The analysts maintain a cautious outlook over the beverage industry (principal players include KO, PEP, STZ, FO, TAP) as a whole, primarily due to weakening US demand along with a deteriorating cost environment. Moreover, analysts expect consumer weakness to remain a drag against a sluggish economic growth and increased price increases. However, looking ahead, analysts believe that emerging market strength should drive continued low-to-mid teens overseas profit growth for the group, and currency translation should also support earnings.

Sales growth, industry-wide, has averaged in the mid single digits historically and this trend seems likely to continue well into the future. Although the U.S. market is mature for carbonated beverages, the analysts see significant growth potential in less developed markets as well as in non-carbonated drinks like bottled water, fruit juices, sport drinks, vitamin water, and ready-to-drink flavored tea.

Though the long-term outlook for the soft drink beverage industry is modestly positive, the recent weak global economic environment has resulted in overall weakness in the liquid refreshment beverage category; therefore, the industry outlook is currently negative. The crisis of consumer confidence generated volume declines in the fourth quarter of 2008, and it is possible that the volume trends may not improve in subsequent quarters. Sales growth has historically averaged in the mid-to-low single-digit range; however, this trend changed in the fourth quarter of 2008.

The soft drink segment includes bottlers of carbonated and non-carbonated drinks, and non-alcoholic beverages. The U.S. market is mature for carbonated beverages; however, there is still growth potential for non-carbonated drinks, like bottled water, fruit juices, sport drinks, and ready-to-drink flavored teas. The demand for these products has been increasing as consumers seek healthier alternatives. Product line extensions by major soft drink producers should continue to spur the interest of consumers and restore the industry’s growth.