The exit of a
player in this subcategory is one of the contributing factors to the decline
witnessed in the dilutables volume overall. The exit of the player affected the
market share for the subcategory in that it shifted from first place to second
place, with dilutable dairy juice blends accounting for the largest market
share for 2017.
The cordials/squashes and bases subcategory has the second largest volume share
and has a lower reconstitution factor than dilutable dairy juice blends.
Cordial/squashes and bases are also more expensive on rand per litre basis
compared to dilutable dairy juice blends. Due to these facts, it is hypothesised
that the cordials/squashes and bases will continue to lose share to the
dilutable dairy juice blends subcategory.
The highest volume growth was recorded by the dilutable ice tea/sports drinks
subcategory, where this was driven largely by private label dilutable iced tea.
Dilutable iced tea is gaining popularity within South Africa and it is believed
that there is untapped market potential in these variants.
Top end retail, bottom end retail and wholesale accounted for the majority
share of the dilutables channelling. These channels have a relatively large
customer base which is ideal for players who want to increase their footprint.
The channels also offer competitive prices and combo deals that attract
consumers who may be price sensitive.
However, the top end retail sector remains the stronghold of the category. This
channel is known to have many in-store promotional activities to drive sales
and also has retail private labels which are often a more economical offering. Private
labels have become popular for consumers especially during these tough economic
times. Over the years retailers have improved the product quality, packaging
and marketing of private labels and this is believed to have changed consumer
perceptions of these brands which may have translated to increased sales.
The majority share of the dilutables category is distributed to the three key
metropolitan regions. Together these regions have a large population base
compared to the other regions. The dense population in these areas is
characterised by a significant number of distribution channels making the
product more accessible and available to cater for the high volume
Gauteng continued to hold the majority volume of the dilutables category followed
by KwaZulu-Natal and the Western Cape. These regions have a large population
base as, according to the mid-year estimates published by Stats SA, 56.7% of
the total population resided in these regions by mid-2017. Many plants are
situated in these areas making it cost effective for players to distribute
their products locally.
South Africa has been experiencing economic pressures of late, which have
depleted consumer spend. Dilutables are considered cheaper relative to other
beverages and are attractive during times in which consumers are looking for
product offerings that will stretch their money.
The increase in VAT and the implementation of the sugar tax on sugary beverages
is expected to lead consumers switching to cheaper alternatives. The likes of
bottled water are expected to benefit from these price increases but players in
the dilutables category can also capitalise on this by changing their
formulations and offering value-for-money products.