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Soft Drinks in Spain

Spain soft drinks market: Economic crisis affected growth for soft drinks during 2012

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2014-02-19 00:49:02 - Soft Drinks in Spain - a new market research report on

The Spanish economic crisis worsened in 2012. The country entered a new phase of recession, and the measures introduced by the newly elected president, Mariano Rajoy, failed to improve the situation. Throughout the year, the unemployment rate continued to grow to reach an alarming rate of 25% of the active population. Private consumption continued to be damaged by the shrinking income of the average consumer plus the rise of VAT half way through the year, which forced many consumers to cut back further on spending.

As the economic crisis continued, more consumers were faced with a troubling financial climate. The little spending money available for many families, and the fear of a further deterioration of the economic situation, forced the majority



of consumers to adopt austerity as the norm when making weekly purchases, including soft drinks. Consumers have become much more aware of the unit prices of products, and they do not hesitate to switch from retailer to retailer looking for the best deals. Due partly to the conduct of consumers, supermarkets have successfully positioned themselves as a key economy retail channel. Thus impulse and more expensive purchases in convenience stores, which were more common in the years of economic prosperity, have been replaced with more cautious purchases in supermarkets and discounters.

In the context of the economic recession, there is an increasing demand for low-priced products that offer high value for money. This has affected soft drinks, putting more pressure on manufacturers to lower unit prices. This has inevitably forced many players to lower their margins in order to remain competitive. Companies which have been unable to make the proper adjustments in terms of efficiency and lower productions costs are going through a very delicate period, with many being forced to withdraw from the industry or manufacture exclusively private label products. As a result, the industry is gradually moving toward concentration, with leading domestic manufacturers and large multinationals, which have strong financial muscle, on the one hand, and private label on the other, gathering the majority of company shares.

After the approval of the use of the natural sweetener stevia (steviol glycoside) as a food additive from the EFSA (European Food Safety Association), manufacturers of soft drinks started to develop new reduced sugar and lower calorie products, incorporating this element into their formulae. Large multinationals like Eckes-Granini International, Cía Servicios de Bebidas Refrescantes and Cía de Bebidas Pepsico see great potential in this niche, as consumers are increasingly demanding healthier and more natural references. Product releases containing stevia have been observed in fruit/vegetable juice and RTD tea, for example.

According to the IMF, GDP in Spain will drop by 1.2% in 2013. With this negative outlook, private consumption is unlikely to recover in the short to medium term. As a result, soft drinks is expected to continue struggling for much of the forecast period, with a drop in the demand, on the one hand, and a preference for basic references, on the other, damaging the industry in volume and value sales terms. Toward the end of the forecast period, when the economy is expected to return to growth, an increase in the demand for added-value products and a rise in off-trade volume sales are anticipated.

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