soft Drinks Drive Growth
With the emergence of these regulatory challenges, major brands identify new opportunities in the premium drinks segment to respond to increased demand for better products.
Тhe intensifying price competition from private label brands and decline in profit margins have further prompted premium alternatives with low and no sugar variants. In particular, there has been significant growth in categories such as craft ready-to-drink (RTD) beverages, functional drinks, and flavored waters.
The development of functional food and drink is a prominent trend that has impacted the soft drinks industry. Due to increasing health awareness among consumers, coupled with innovation in food science, demand for functional drinks has surged.
Although there is no universally accepted definition yet, functional drinks can be defined as fortified, enriched, or enhanced foods that contain non-traditional ingredients like minerals, vitamins, amino acids, dietary fibers, probiotics, added raw fruits, and others. Furthermore, they provide a health benefit beyond the traditional nutrients they contain.
Due to consumer interest in functional products, companies actively invest in their development. In Asia Pacific, the carbonated soft drinks market witnessed the launch of numerous vitamin and mineral fortified drinks. Furthermore, fortification can be a relatively low cost effort for manufacturers, leading to an almost unchanged production cost.
One of them most widely used ingredients in functional beverages is ginger, due to its popular digestive and anti-inflammatory qualities. Ginger is added to a variety of products such as coffee, tea, juice, enhanced water, and other functional drinks.
Differentiation in the Soft Drinks Industry
In today’s market, it is crucial for companies to differentiate their offerings to stay competitive.
Flavor is among the most prominent differentiation factors. As a result, soft drinks industry players launch new products with fruity flavors such as pink grapefruit, green apple, watermelon, and many others.
However, a significant number of companies find functionality an even more important aspect of differentiation. Thus, they choose to differentiate their brands based on their products’ functional qualities rather than flavor.
Of course, there are soft drink companies that attempt to combine both flavor and functionality. Moreover, producers choose flavors that emphasize their product’s specific functionality. For instance, pomegranate flavors become more common, owing to the antioxidant effects associated with pomegranate polyphenols.
Overall, functional ingredients can improve not only the nutritional profile of a product but also its taste. Therefore, companies increasingly invest in the development of new soft drinks with added vitamins, proteins, and fibers.
Digestive Health and Soft Drinks
Тhe growing use of ingredients promoting digestive health is another important trend that impacts the global soft drinks industry.
The interest in food and drinks that support digestive health has led to a growing demand for fermented beverages with functional probiotic ingredients. Companies meet these consumer needs by offering functional drinks with gut-friendly ingredients hat contain probiotics or dietary fibers.
In particular, apple cider vinegar-based beverages are especially popular. That is mainly due to their anti-inflammatory qualities and their ability to reduce bloating and improve digestion.
In Australia, the soft drinks industry saw the introduction of a range of apple cider vinegar-based soft drinks. They feature health benefit claims attributed to their superfood ingredients.
Anti-aging Soft Drinks
However, improved health is not the only motivation for consumers to seek out enhanced beverages. Some consumers are also interested in food and drink that affect the aging processes.
Consumers are attracted by products that contain antioxidants and superfoods like aloe vera, matcha, ginger, and other oils.
In Japan, a local company released a special peach-flavored carbonated drink. It is formulated with glucosylceramide, an ingredient known for its ability to retain moisture in the skin. The product has been also promoted as FFC certified (Food with Functions Claim) in Japan and as an alcohol- and sugar-free drink.
Flavored Water Rises
In the bottled water market, alkalizing and flavored options have prompted the growth of the category. As a result, bottled water has become the largest segment in some countries like the UK. Products such as energy waters, sports waters, and juice-infused waters are important growth drivers for the soft drinks industry due to their functionality and health claims.
In the US, numerous brands have entered the flavored water segment. For example, Hint was the fastest-growing flavored water brand in 2015. Its unique positioning allowed it to become both a flavored water and sugar-free drink. The company tapped into the trend by offering a wide range of naturally flavored and sugar-free waters as well as energy beverages.
Sparkling coconut water and vinegar drinks are other drinks that have risen as healthy alternatives to traditional carbonated drinks.