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Around the world, rising levels of overweight, obesity, and their related diseases are putting pressure on governments to help their citizens eat more healthfully. Dietary guidelines are a common approach – they summarize which foods/beverages and nutrients to include and which to limit or avoid for health. At the top of the ‘avoid’ list in many countries is sugar.

Sugar is an easy target since it is a source of extra calories and does not carry nutrition benefits beyond those calories. Sugar-sweetened carbonates top the list of high sugar-low nutrition foods and beverages. That is why an increasing number of countries globally, including in Southeast Asia (SE Asia), are imposing ‘sugar taxes’ in an attempt to curb growth in weight-related diseases and improve the health of their population. The increased attention on sugar pushes the industry to innovate around sweeteners and motivates consumers to consider sugar and health when choosing carbonates.

The carbonate marketplace in countries in Southeast Asia – China, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam – continues to expand. Value and volume show steady growth, up nearly 50 percent between 2010 and 2018 and are projected to grow at a healthy rate in the coming years. While China dominates the category, followed by Thailand and the Philippines, Indonesia is seeing the strongest value gains. Indonesia, Vietnam, the Philippines, and China rank in the top five fast-growing global markets by volume.

Product development trends suggest that consumers are turning away from sugar-laden drinks, and embracing sugar free, ‘healthy’ and novel carbonate products. As the category comes under increasing pressure from non-carbonated soft drink options that are deemed ’healthier’, product innovation will need to focus on reformulations and premiumization to continue to build on current growth trends and interest in health-related benefits. New carbonate launches have been on an upward trajectory since 2016, with Singapore and China as the most active. Lotte Chilsung Milkis Yogurt Flavored Soda Beverage was introduced Fall 2019 in Singapore. Jianlibao Meilifang Old Beijing Carbonated Orange Juice Beverage contains at least 2.5 percent juice.

While most consumers in SE Asia are maintaining their consumption of carbonates, high percentages in Indonesia and Thailand are drinking less, naming ‘because it’s unhealthy’ overwhelmingly as the main reason. Consumers in Indonesia and Vietnam value health over flavor in carbonates, and sugar-related claims are a top factor. Attributes that encompass naturalness are also of concern, including ‘no artificial colors or flavors’, ‘made with real ingredients’, for example, Gus Extra Dry Ginger Ale with ‘real ginger root’, and ‘natural’.

The industry across SE Asia is dominated by Coca-Cola and PepsiCo, although large local and regional companies and smaller niche concerns are also active. Coca-Cola and PepsiCo compete with full lines of key global brands that include zero sugar options, along with health-focused products containing fiber or added vitamins and minerals that satisfy consumer needs for added functionality. In the Philippines, a new ‘supersoda’ energy drink under the Thunder brand features caffeine for energy but zero sugar/calories; sparkling juices and other lower calorie carbonates are also available.

Trends in carbonates in SE Asia echo Innova’s evolving list of top trends that are driving development of food and drink markets around the world. The 2019 ‘Eating for Me’ trend, incorporates products meeting the needs and preferences of the individual. As consumers become increasingly aware of their individual sugar intake, the importance of sugar free or no added sugar carbonate alternatives gathers speed. Other products include carbonates fortified with selected vitamins and minerals for functionality or, like China’s Easelife Bubble Soda Water, marketed on their vitamin C and zero calories.

The trends ‘The Plant Kingdom’, ‘The Plant Based Revolution’, and ‘Alternatives to All’ demonstrate the mainstreaming of plant based products in carbonates in SE Asia, including natural sweeteners and other plant based ingredients perceived to be healthier. The trend ‘A Fresh Look at Fiber’ marked the return of fiber as an essential food ingredient for gut health, and it appears in several carbonates product launches in SE Asia, including Coca-Cola Plus Foshu Carbonated Cola Soft Drink With Added Fiber (Vietnam).

The domination of ‘sugar free’, ‘low calorie’, and ‘low sugar’ claims/positionings demonstrates both a shift in SE Asia towards healthier, lower sugar products and the evolution of product portfolios to fall in line with global dietary guidelines and sugar taxes. To take full advantage of the growing market and prevent health-conscious consumers choosing other soft drinks options such as bottled water, manufacturers will need to expand product ranges with healthier profiles, particularly with sugar reductions, added fiber, high protein, health functionality, and personalized nutrition features.

Category Insider: Carbonates – China & Southeast Asia is a report from Innova Market Insights, which brings together consumer research, market sizes, company analysis and a review of new product trends and activity to demonstrate just how the picture has been changing and to suggest where the future opportunities can be found.


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