September 15, 2020

Comparing Soft Drink And Coffee Consumption

Soft drinks (such as sodas and colas) are immensely popular all across the world. And while we know the market for coffee is similarly huge, there’s one huge question: how do the two compare?

Answering this question isn’t as simple as it seems. There are massive differences between the two markets, and growth and consumption is measured very differently in both. 

To understand more and compare consumption between the two, I spoke to market experts from across the world. Here’s what they said. 

Lee este artículo en español Café vs. Refrescos: ¿Cómo se Compara el Consumo?

A Brief History Of Soft Drink Consumption

While carbonated water was invented in England in the late 18th century, the earliest reference to a flavoured soft drink (ginger beer) dates back to 1809. Colas – getting their name from the African kola nut, used to flavour the drink – emerged in the late 1800s. 

Two of the most popular brands (Coca-Cola and Pepsi) were founded just before the turn of the 20th century. While Coca-Cola was founded as a response to Prohibition legislation in the US, Pepsi was originally named “Brad’s Drink” and invented as a digestive aid. 

Throughout the 20th century, both brands grew massively, and played a huge role in the mass production of soft drinks. While both companies sold their products as syrups throughout the first half of the 20th century, they also capitalised on the demand for ready-to-drink (RTD) products to create the bottles and cans we’re familiar with today. 

Their ability to manufacture at scale meant that bottles were reasonably priced, and became a huge part of Western culture incredibly quickly. In 2017, a study revealed that PepsiCo and The Coca-Cola Company made up a staggering 78% of the US soda market.

An operations manager at a Guatemalan green coffee exporter tells me that he sees soda and soft drinks as being far more popular than coffee. He says that soda is more affordable and accessible than coffee in producing countries.

He says this has created “a cultural aspect in the sense that people talk about soft drink brands, rather than coffee at the local coffee shop”.

This observation is reflected in a 2017 study conducted by the Centers for Disease Prevention & Control (CDC), which found that soft drinks became “more affordable, more rapidly” in low and middle-income countries. 

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Comparing Consumption Statistics

It’s not easy to compare soft drink and coffee consumption, for a number of reasons. Firstly, there’s the issue of what qualifies as a soft drink, which varies from report to report. Secondly, because there is so much data and so many issues with collecting it, it’s impossible to be truly accurate. Finally, coffee consumption is measured in kilograms of beans (rather than litres, as soft drinks are), which are then brewed at different ratios for different beverages.

However, based on a number of different statistics, we came up with some very rough estimates. Please note that these figures are not accurate. Instead, they are intended to very roughly illustrate how big these two markets are.

On average, global soft drink consumption is about 45 litres per capita. This means that around 1 trillion cans (assuming a can is 330ml) are drunk every year. 

In comparison, in 2019, global coffee consumption worked out at just over 10 billion kilograms. According to the SCA, the “golden ratio” for brewing coffee is around 55g per litre, or about 18g per 330ml. Using this as an estimate, for a cup of the same size (330ml), this works out at around 555 billion cups of coffee consumed every year.

What Makes Soft Drinks Popular?

Despite the fact that accurate statistics are almost impossible to obtain, there is some agreement about the two markets.

Most articles and reports indicate that soft drink consumption is still generally higher than coffee consumption, but it is falling – while overall coffee consumption is growing.  

However, before we look at coffee consumption and its growth, we need to consider what makes soft drinks popular.

Accessibility & Affordability

Thanks to mass production, soft drinks are accessible and affordable across the entire world. For example, a can of cola in Guatemala or a bottle of Postobon in Colombia can easily be purchased relatively cheaply. Finding a good cup of coffee, however, can be more difficult.

Furthermore, the CDC study found that soft drinks “undermine people’s ability to resist overconsuming sugar-sweetened beverages by lowering the unit price as product size increases”. This means that buying higher volumes of soft drinks to get a “good deal” is more attractive.

RTD beverages have also been an important part of the growth of soft drinks. They offer versatility and convenience. However, while the market for RTD coffee beverages (such as cold brew and iced coffee) is growing, it is tiny in comparison to RTD soft drinks.

Promoting Consumption

Marketing in the soft drinks and coffee industries are fundamentally different. Let’s compare Coca-Cola and Starbucks.

In 2018, Coca-Cola’s revenue was US $31.8 billion, while Starbucks’ was US $24.7 billion – a difference of just over US $7 billion. However, while Starbucks spent US $245 million on marketing in 2019, Coca-Cola spent around US $4 billion – 16 times more.

Matt Swenson is the Director of Coffee at Nestlé. He says that cold brew and the marketability of other RTD coffee beverages can help the industry grow.

Matt tells me that globally, consumers are becoming more health-conscious. As cold brew offers a healthier alternative to soft drink, he believes that with the right marketing, cold brew could take some of the market share from soft drinks. 

Albert Scalla is the Senior Vice President of Trading at the StoneX Group. He explains that coffee consumption and soft drink consumption are promoted in very different ways. As a result, he says that it’s difficult to compare the two.

However, Albert is concerned that the “coffee oversupply means market prices [will] suffer”. He feels that the oversupply means that the industry should “change its ways” and promote coffee consumption more heavily.

Ricardo Pereira is the COO of Ally Coffee. He says: “While there’s a tremendous growth of coffee consumption in producing countries, the flavor profile of soda is still more favourable as there’s still not a lot of good quality coffee left [over] in producing countries.” 

He applauds Brazil and Colombia as producing countries who have made great strides in promoting internal coffee consumption. However, like Albert, he says that there’s still lots of work to be done.

A Decrease In Soft Drink Consumption: Can Coffee Capitalise?

Market trends over the past 10 years have clearly indicated that consumers are more focused on health than ever before. According to data from IBISWorld, between 2005 and 2017, US soda revenue fell from around $27 billion to just over $15 billion.

As well as this, dozens of countries around the world, including the UK, Ireland, France, Chile, Norway, and Malaysia have imposed a “sugar tax” in recent years. This naturally affects the sales of sugary soft drinks like Coca-Cola and Pepsi. 

So how can coffee steal some of the market share?

Promote Consumption, Especially In Producing Countries

In order to mitigate oversupply issues and take market share from the soft drinks industry, the coffee industry must focus more heavily on promoting consumption. 

While advertising and wider social media campaigns will help with this in countries that already consume a lot of coffee, we must also promote internal consumption in coffee producing countries.

There are already a number of grassroots initiatives in producing countries that have been successful in promoting internal consumption. Brazil’s is the most famous, but Colombia and Guatemala have also launched their own initiatives to grow consumption.

Deliver Healthy, Traceable & Transparent Products

As consumers become more health-conscious and demand more transparency in their purchases, the coffee sector can capitalise. Specialty coffee already has a focus on traceability and transparency, and can also leverage the fact that coffee is healthier than sugary soft drinks and sodas.

For example, in the home, children often drink soda before coffee, and coffee is often seen as an “adult” beverage. If the conversation around the negative health effects of soda continues, and coffee is positioned as a “healthier” alternative, it may be able to steal some of the market share that soda loses.

Ricardo points out that transparency is a natural advantage that specialty coffee has over soft drinks. “With soda, it’s very difficult to be transparent as there are more factors and ingredients that need to be looked at,” he says.

“As consumer behaviour continues to evolve, transparency and traceability will become more and more important for consumers.” Products like wine, cacao, and coffee already have the structures in place to promote transparency, whereas soda does not.

Offering Convenience: RTD Coffee 

It’s no secret that cold brew and iced coffee have experienced unprecedented growth since entering the market. While both products are still relatively new and comparatively small, there is a good chance that RTD coffee could prove to be a viable alternative to soft drinks in the long-term – especially sugary sodas.

Cold brew has potential to steal some of the market share from brands like Coca-Cola and PepsiCo. It is a cold, refreshing beverage which still contains caffeine and is a far healthier option than sodas.

Beyond cold brew, Matt says that consumers are also starting to “embrace the idea that coffee can be an ingredient, such as in pancakes, protein shakes, and so on”. Cold brew might be a good alternative to sodas and soft drinks, but if coffee flavourings increase in popularity, that means more opportunities for everyone across the supply chain.

The nature of the data that is available makes it difficult to accurately compare soft drink and coffee consumption.

However, one thing is certain. If soft drinks face more difficulties in the market and consumption continues to decrease, RTD coffee could capitalise and present itself as a viable alternative.

Enjoyed this? Then read Exploring RTD Cold Brew’s Rising Popularity

Photo credits: Dominic Alves, Siju, David Pursehouse, Mohamed Hayibor

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