Up And Down Beverages Competition

By
09-05-2018

Competition within the beverage market, especially in Ready To Drink (RTD) category, in Indonesia is getting tighter in the last several years. If we look at the market, there are more and more new brands both local and foreign brands being sold - not only in modern retail stores but also in traditional stores such as kiosks or warong, and even hawkers. According to Nielsen Retail Audit1), in the last three years there have been more than 100 new RTD beverage brands on the market. This does not include new variants released by the existing brands. As brand or new variant increases, competition in obtaining the space to sell at retail stores becomes increasingly fierce - especially because the space expansion is not as fast as brand or variant addition.

It must also be realized that competition in the beverage market not only becomes more fierce, but also more complex, especially for out of home consumption. The development of mobility keeps people out of the house longer and this influences their consumption pattern. Consumers are exposed to the increasingly diverse types of outlets that sell drinks - from ready-to-drink beverage outlets, local coffee shops to mobile coffee traders, even minimarkets also sell ready-to-drink drinks. Therefore, it is increasingly important for beverage producers to understand consumers’ beverage consumption pattern, especially when the competition in the beverage industry is no longer centered in a single category, but also on other beverage categories of the industry.

From a survey on drinks recently conducted by Nielsen2), Mineral Water is still the most frequently consumed type of beverage. This is related to the basic function of water which is still considered the best to meet the needs of human body fluids. Therefore, Mineral Water becomes the most drunk beverage immediately after waking up in the morning, or with meals.

Coffee and Tea are also the kind of beverage that are often consumed by consumers. It is not surprisingly, as coffee or tea often becomes a "must" drink that is usually served daily in Indonesian households. Both of these drinks are also being consumed as drinks to start the day. In addition, because of its caffeine, coffee becomes a sought-after drink when one requires energy at night.

Other than Mineral Water, consumers usually start to consume RTD drinks consumed before noon - in between meals or during breaks. The most consumed is still RTD Tea, which is indeed one of the RTD categories that is easily found on the market. Other drinks that are included in the Indulgence or Functional drinks have lower share compared to Mineral Water or tea/coffee-based drinks3). Consumers have a tendency to consume these drinks at certain occasions, hence the lower frequency of consumption. 

The competitive market situation at the category level is also seen from the advertising activities. The brands compete with each other to maintain its existence in order to remain the consumer choice through ad placement, especially on national TV. Interestingly, according to the data from Nielsen Ad Intel, ads from functional beverages, coffee and indulgence beverages categories compete very tightly to achieve highest GRP figures. This indicates the market's excitement in the three categories. Meanwhile, ads from mineral water category with the biggest share of throat actually get the least GRP compared to other categories. This might be caused by the consumers’ perception of mineral water as basic necessities, and some players in this category have not been active on TV. On the other hand, there are many mineral water products with local marketing reach or only available in certain areas, therefore the producers might not see advertisements on national TV as an efficient way in their overall marketing activities.

Speaking of image, a fierce competition also occurs in the minds of consumers. "Available anywhere", "Refreshing", "Suitable to drink anytime anywhere" is an association attached to all drinks especially RTD. The rest of the categories can have different association in the minds of consumers, especially drinks that have certain functions. Therefore, it is very important for a brand to build certain association that are inherent to the brand so that it can be distinguished from other brands in the market.

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1) Nielsen Retail Audit, RTD Beverages, National Urban, MAT 16 – 18

2) Nielsen Beverages Share of Throat Report provides a complete understanding of consumer habits and attitudes in the beverages category for both in-home as well as out-of-home consumption. This study combined face-to-face interview and diary placement among 1,150 randomly selected samples in 5 cities: Jakarta Greater, Yogyakarta, Surabaya, Medan, Makassar; covering 18 beverages category.

3) Share within 18 categories:

Tea Based Beverages: Tea Bag, Tea RTD, Tea – Brewed

Coffee Based Beverages: Coffee Sachet, Coffee RTD, Coffee – Brewed

Functional Beverages: Isotonic, Liquid Milk, Juice RTD/Artisanal, Yoghurt Drink, Vitamin Drink, Isotonic, Energy Drink

Indulgence Beverages: CSD, Ice Cream, Chocolate Drink, RTD Jelly Drink

 

 

Tagged:  SHOPPER  |  CONSUMER  |  INNOVATION

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