To show what factors drive profitability in the beverage industry, which chains are growing fastest, and how the industry survived the corona crisis, we analyzed the 700 largest beverage companies in the world (net sales of €50 million and more). Curious which insights we found in their financial figures? Find them below.
The beverage industry is growing at a healthy pace
Over the period 2017-2021, companies in the beverage industry grew with a relatively healthy pace. Even when including COVID-year 2020, the industry still has a CAGR of 4.5%. Net sales only saw a small decline (-2.4%) in 2020, showing that the industry was able to make up for lost foodservice traffic during the pandemic.
The sector showed a strong recovery after COVID. With an average sales growth of 10.6% in 2021, many companies even reached record sales levels with increases in value and volume. The main driver for this growth is that during COVID, consumers returned to trusted premium brands. Research has shown that in times of uncertainty, most consumers choose brands they trust. Where these premium brands previously lost market share to private labels and niche brands, they are now taking it back.
Looking at growth on a category level, shows that the liquor segment realized the strongest growth (especially in 2021). The segment really benefitted from the demand for more premium brands.
A profitable and healthy industry
With an average profitability of 6.1% in 2017-2021, the overall industry is healthy. The industry saw a strong increase in profitability, mainly in 2021. Throughout the pandemic, consumers spend relatively more on premium brands, increasing the average EBIT to 7.2%. Liquor and wine companies were the largest drivers for this increase in profitability in 2021.
Between the category levels, there are large differences in profitability. The liquor segment is the front-runner here and the companies in this segment are realizing the highest margins. More saturated markets, like beer, wine and soft drinks, are below-average.
What's to come for the beverage industry?
As mentioned above, during the pandemic a lot of consumers chose the familiarity of premium brands over private labels. But with current inflation increases, consumers are shifting back to the value segments. NielsenIQ reports that inflation already brought a strong increase in private label sales in Q2 of 2022 globally. With further inflation increases (especially in Europe) we expect this trend to continue over the next period.
More beverage industry trends?
Want to find out more beverage industry trends? In our beverage industry trend report we share the latest insights, trends, and developments on the performance of the industry and its top performers. Download the trendreport for free via the button below.