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Beverages - Soft Drinks

US soft drink primer, 2023 edition

23 June 2023
US soft drink industry investment guidebook
This 5 th edition primer is a guide to the key drivers for investors to consider when Equity
investing in US non-alcoholic beverage companies. Inside we provide an outline and United States
analysis of critical product categories, channels, demographics, margin structure and Beverages - Soft Drinks
competitive dynamics that should be considered during the investment process.
Bryan D. Spillane
Research Analyst
Non-alcohol + alcohol beverage category $ +12% in 2022 BofAS
+1 646 855 1979
According to Euromonitor, total US beverage category volume (including all LRBs + [email protected]
alcoholic beverages) totaled 156bn liters in 2022, up +1.3% vs. 2021 and grew at a
Lisa K. Lewandowski
+1.2% CAGR over the last 5 years. Retail dollars reached $542.9bn, +11.5% YoY and Research Analyst
BofAS
+4.9% annually over the 5-year period. The bottled water and carbonated soft drink +1 646 855 4647
categories (CSD) are by far the largest in volume terms, with each garnering ~30% [email protected]
share of the US total. Of alcoholic beverages, beer is the largest volume producer with a Peter T. Galbo, CFA
Research Analyst
15% share. In dollar terms, the alcoholic beverage sectors dominate, due largely to their BofAS
higher price points and federal and state (and sometimes local) taxation. In 2022, Beer +1 646 743 0175
[email protected]
held a 22% $ share, spirits were at 21%, while CSD and bottled water held $ shares of
Jonathan Keypour
15% and 10% respectively. Research Analyst
BofAS
+1 646 855 4345
Energy and Sports Drinks lead growth [email protected]
In 2022, US Liquid Refreshment Beverage all channel category dollar sales grew +10.5% Christian Junquera
with volume growth of +1.0%. Energy drinks (+4.8%) and Sports drinks (+5.2%) were the Research Analyst
BofAS
leaders on volume growth. Carbonated soft-drinks volumes increased +0.4% and were +1 646 855 5195
[email protected]
dragged by a -2.6% volume decline on-premise as mobility remained impaired in the
first half of the year. From our perspective, Energy and Sports Drinks volume growth are
being enabled by an expanding product array to serve more need states while growing
LRBs= liquid refreshment beverages
usage occasions. Celsius is an example, as its flavor (e.g. taste), energy and calorie
combination increasingly drives consumption into more refreshment occasions (consume CAGR= compound annual growth rate
with a meal) relative to other energy drinks.
CSDs= carbonated soft drinks
Consumer seeking function helps drive the category PET = for polyethylene terephthalate
In addition to refreshment, consumers demonstrate interest in function or “solutions” in
(plastic bottles)
beverages. The spectrum ranges from Energy drinks, sports nutrition (Creatine), Sugar
free products (success of Zero sugar products for Coca-Cola, Pepsi and Keurig Dr
Pepper), gut health (Kombucha) and protein. More recently, the flexibility that beverages
offer as a platform to service a range of needs provides investors fertile ground for
value creation in the industry. (We point to Celsius and Vita-Coco as recent examples).

Industry adapting to change

We estimate the industry profit pool has increased ~5% annually over the past 10 years
due in part to changes in company strategy and tactics. Key highlights include: 1) a
sharper focus on revenue over volume in carbonated soft drinks; 2) enhanced revenue
management capabilities including the introduction of more premium priced
packages/SKU's; 3) R&D investments on new products including low/reduced; and 4)
stepped up advertising.

BofA Securities does and seeks to do business with issuers covered in its research
reports. As a result, investors should be aware that the firm may have a conflict of
interest that could affect the objectivity of this report. Investors should consider this
report as only a single factor in making their investment decision.
Refer to important disclosures on page 161 to 163. 12571883

Timestamp: 23 June 2023 05:00AM EDT

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2022 at a glance
Per Beverage Digest, US LRB (liquid refreshment beverage) sales across all channels
increased 11.3% in value and +0.9% in volume, implying price/mix growth of +10.4%.
Dollar sales growth was driven by inflationary pricing as producers offset higher
operating and input costs. The carbonated soft drink (CSD) category recorded its second
consecutive year of volume growth after 16 years of declines. The CSD category was
aided by the continued rebound of fountain and foodservice traffic that was impaired
during the pandemic.

Solid company performance in North America in 2022. Coca Cola’s (KO) North
American unit generated sales of $15.7bn, or +19% reported/+13% FX neutral in 2022.
PepsiCo Beverages North American (PBNA) posted sales of $26.2bn, +4% reported/+11
ex. FX and Keurig Dr Pepper’s (KDP) US Refreshment Beverages unit recorded sales of
$2.01bn, +13% YoY. In 1Q23, KO’s North American sales increased +9%, PBNA’s +12%
and KDP’s US Refreshment ops +13%.

Exhibit 1: US LRB category all-channel performance by segment (2022) Exhibit 2: 2022 all -channel performance of top US LRB trademarks
Dollar sales was strongest for Sport Drinks, softest for RTD tea. Dollar sales growth was strongest for Gatorade, weakest for Nestle Pure Life
(acquired by Blue Triton in 2021)
Implied
LRB category Vol shr $% Vol % px/mix Implied
Bottled water 36.6% 12.2% 0.1% 12.1% Trademark Vol shr $% Vol % px/mix
Carbonated soft drinks 34.1% 12.5% 1.4% 11.1% Coca-Cola (KO) 11.0% 10.0% 1.4% 8.6%
Juice, juice drinks 8.4% 8.2% -1.8% 10.0% Pepsi (PEP) 4.8% 9.0% -1.5% 10.5%
RTD tea 6.3% 6.9% -1.5% 8.4% Dr Pepper (KDP) 3.8% 10.0% 0.5% 9.5%
Sports drinks 5.7% 18.5% 3.1% 15.4% Gatorade (PEP) 3.6% 20.9% 4.5% 16.4%
Energy 3.1% 8.6% 1.1% 7.5% Mtn Dew (PEP) 3.3% 7.0% -1.7% 8.7%
RTD coffee 1.7% 11.4% 1.9% 9.5% Sprite (KO) 3.0% 15.0% 2.1% 12.9%
Other 4.1% 11.0% 9.3% 1.7% Nestle Pure Life (BT) 2.6% -5.0% -17.0% 12.0%
Total LRBs 100.0% 11.3% 0.9% 10.4% Poland Spring (BT) 1.9% 13.0% 2.2% 10.8%
Source: Beverage Digest Aquafina (PEP) 1.9% 8.0% 0.9% 7.1%
RTD= ready-to-drink Dasani (KO) 1.7% 1.8% -1.0% 2.8%
BofA GLOBAL RESEARCH Source: Beverage Digest.
Trademarks include all variations (regular, diet, caffeine free, etc)
BT= Blue Triton
BofA GLOBAL RESEARCH

Exhibit 3: US all channel volume and value share (2022%) Exhibit 4: YoY US volume and value share changes by category
CSD won 40bps of value share and 20bps of volume share YoY Bottled water, CSDs and Sports drinks gained value share in 2022
Vol shr $ share 0.6%
Bottled water 36.6% 16.3% Vol Shr% $Shr %
Carbonated soft drinks 34.1% 42.2% 0.4%
Juice, juice drinks 8.4% 13.8%
RTD tea 6.3% 8.9%
0.2%
Sports drinks 5.7% 6.7%
Energy 3.1% 9.6%
RTD coffee 1.7% 2.3% 0.0%
Other 4.1% 0.2%
Total LRBs 100.0% 100.0% -0.2%
Source: Beverage Digest
BofA GLOBAL RESEARCH -0.4%

-0.6%
Bottled CSDs Juice, juice RTD tea Sports Energy RTD coffee Other
water drinks drinks

Source: Beverage Digest

BofA GLOBAL RESEARCH

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Total US beverages
While this primer focuses on the non-alcoholic side of US beverages, this section shows
the relative importance of all consumed beverages, non-alcoholic and alcoholic alike.

Note: In this primer we use several terms interchangeably: on-premise,

foodservice, and on-trade all refer to sales/volume trends in the bar/restaurant
venue or away-from-home channel intended for immediate consumption. For
take home consumption purchases, we use off-trade, off-premise or at times
retail depending on the category. Data sources may vary modestly from each
other and company data depending on how they slice and dice the data.

Non-alcohol + alcohol beverage category dollars grew 12% in 2022

The total US beverage category (including all LRBs1 + alcoholic beverages) totaled some
156.0bn liters in 2022, up +1.3% vs. 2021 and at a +1.2% CAGR over the last 5 years.

Retail dollars reached $542.9bn, +11.5% YoY and +4.9% annually over the 5-year period.

The bottled water and carbonated soft drink categories2 (CSD) are by far the largest in
volume terms, with each garnering ~30% share of the US total. Of alcoholic beverages,
beer is the largest volume producer with a 15% share.

In dollar terms, the alcoholic beverage sectors dominate, due largely to their higher price
points and federal and state (and sometimes local) taxation. In 2022, Beer held a 22% $
share, spirits were at 21%, while CSD and bottled water held $ shares of 15% and 10%
respectively.

Exhibit 5: Total US beverage volume share (non-alc + alc), 2022 Exhibit 6: Total US beverage (non alc + alc) dollar share, 2022
LRBs (liquid refreshment beverages) accounted for 79% of beverage Alcohol beverages represented 57% of beverage sales dollars in 2022
volume
Juice RTD Coffee RTD Tea Carbonates Juice RTD Coffee RTD Tea
8% 1% 4% 15% 7% 1% 3%
Energy Drinks
Carbonates Energy Drinks
4%
30% 2%
Sports Drinks
Sports Drinks Bottled Water 3%
5% 10%

Beer
Beer
15%
Cider/Perry 22%
Wine
0%
10%
RTDs with
Cider/Perry
alcohol
RTDs with 0%
Bottled Water Wine Spirits 2%
Spirits alcohol
30% 2% 1%
21% 4%
Source: Euromonitor Source: Euromonitor
Note: Excludes hot drink volume share Note: Excludes hot drink value share
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

1
LRBs= liquid refreshment beverages and includes all non -alcoholic beverages from bottled water to sports drinks
2Carbonated soft drinks, carbonates and CSDs refer to sweetened, sparkling non-alcoholic ready to drink beverages.
Ready-to-drink (RTD) refers to beverages that do not require preparation or dilution.

Beverages - Soft Drinks | 23 June 2023 7

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 Exhibit 7: LRBs on-premise and take home volume (mn liters) Exhibit 8: Alcoholic bevs on-premise + take home vols (mn liters)
LRB volume grew 1% in 2022, led by a rebound of on-premise volume Alcoholic beverage volume expanded by 2.3% in 2022, aided by the
continual recovery in on-trade volume as life normalized
40,000
Off trade On trade Off trade On trade
125,000

30,000
100,000

75,000
20,000

50,000

10,000
25,000

- -
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 9: LRB on-premise and take home value ($mns) Exhibit 10: Alcoholic bevs on-premise and take home $ ($mns)
Total value grew +10.5% in 2022, following a 16% rise in 2021 Alcoholic $ sales +12.3% cycling a 16.6% increase in 2021
$300,000 $400,000
Off trade On trade Off trade On trade

$300,000
$200,000

$200,000

$100,000
$100,000

$- $-
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 11: Hot drink volumes (tonnes) Exhibit 12: Hot drink value ($, retail value)
Hot drink volumes slipped 5.5% in 2022, led by a 6% drop in coffee volumes, Hot drink value rose by 8% in 2022 or +5% over the 5-year period
including an 8% drop in retail volume
$30,000
Coffee Tea Other hot drinks
Coffee Tea Other Hot Drinks
1,200,000

1,000,000
$20,000
800,000

600,000

400,000 $10,000

200,000

- $-
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

8 Beverages - Soft Drinks | 23 June 2023

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Exhibit 13: US market Alcohol, hot drink and LRB volume growth YoY
Volume growth in 2022 was strongest for alcoholic beverages (+2%), followed by LRBs (+1%).
2018 2019 2020 2021 2022 3Y CAGR 5Y CAGR
Alcoholic Drinks Off-trade Volume -0.2% 1.3% 14.8% -2.1% -2.3% 3.2% 2.1%
On-trade Volume -0.1% -0.3% -36.2% 29.0% 21.7% 0.1% 0.0%
Total Volume -0.2% 0.9% 2.3% 2.7% 2.3% 2.4% 1.6%
Hot Drinks Foodservice Volume 1.4% 1.6% -19.9% 22.3% 2.3% 0.1% 0.6%
Off-trade Volume 1.0% 0.9% 9.3% -5.0% -7.8% -1.5% -0.5%
Total Volume 1.1% 1.1% 2.4% 0.0% -5.5% -1.1% -0.2%
LRBs Off-trade Volume 1.6% 1.5% 4.7% 2.5% -0.9% 2.1% 1.9%
On-trade Volume 0.8% -0.1% -35.1% 29.4% 8.8% -2.9% -1.6%
Total Volume 1.4% 1.2% -4.6% 6.8% 1.0% 0.9% 1.1%
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 14: US market Alcohol, hot drink and LRB value % growth YoY
A fter weak on-trade volume due to the initial phase of the pandemic, sales rebounded for both alcoholic and soft drink beverages
2018 2019 2020 2021 2022 3Y CAGR 5Y CAGR
Alcoholic Drinks Off-trade 3.1% 3.4% 17.9% 5.9% 6.8% 10.1% 7.3%
On-trade 3.2% 4.0% -24.2% 31.6% 18.5% 5.8% 4.9%
Total value 3.2% 3.7% -4.2% 16.6% 12.3% 7.9% 6.1%
Hot Drinks Retail value (take home) 0.9% 0.6% 13.3% 2.9% 8.2% 8.1% 5.1%
Soft Drinks Off-trade 3.2% 4.0% 5.6% 6.6% 6.8% 6.3% 5.2%
On-trade 1.9% 1.1% -35.6% 35.9% 17.1% 0.8% 1.1%
Total value 2.6% 2.7% -11.7% 15.6% 10.5% 4.1% 3.5%
Total Total $ value 2.9% 3.2% -6.8% 15.6% 11.4% 6.3% 5.0%
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 15: US LRB volume, implied price/mix and value growth (2022) Exhibit 16: US alcohol/hot drink volume, implied price/mix and value
Total implied price/mix for LRBs was +10% in 2022 growth (2022)
Total Alcohol price/mix was +10%
Implied
Category Data Type Value Volume px/mix Implied
LRBs Off-trade 6.8% -0.9% 7.7% Category Data Type Value Volume px/mix
On-trade 17.1% 8.8% 8.3% Alcoholic Drinks Off-trade 6.8% -2.3% 9.1%
Total 10.5% 1.0% 9.5% On-trade 18.5% 21.7% -3.2%
Bottled Water Off-trade 6.2% -0.6% 6.9% Total 12.3% 2.3% 10.0%
On-trade 20.3% 11.8% 8.5% Beer Off-trade 0.0% -5.6% 5.7%
Total 12.4% 1.1% 11.3% On-trade 28.2% 25.3% 2.9%
Carbonates Off-trade 4.5% -2.6% 7.1% Total 12.8% 0.8% 12.0%
On-trade 14.5% 7.8% 6.7% Cider/Perry Off-trade 4.6% -1.1% 5.7%
Total 8.5% 0.4% 8.2% On-trade 8.8% 4.0% 4.8%
Concentrates Off-trade 5.2% 0.5% 4.7% Total 6.9% 0.4% 6.5%
Total 5.2% 0.5% 4.7% RTDs Off-trade 32.3% 15.8% 16.6%
Juice Off-trade 6.3% -1.5% 7.8% On-trade 43.2% 21.9% 21.3%
On-trade 19.8% 9.4% 10.4% Total 35.7% 16.4% 19.4%
Total 11.5% -0.1% 11.6% Spirits Off-trade 9.2% 2.2% 7.0%
RTD Coffee Off-trade 7.1% -1.9% 9.1% On-trade 11.9% 4.9% 6.9%
On-trade 16.9% 6.9% 10.0% Total 10.6% 2.8% 7.9%
Total 7.8% -1.5% 9.3% Wine Off-trade 6.1% 1.3% 4.8%
RTD Tea Off-trade 4.6% -1.6% 6.2% On-trade 8.3% 3.1% 5.2%
On-trade 13.9% 6.0% 7.9% Total 7.0% 1.5% 5.5%
Total 8.7% 1.2% 7.5% Hot Drinks Retail Value 8.2% -7.8% 16.0%
Energy Drinks Off-trade 12.3% 4.7% 7.6% Source: Euromonitor
On-trade 16.9% 8.1% 8.8% BofA GLOBAL RESEARCH
Total 13.1% 4.8% 8.2%
Sports Drinks Off-trade 12.8% 5.1% 7.7%
On-trade 18.7% 10.6% 8.1%
Total 13.1% 5.2% 7.9%
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 9

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The state of US beverages
Sugar reduction showing progress
Sugar and artificial sweeteners continue to be scrutinized by consumers, as reducing
obesity and clean living have become more mainstream. Some parents are not allowing
their children to consume sugar-laden beverages, even the diet variety, due to health
concerns regarding sugar and/or artificial sweeteners, and in some instances, plastic
packaging.

In addition, scientific studies speculating about the long-term impact of sugar, and
artificial sweeteners, artificial sweeteners are also perceived as not offering the best
taste for those used to consuming full-flavored versions. The US Federal Dietary
guidelines call for smaller portions, replacing some carbonates with water, choosing
reduced fat milk products and lowering sodium intake.

Over the last decade, regulators and public health groups have called for sugar reduction
for produced consumed across foodservice, packaged foods and beverages, with many
countries (>50) and local sugar-sweetened beverage taxes implemented in recent years
to combat this health issue.

• Over the last five years, Euromonitor estimates that retail grams of sugar/day from
soft drinks globally have slightly from 8.96g to 8.47g or ~5%. Some of the larger
declines came from high consumption markets, with a 13% decline in Latin America
and 6% drop in North America over the same period.

• The American Beverage Association states that nearly 60% of US beverages sold
today have no sugar. Producers/bottlers have innovated on package sizes and
reformulated beverage formulas to take out sugar/calories so consumers can make
more informed choices.

Demand for caffeine

American consumers have a long-established relationship with caffeine. Per-capita
consumption increased from 120mg/day in 1999 to 165mg/day in 2010 driven largely by
an aging population and the emerging interest in a wide variety of caffeine sources.
Most notable in our view are the growth in Coffee and Tea served cold and in the
afternoon as well as Energy drinks. These products have contributed to the decline in
carbonated soft drinks by providing alternative platforms for consuming caffeine outside
the morning day part.

Functional beverages and consumer need states

Beyond energy, consumer demand for nutritional density in beverages is increasing. This
is related to changes in consumer behavior as lives got busier (pre pandemic) and in the
aftermath of the pandemic, consumer habits regarding health and wellness continues to
evolve.

The traditional eating pattern of three meals occasionally augmented by a snack is being
displaced by one where consumers are eating more “mini-meals” throughout the day.
This is disrupting traditional meals (e.g. shrinking) and snacks (consumers seeking more
nutritional density). Beverages are playing a role in meeting this change in behavior with
offering higher levels of protein, fruits and vegetables, micro nutrients and other
nutritional wants and desires.

• Leading brands like Red Bull (privately held), Monster (MNST) and Gatorade (PEP)
are the most successful functional beverages globally.

• KO acquired a controlling interest in Body Armor in 2021 (cost US$5.6bn) and has a
19% ownership interest in MNST.

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• In August 2022, Celsius Holdings (CELH) signed a US distribution deal with PepsiCo
and began migrating to the latter’s direct-store distribution network in October of
that year. The deal consolidated Celsius’ delivery network from over 200 partners
which included those within the Anheuser-Busch, PepsiCo, Keurig Dr Pepper, and
MillerCoors systems, giving Celsius access to deeper Convenience store penetration
and placement within Pepsi’s owned coolers. The deal included a $550mn
investment through preferred convertible shares by Pepsi which equal about an
8.5% ownership stake in Celsius on an as-converted basis.

• In December 2022, Keurig Dr Pepper (KDP) and C4 parent company Nutrabolt

signed a similar long-term sales and distribution deal as that between Celsius and
Pepsi, with KDP taking a 30% stake in Nutrabolt for $863mil.

• In May 2023, PepsiCo announced that Gatorade and Propel brands would soon
introduce the dissolvable functional beverage category – which makes it easy to
stay hydrated on the go -- in plastic tubes of ten. These products enter the $2.5bn
(per Beverage Digest) enhancer market made popular in recent years by Nestle-
owned Nuun brand. Nuun offers a line of electrolyte products for hydration for
several need states including Daily Hydration, Daily Energy, Daily Sport Hydration,
Nuun Vitamins, Nuun Immunity, Nuun Rest, and Nuun Instant.

Inflationary pressures on soft drinks and consumer goods

in general
The global pandemic led to shortages in some cross border products such as packaging
materials, artificial ingredients and additives.

Overall US inflation rose 8.0%/+5.3% over the 2022/first 5 months of 2023; this
compares to packaged carbonated beverage growth of +10.6%/+12.0% over the same
period. This may be reflected in higher prices per SKU (stock keeping units) and/or
changes to price/package mix across channels.

Blurring category lines

After years of avoidance, both KO and PEP added new alcoholic beverages into their
portfolios over the last few years. At the same time, brewers such as Molson Coors and
AB-InBev invested in functional beverages and other alcohol alternatives, as well as
ready-to-drink alcoholic beverage products such Hard Seltzers.

• In March 2021, KO and Molson Coors (TAP) joined forces to launch KO’s first hard
seltzer option, Topo Chico Hard Seltzer into the US market place. KO extended
Topo Chico Hard Seltzer into Europe in 2022, sold and distributed by Coca-Cola
Europacific Partners and Coca-Cola HBC. New products such as Simply Spiked
Lemonade, Fresca Mix and Jack Daniel’s & Cola-Cola have also been added to the
shelf.

• In mid-2021, PEP announced plans to launch Hard Mtn Dew, a 5% ABV flavored
malt beverage. PEP also announced the creation of Blue Cloud Distribution, which
as of early 2022 was permitted to distribute alcohol in 17 US states. We see
PepsiCo as “sticking a toe in the water,” to find out what the company doesn’t know
about the country’s complex state-by-state system alcohol regulations and
determine the real size of the opportunity for PepsiCo.

• Boston Beer (SAM) announced in May 2022 that it would be launching a tea with
THC (cannabis) in Canada in July. “TeaPot” is a line of cannabis-infused teas3 with
5mgs of THC/can. SAM management views Canada as a pilot market that could
transition into the US when US national laws permit. This introduction follows

3 Tea Pot will not contain alcohol.

Beverages - Soft Drinks | 23 June 2023 11

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 other brewer/cannabis tie-ups such as Constellation/Canopy, Molson Coors/HEXO
and ABI/Tilray (now discontinued).

• In early 2022, Monster acquired CANarchy, a group of independent craft brewers.

• In May 2023, Constellation Brands announced that it purchased a minority stake

in TÖST, a company specializing in alcohol-free sparkling beverages. Per TӦST’s
website the brand was created to “fill the immense space when the consumer is
looking for more than sparkling water when they are not drinking alcohol.” TÖST is
currently sold in 40+ states and 7 countries through major retailers, grocers,
restaurants, specialty stores, liquor stores, and caterers.

Consumers crave variety and choice

The US millennial generation (~80m strong) grew up on choice and variety, and appear
to love to customize/tailor their product to their taste and crave preferences.
Carbonated soft drinks have found it difficult to compete in an environment with a
plethora of options available to consumers seeking new taste experiences. As an
example, many households now hold almond milk, oat milk, coconut water, kefir,
smoothies, etc., rather than just traditional (cow’s) milk in their refrigerator, illustrating
an increased desire for ethnic and local foods, as well as greater health awareness and a
demand for increased choice.

• Rise of the foodie/artistry. Consumer interest in knowing how food/ beverages

are produced has increased in the last 25 or so years. The popularity of celebrity
chefs, cooking shows and other foodie programs has educated and prompted
consumers to scrutinize food ingredient labels. Educated palates are driving growth
in specialized coffee, tea, sourcing of water and other beverages.

• All natural ingredients. The appeal to consumers for a short list of ingredients
that they can easily pronounce, or are locally sourced, has becoming increasingly
popular with consumers. Authenticity, credibility, and straightforward positioning
add appeal to a greater number of consumers, especially of the millennial
generation.

• Allergens/dietary restrictions. More and more Americans are looking to avoid

certain allergens such as milk, soy, and wheat from their diets — whether for health
or perceived health reasons. Further, added ingredients such as artificial
coloring/flavorings and preservatives receive more attention and avoidance.

• “Do it yourself” juicing. While 100% orange juice has some positive benefits,
such as Vitamin C, more consumers have been reading labels and found that orange
juice has high levels of sugar/calories. As a result, many educated, affluent, health-
oriented consumers have turned to juicing (themselves or buying through a juice
bar). Many proponents claim the absence of processing/pasteurization provides
more flavor and health benefits/nutrients and aids in digestive and overall health.
Juice producers are responding by incorporating vegetable juices, superfoods
(blueberries, acai, and pomegranates) and coconut water to enhance flavor and
lower sugar content.

• The rise of no-alcohol. Per IWSR Drinks Markets Analysis, the sales of no-or low-
alcohol beverages grew >7% in volume across 10 key global markets, reaching
$11bn in value. IWSR cites an expansion of taste, production techniques and a
“diversification of consumption occasions” are driving the non-alcohol category’s
growth. An example of such a brand is Seedlip, owned by Diageo since 2019.

• Drinks that address mood and/or experiences rather than flavor. In 2022, KO
started the “Creations” platform in efforts to draw in younger consumers. In 2022
it rolled out Coca-Cola Starlight, Coca-Cola Byte, Marshmello’s Limited edition

12 Beverages - Soft Drinks | 23 June 2023

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 Coca-Cola (collaboration with the artist Marshmello) and Cola-Cola Dreamworld. In
February, it released Coca-Cola Move (collaboration with singer Rosalia) and in early
June 2023 it announced the launch of Coca-Cola Ultimate (inspired by the video
game League of Legends). These drinks are not designed to discover flavors, but
rather a mood or experience. KO is anticipated to launch other limited time
offerings throughout 2023.

Sustainability and environmental impact concerns

Increasingly, consumers are concerned about the environmental sustainability or impact
of the products they buy. The ethnical nature of growing coffee, tea, and cocoa in many
third world countries have gained attention and forced companies to prove their
practices and become more eco-friendly (including packaging), ethnical (including the
working /living conditions of people in these areas), or address the environmental impact
(recycling).

• Only half of Americans have automatic access to curbside recycling, and

some who have access do not participate or participate fully. High processing
charges have driven >50 programs in the US to be eliminated, reduced availability,
or raised recycling fees. With recovery scope limited to varying ranges of PET, glass
and aluminum containers, estimates by the Recycling Partnership suggest up to 8 -
10% of additional single family capture from these alternative collection sites.

• Since 1973, the PET plastic bottle has grown in popularity due to its versatility and
recyclability.

• In 2022, 24 new bottle bills were proposed across the US, all in states without
existing bottling laws, none of which were approved per the American Beverage
Association (ABA). The American Beverage Association says it supports bills that
make an existing/new law better for the environment, consumers and business
community.

Exhibit 17: Packaged carbonated soft drink market share history (cans vs. glass vs. plastic)
In 2021, we estimate that plastic bottles accounted for 57% of soft drink volumes vs. 26% in 1980

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1981
1982

1985
1986

1990

1994
1995

1998
1999

2003

2007
2008

2011
2012

2016

2020
2021
1980

1983
1984

1987
1988
1989

1991
1992
1993

1996
1997

2000
2001
2002

2004
2005
2006

2009
2010

2013
2014
2015

2017
2018
2019

Cans Glass Bottles Plastic Bottles

Source: BofA Global Research, Industry sources

BofA GLOBAL RESEARCH
More than just a number. Since 1988, all plastics were designated a number (1-7) as
defined by ASTM International. The code identifies what kind of (plastic) resin the
particular product is made of.

If one looks at the number inside the triangle at the bottom of a plastic package, one
would see a number ranging from 1 to 7. This number tells you what plastic is used and
if it is recyclable.

Beverages - Soft Drinks | 23 June 2023 13

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 Most plastic with #1 or #2 symbols are recyclable, but #3-7 depend on your area’s
recycle center. Very often the higher numbered products end up in the landfill.

What is PET? PET stands for polyethylene terephthalate and is a form of polyester.
PET bottles and containers have been used in beverages, food, personal care and
household item packages since the early 1970s. PET is a transparent, lightweight,
strong, shatterproof, resealable and a recyclable packaging material. It is identified as
the #1 code on or near the bottom of a plastic package. The FDA has approved PET as
safe for food and beverage content.

What is rPET? Recycled PET (rPET) is used to make new PET bottles, as well as other
products such as bakery/produce containers, trays, cups, etc. It is also used in many
fiber applications from carpets to clothing to fiberfill for soft furniture.

A shift to tap water was evident during the last recession, as consumers blended their
own beverages to save money. However, tap water consumption continues to grow, as
concerns about plastic packaging spreads (many Americans today carry their own
reusable water bottle)….and consumers realize their local water taste good.

Exhibit 18: Recycling symbols for plastic Exhibit 19: PET bottles/containers are Per the United Nation’s Sustainable
Most plastic with #1 or #2 symbols are considered safe, lightweight, resealable and Development Goals Report of 2021,
recyclable, but #3- shatter resistant “A growing global population combined
recycle center Americans collect over 1.8bn pounds of PET every with unsustainable use of natural resources
year
is having a devastating impact on our
planet – propelling climate change,
destroying nature and raising pollution
levels.
The UN estimates that 14% of the world’s
food is lost along the supply chain prior to
the retail level.

Around the world, 1mn plastic drinking

bottles are purchased every minute and 5tn
single-use plastic bags are thrown away
each year globally.

The global material footprint increased by

Source: Society of Plastics Institute Source: National Association for PET Container Resources 70% between 2000 and 2017.”
BofA GLOBAL RESEARCH (NAPCOR)
BofA GLOBAL RESEARCH

Media advertising shifts to digital

TV is no longer the primary choice of connecting with consumers. Smartphones, the
internet and other forms of digital consumption have become popular with the millennial
generation, especially forms of communication where they can share experience with
their friends.

Impact of the global pandemic

The pandemic brought lockdowns and social distancing and changed the way consumers
purchased and consumed beverages in the US and around the globe. In addition,
beverage manufacturers and distributors faced supply constraints that impacted their
businesses. These constraints, among other things, included labor and packaging
material shortages, rising commodity prices, rapid swings in distribution needs, shifts to
on-line ordering, cancelled product launches and or discontinuation of certain product
SKUs or brands, and required managements to pivot to address immediate challenges
caused by the pandemic, sometimes pushing back or altering strategic priorities.

14 Beverages - Soft Drinks | 23 June 2023

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Bars, restaurants, and other venues were hard hit, facing months of closures, inside
dining restraints and labor shortages.

Many of these inflationary pressures, especially labor shortages and food/beverage

inflation, continue to this day.

The global pandemic over the 2020-2022 period was pronounced with notable shifts in
sales from on-premise channels to take home as lockdowns rolled around the globe and
then returned to normal.

Off trade/take home volume %

Exhibit 20: Off trade: Volume CAGRs % trends over the 2019-2022 period (i.e. the pandemic period)
Worldwide and US CAGRs for total LRBs/soft drinks expanded at a 2.1% CAGR
Mid East,
Category World Asia Pacific Australasia E Europe LatAm Africa No America USA W Europe
LRBs/soft drinks 2.1% 2.2% 2.1% -0.2% 2.1% 4.1% 2.0% 2.1% 1.1%
Bottled Water 2.8% 3.2% 0.2% -0.3% 0.4% 5.5% 3.2% 3.4% 0.6%
Carbonated Bottled Water -0.6% 1.9% 4.5% -0.8% 3.5% 3.4% 3.7% 4.5% -3.0%
Flavored Bottled Water 2.8% 7.7% 0.9% -2.5% -1.8% 13.5% 6.1% 6.4% 5.8%
Functional Bottled Water 0.5% -4.8% -14.7% 3.7% 0.0% 6.5% 7.1% 7.1% 5.6%
Still Bottled Water 3.3% 3.4% -0.8% 0.3% 0.0% 5.5% 2.8% 2.9% 1.7%
Carbonates/CSDs 1.9% 5.3% 2.0% -0.6% 2.4% 1.6% -0.7% -0.6% 1.8%
Regular Carbonates 1.5% 3.7% 0.4% -1.0% 2.5% 1.6% -1.0% -1.0% 0.2%
Reduced Sugar Carbonates 4.2% 27.3% 4.4% 3.8% 1.0% 2.2% 0.2% 0.2% 5.0%
Cola Carbonates 2.3% 4.4% 0.1% 0.7% 3.3% 2.2% -1.0% -0.8% 2.4%
Non-Cola Carbonates 1.5% 6.1% 4.5% -2.0% 1.0% 1.1% -0.4% -0.5% 1.0%
Concentrates 1.1% 1.2% -2.0% 0.9% -1.3% 3.0% 3.6% 4.3% 0.9%
Liquid Concentrates 1.1% 1.2% -2.0% 0.9% -1.3% 3.0% 3.6% 4.3% 0.9%
Juice -0.2% -1.8% 1.5% -2.4% 3.7% -0.6% 1.1% 1.2% -0.8%
100% Juice 0.5% -1.7% 2.1% -0.4% 5.6% -0.8% 2.0% 2.2% -0.4%
Juice Drinks (up to 24% Juice) -0.3% -2.0% -0.1% -1.0% 4.4% -0.6% 0.2% 0.2% -0.4%
Nectars (25-99% Juice) -1.0% -1.2% 0.1% -5.7% 2.0% -0.5% 1.9% 3.3% -2.3%
Coconut and Other Plant Waters 1.0% 0.9% -0.8% 12.0% 4.1% -1.2% -1.5% -1.8% 0.6%
RTD Coffee 0.1% -1.7% 6.8% 10.9% -4.2% 10.5% 7.4% 7.4% 6.1%
RTD Tea -1.1% -2.1% 5.8% -3.0% 1.3% 1.9% 1.6% 1.1% 2.6%
Carbonated RTD Tea and Kombucha 4.1% 1.2% 14.9% 26.0% 5.1% 3.6% 1.1% 0.3% 3.0%
Still RTD Tea -1.2% -2.1% -1.4% -3.0% 1.1% 1.9% 1.6% 1.1% 2.6%
Energy Drinks 8.4% 6.9% 10.8% 16.0% 18.1% 5.0% 5.0% 5.0% 9.3%
Regular Energy Drinks 7.9% 6.9% 8.5% 15.1% 17.7% 4.6% 3.4% 3.3% 8.1%
Reduced Sugar Energy Drinks 11.6% 7.9% 21.3% 32.7% 25.3% 18.9% 8.0% 8.0% 16.8%
Sports Drinks 5.4% 0.9% 0.0% 1.5% 9.9% 1.4% 8.2% 8.3% 2.2%
Regular Sports Drinks 5.4% 1.0% -1.7% 1.4% 10.5% 1.4% 8.7% 8.8% 1.8%
Reduced Sugar Sports Drinks 5.3% 0.2% 18.8% 5.9% -13.0% 6.0% 6.1% 12.8%
Source: Euromonitor
BofA GLOBAL RESEARCH

On trade/bar and restaurant volume %

Exhibit 21: On trade: Volume CAGRs % trends over the 2019-2022 period (i.e. the pandemic period)
Global on-trade volumes grew faster than take home as outings continued to normalize
Category World Asia Pacific Australasia E Europe LatAm ME, Africa No America USA W Europe
LRBs/soft drinks 2.1% 2.2% 2.1% -0.2% 2.1% 4.1% 2.0% 2.1% 1.1%
Bottled Water 2.8% 3.2% 0.2% -0.3% 0.4% 5.5% 3.2% 3.4% 0.6%
Carbonated Bottled Water -0.6% 1.9% 4.5% -0.8% 3.5% 3.4% 3.7% 4.5% -3.0%
Flavored Bottled Water 2.8% 7.7% 0.9% -2.5% -1.8% 13.5% 6.1% 6.4% 5.8%
Functional Bottled Water 0.5% -4.8% -14.7% 3.7% 0.0% 6.5% 7.1% 7.1% 5.6%
Still Bottled Water 3.3% 3.4% -0.8% 0.3% 0.0% 5.5% 2.8% 2.9% 1.7%
Carbonates/CSDs 1.9% 5.3% 2.0% -0.6% 2.4% 1.6% -0.7% -0.6% 1.8%
Regular Carbonates 1.5% 3.7% 0.4% -1.0% 2.5% 1.6% -1.0% -1.0% 0.2%
Reduced Sugar Carbonates 4.2% 27.3% 4.4% 3.8% 1.0% 2.2% 0.2% 0.2% 5.0%
Cola Carbonates 2.3% 4.4% 0.1% 0.7% 3.3% 2.2% -1.0% -0.8% 2.4%
Non-Cola Carbonates 1.5% 6.1% 4.5% -2.0% 1.0% 1.1% -0.4% -0.5% 1.0%
Concentrates 1.1% 1.2% -2.0% 0.9% -1.3% 3.0% 3.6% 4.3% 0.9%
Liquid Concentrates 1.1% 1.2% -2.0% 0.9% -1.3% 3.0% 3.6% 4.3% 0.9%
Juice -0.2% -1.8% 1.5% -2.4% 3.7% -0.6% 1.1% 1.2% -0.8%
100% Juice 0.5% -1.7% 2.1% -0.4% 5.6% -0.8% 2.0% 2.2% -0.4%

Beverages - Soft Drinks | 23 June 2023 15

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 Exhibit 21: On trade: Volume CAGRs % trends over the 2019-2022 period (i.e. the pandemic period)
Global on-trade volumes grew faster than take home as outings continued to normalize
Category World Asia Pacific Australasia E Europe LatAm ME, Africa No America USA W Europe
Juice Drinks (up to 24% Juice) -0.3% -2.0% -0.1% -1.0% 4.4% -0.6% 0.2% 0.2% -0.4%
Nectars (25-99% Juice) -1.0% -1.2% 0.1% -5.7% 2.0% -0.5% 1.9% 3.3% -2.3%
Coconut and Other Plant Waters 1.0% 0.9% -0.8% 12.0% 4.1% -1.2% -1.5% -1.8% 0.6%
RTD Coffee 0.1% -1.7% 6.8% 10.9% -4.2% 10.5% 7.4% 7.4% 6.1%
RTD Tea -1.1% -2.1% 5.8% -3.0% 1.3% 1.9% 1.6% 1.1% 2.6%
Carbonated RTD Tea and Kombucha 4.1% 1.2% 14.9% 26.0% 5.1% 3.6% 1.1% 0.3% 3.0%
Still RTD Tea -1.2% -2.1% -1.4% -3.0% 1.1% 1.9% 1.6% 1.1% 2.6%
Energy Drinks 8.4% 6.9% 10.8% 16.0% 18.1% 5.0% 5.0% 5.0% 9.3%
Regular Energy Drinks 7.9% 6.9% 8.5% 15.1% 17.7% 4.6% 3.4% 3.3% 8.1%
Reduced Sugar Energy Drinks 11.6% 7.9% 21.3% 32.7% 25.3% 18.9% 8.0% 8.0% 16.8%
Sports Drinks 5.4% 0.9% 0.0% 1.5% 9.9% 1.4% 8.2% 8.3% 2.2%
Regular Sports Drinks 5.4% 1.0% -1.7% 1.4% 10.5% 1.4% 8.7% 8.8% 1.8%
Reduced Sugar Sports Drinks 5.3% 0.2% 18.8% 5.9% -13.0% 6.0% 6.1% 12.8%
Source: Euromonitor
ME= Middle East
BofA GLOBAL RESEARCH

Total volume %
Exhibit 22: On/off (total volume): Volume CAGRs % trends over the 2019-2022 period (i.e. the pandemic period)
Overall volume growth was strongest in the Middle East and Africa (+3.5% CAGR) and Latin America (+1.4%)
Category World Asia Pacific Australasia E Europe LatAm ME, Africa No America USA W Europe
LRBs/soft drinks 1.2% 0.8% 1.1% -0.7% 1.4% 3.5% 0.9% 0.9% 0.2%
Bottled Water 1.9% 1.6% -0.8% -0.7% 0.1% 5.0% 1.9% 2.0% -0.2%
Carbonated Bottled Water -1.3% -1.1% 3.9% -1.2% 2.7% 2.2% 0.6% 0.8% -3.2%
Flavored Bottled Water 2.5% 7.8% -0.1% -2.6% -1.9% 11.2% 5.5% 5.9% 5.3%
Functional Bottled Water 0.4% -4.8% -10.2% 3.6% 1.7% 6.2% 6.5% 6.5% 5.2%
Still Bottled Water 2.3% 1.8% -1.9% 0.0% -0.3% 5.0% 1.5% 1.6% 0.6%
Carbonates/CSDs 0.8% 2.6% 0.8% -1.3% 1.6% 1.1% -1.3% -1.2% 0.7%
Regular Carbonates 0.3% 1.1% -0.8% -1.7% 1.7% 1.0% -1.5% -1.5% -0.8%
Reduced Sugar Carbonates 3.1% 23.2% 3.5% 2.6% 0.7% 1.7% -0.5% -0.4% 4.0%
Cola Carbonates 1.0% 1.7% -1.0% -0.2% 2.4% 1.5% -1.6% -1.4% 1.3%
Non-Cola Carbonates 0.5% 3.4% 3.6% -2.5% 0.5% 0.7% -1.0% -1.0% -0.1%
Concentrates 0.9% 1.2% -2.0% 0.9% -1.3% 3.0% 3.6% 4.3% 0.3%
Liquid Concentrates 0.9% 1.2% -2.0% 0.9% -1.3% 3.0% 3.6% 4.3% 0.3%
Juice -0.8% -2.4% 1.1% -2.8% 1.9% -1.3% 0.3% 0.4% -1.3%
100% Juice -0.3% -2.2% 1.7% -0.9% 4.3% -1.2% 0.6% 0.5% -0.9%
Juice Drinks (up to 24% Juice) -1.0% -2.6% -0.3% -1.3% 1.7% -1.5% -0.1% 0.0% -0.8%
Nectars (25-99% Juice) -1.4% -1.7% -0.1% -5.8% 1.7% -0.9% 1.5% 2.6% -2.7%
Coconut and Other Plant Waters 0.8% 0.8% -1.9% 12.0% 3.6% -1.2% -1.7% -2.0% 0.1%
RTD Coffee 0.1% -1.8% 6.8% 10.8% -4.8% 10.4% 6.9% 6.9% 6.0%
RTD Tea -1.5% -2.5% 3.2% -3.2% 1.0% 1.7% 0.6% 0.3% 1.7%
Carbonated RTD Tea and Kombucha 3.1% 9.8% 12.4% 26.0% 8.4% 3.6% 0.8% 0.1% 0.9%
Still RTD Tea -1.6% -2.5% -3.6% -3.2% 0.8% 1.7% 0.6% 0.3% 1.7%
Energy Drinks 7.6% 5.8% 9.2% 14.5% 16.1% 5.4% 4.7% 4.7% 8.6%
Sports Drinks 5.1% 0.6% -0.1% 1.2% 9.7% 1.3% 8.0% 8.2% 1.8%
Source: Euromonitor
BofA GLOBAL RESEARCH

16 Beverages - Soft Drinks | 23 June 2023

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Total volume % trends (on + off-premise)
Exhibit 23: LRB global volume % trends Exhibit 24: Global bottled water volume % Exhibit 25: Global carbonated soft drink vol%
Overall LRB volume over the last 3 years grew Bottled water volume is expanding faster than CSD volumes in 2022 surpassed 2019 levels
+1.2% annually overall LRB volumes led by flavored water
6.0% 4.9% 8.0% 6.1% 6.0% 5.0%
3.9% 5.2% 4.0%
3.4% 4.6% 4.3% 4.0%
4.0% 2.9%
4.0% 1.9% 0.8% 1.2% 0.8%
2.0% 1.2% 2.0%
0.0%
0.0% 0.0%
-2.0%
-2.0%
-4.0% -4.0%
-4.0% -3.5% -6.0%
-6.0% -4.9% -8.0% -8.0% -6.3%
2018 2019 2020 2021 2022 3-year 2018 2019 2020 2021 2022 3-year 2018 2019 2020 2021 2022 3-year
CAGR CAGR CAGR

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 26: Juice global volume % trends Exhibit 27: Global RTD coffee volume % Exhibit 28: Global RTD tea volume %
Nectars and juice drinks are the slowest RTD coffee volumes dipped by 1% in 2022 RTD tea was very weak at the start of the
performing sub categories of juice following +4% in 2021 pandemic and remains below pre pandemic
levels
6.0% 5.0% 4.0% 6.0% 5.0%
4.0% 3.9% 6.0%
4.0% 3.6%
0.8% 1.2% 4.0% 1.6% 2.4%
2.0% 0.8% 2.3% 1.1%
2.0%
0.0% 2.0%
0.1% 0.0%
-2.0% 0.0% -2.0%
-4.0% -1.5%
-4.0%
-2.0% -0.9% -6.0%
-6.0%
-8.0%
-8.0% -6.3% -4.0% -2.7% -10.0%
2018 2019 2020 2021 2022 3-year 2018 2019 2020 2021 2022 3-year -12.0% -9.9%
CAGR CAGR 2018 2019 2020 2021 2022 3-year
CAGR
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 29: Energy drink global volume % Exhibit 30: Global sports drink volume %
Energy drink volume was up in every region Global sports drinks outpaced peer beverages
over the pandemic period
12.0% 10.4% 11.1% 10.1%
10.0% 10.0%
8.4%
7.6%
8.0% 7.0% 8.0%
6.4%
6.0% 6.0% 5.1%
4.5%
4.0% 3.2%
1.8% 4.0%
2.0%
2.0% 0.8%
0.0%
2018 2019 2020 2021 2022 3-year 0.0%
CAGR 2018 2019 2020 2021 2022 3-year
CAGR
Source: Euromonitor
BofA GLOBAL RESEARCH Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 17

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 Exhibit 31: Change in (on + off) LRB volumes by type and region over the 2019-2022 period
Overall bottled water represented 75% of volume growth on/off-premise over the pandemic period
70,000

LRBs/soft drinks Bottled Water Carbonates

Concentrates Juice RTD Coffee
RTD Tea Energy Drinks Sports Drinks
50,000 Asian Speciality Drinks

30,000

10,000

(10,000)
World Asia Pacific Australasia E Europe LatAm ME, Africa No America W Europe

Source: Euromonitor
Volume in mns of liters
BofA GLOBAL RESEARCH

Exhibit 32: Take home volume growth (mns of liters) for overall LRBs, Exhibit 33: On-premise volume growth (mns of liters) for overall LRBs,
2019-22 2019-22
The Mid East/Africa region drove absolute liter growth, representing 33% of Severe and extended lockdowns in many countries drove declines in all but
the gain the ME, Africa region
2,000
15,000

13,000
-
11,000

9,000 (2,000)

7,000

5,000 (4,000)

3,000
(6,000)
1,000

(1,000)
(8,000)
Asia Pacific Australasia E Europe LatAm ME, Africa No America W Europe
Asia Pacific Australasia E Europe LatAm ME, Africa No America W Europe

Source: Euromonitor Source: Euromonitor

Volume in mns of liters Volume in mns of liters
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

How and where people shop is changing

The pandemic threw a wrench in traditional shopping habits as many shoppers shifted
from instore purchases of groceries to socially distanced online delivery for car pick up,
home delivery, Instacart or even faster access from such apps such as Grubhub,
Seamless, Postmates, UberEATS or go puff. The convenience and variety of such
delivery services became important not just to city dwellers but suburbanites as well. As
America emerged from the pandemic, in store shopping returned, but has not recovered
to pre-pandemic levels.

18 Beverages - Soft Drinks | 23 June 2023

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E-commerce rises but remains limited due to weight
In 2022, 1.8% of US LRB volume was sold in e-commerce transactions, +70bps since
2017, but remains limited due to weight, bulk and cost of shipping LRB packages. Also
leakage is a potential problem in terms of packaging and cold chain logistics for some
types of juices can also add to costs. That said, we would look for manufacturers/
retailers to continue to adjust their assortment and package configurations to make it a
more profitable endeavor.

Exhibit 34: % of US LRB take home volume through e-commerce (%)

RTD coffee, energy drinks and sports drinks are most popular via e-commerce
2017 2018 2019 2020 2021 2022
LRBs/soft drinks 1.1 1.2 1.3 1.6 1.7 1.8
Bottled Water 0.2 0.3 0.3 0.4 0.4 0.5
Carbonates 1.8 1.9 2.2 2.5 2.7 2.9
Concentrates 1.0 1.2 1.3 1.6 1.8 2.2
Juice 0.6 0.6 0.7 1.2 1.2 1.2
RTD Coffee 1.9 2.3 2.5 4.1 4.2 4.9
RTD Tea 0.5 0.6 0.8 1.9 2.1 2.9
Energy Drinks 3.0 3.1 3.3 4.4 4.2 3.9
Sports Drinks 2.5 2.6 3.4 3.6 3.7 3.8
Source: Euromonitor
This data includes on-line grocery store purchases
BofA GLOBAL RESEARCH

Take home dominates across the globe due to easy accessibility of grocery stores and
small local grocers. Australasia (7%), Asia Pacific (5%) and Western Europe (4%) have
the highest retail e-commerce businesses, while Latin America (2%) and the Middle East,
Africa suffer from lack of infrastructure to make this more viable. France is the regional
leader for e-commerce in Western Europe at 10%, led by the popularity of “click and
collect”, known in France as “drive”.

Japan accounts for about 1/3 of global vending sales. In Japan, vending accounted
for 16% volume share in 2022. During the pandemic, vending operators removed
unprofitable machines. Vending is the most profitable sales channel for soft drink
producers, as they can set prices. Euromonitor indicates that Coca-Cola Japan has
introduced a subscription services across Japan, which entitles subscribers to one free
drink a day for a monthly fee (available at >340,000 vending machines across Japan.)

Exhibit 35: % of regional volume through take-home e-commerce channels in 2022

The US trails most regions in e-commerce purchases for beverages at just 1.8%
World Asia Pacific Australasia E Europe LatAm Mid East, No America USA only W Europe
Africa
LRBs/Soft Drinks 3.0 4.5 6.6 2.7 1.8 1.2 2.1 1.8 4.4
Bottled Water 3.0 5.2 10.7 3.2 2.0 0.8 0.7 0.5 4.3
Carbonates 2.9 4.1 4.7 2.3 1.8 2.1 3.1 2.9 4.2
Concentrates 2.7 3.0 0.6 1.3 1.0 1.0 2.2 2.2 5.8
Juice 3.6 5.7 8.2 2.3 1.6 1.9 1.8 1.2 5.1
RTD Coffee 3.6 3.5 2.7 1.2 0.2 2.4 4.9 4.9 3.3
RTD Tea 3.1 3.1 5.1 1.3 0.8 3.7 3.2 2.9 4.0
Energy Drinks 2.9 2.3 7.2 1.7 2.2 1.3 3.9 3.9 4.0
Sports Drinks 3.3 2.6 4.8 1.6 1.4 0.8 3.8 3.8 6.0
Asian Specialty Drinks 2.7 2.6 3.5 11.5
Source: Euromonitor
BofA GLOBAL RESEARCH

Channel developments
While beverages are mainstays in larger retail formats, some beverages are reliant on
smaller channels, such as vending and convenience (c-store) channels given many
beverages are sold in single-serve packaging for impulse buying or for portion control.
When America went into pandemic-related lockdowns, purchases shifted away from
restaurants, vending and many other single serve venues into e-commerce, which
offered both larger and smaller (multi-pack) options.

Beverages - Soft Drinks | 23 June 2023 19

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 Exhibit 36: Channel mix change (pts) from 2017 to 2022
Distribution changes vary by beverage type, but small local grocers and non-grocery stores appear to be the most negatively impacted by the pandemic
10.0
C-store E-commerce Vending Non-grocery Supermarkets Hypermkts, discounters, clubs Small local grocers

5.0

(5.0)

(10.0)
LRBs Bottled water Carbonates Concentrates Juice RTD Coffee RTD Tea Energy Sports

Source: Euromonitor % share change (in points) of off trade volume

BofA GLOBAL RESEARCH

Exhibit 37: % share of take-home volume sold by type and channel in the US (2022)
Traditional supermarkets, hypermarkets, discounters and clubs are very important for most beverages

C-store E-commerce Vending Non-grocery Supermarkets Hypermkts, discounters, clubs Small local grocers
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
LRBs Bottled water Carbonates Concentrates Juice RTD Coffee RTD Tea Energy Sports
Source: Euromonitor
BofA GLOBAL RESEARCH

Carbonated soft drink milestones

From soda water to cola
• In 1835, the first bottled soda water was produced in the United States.

• Around 1851, the first ginger ales were created in Ireland.

• By 1876, root beer was introduced.

• In 1885, in Waco, Texas, a pharmacist named Charles Alderton invented Dr Pepper.

Alderton’s boss at the Morrison's Old Corner Drug Store was credited with naming
the beverage after a doctor friend. (In the 1950s, the period was removed from the
“Dr Pepper” name.)

• In 1886, John Pemberton, a pharmacist from Atlanta, GA invented a drink that would
become Coca-Cola. According to The Coca-Cola Company’s official version, he was
a tinkerer who stumbled on the right combination of ingredients by accident while
trying to devise a cure for headaches. During the first year, sales averaged 9

20 Beverages - Soft Drinks | 23 June 2023

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 glasses per day in Atlanta. Today, Coca-Cola beverages are enjoyed about 1.9bn
servings per day.

• In 1888, Asa Chandler secured the rights to the Coca-Cola formula following John
Pemberton’s death for $2,300. At the time, Asa Chandler regarded it as just one of
his many patent medicines.

• William Painter invented the crown bottle cap in 1892.

• Pepsi-Cola was created by Caleb Bradham, a New Bern, N.C. pharmacist. Bradham’s
most popular beverage was called “Brad's drink” (created in 1893) and was later
renamed Pepsi Cola (1898) after the pepsin and cola nuts used in the recipe.

• Until 1895, Coca-Cola was sold as primarily a medicinal product “Sovereign Remedy
for a Headache”. Once the company dropped its medicinal stance and began
advertising and selling it simply as a refreshing drink, it was given universal appeal
and a cheerier approach to marketing.

• By 1895, Coca-Cola had annual sales of 76,000 gallons and was sold in every state
in America. At the time, the Coca-Cola Company sold syrup; it did not sell the
finished product of syrup mixed with soda water as Chandler strongly opposed the
selling of Coca-Cola in bottles for he worried that the drink’s flavor could suffer
during storage.

Coca-Cola bottling rights sold for a $1

• In 1899, the first patent was issued for a glass blowing machine that was used to
produce glass bottles. Within a few years, glass bottle production increased from
1,500 bottles a day to 57,000 bottles a day.

• In 1899, Chandler granted two attorneys, Thomas and Whitehead, the right to sell
Coca-Cola in a bottle across most of the US for a dollar. A third lawyer, Lupton,
soon joined their venture. At the time, Chandler didn’t think that this was an
important deal. He simply agreed to sell them syrup, perhaps thinking that if
bottling took off, the company would just sell more syrup. The three
lawyers/bottlers divided the country into territories and sold bottling rights to local
entrepreneurs. Boosted by progress in bottling technology, bottlers showed
improved efficiency and product quality.

• Canadian John McLaughlin invented the modern Canada Dry version of Ginger Ale in
1907.

• By 1909, nearly 400 Coca-Cola bottling plants were operating, most of them family-
owned businesses. (Some bottlers were open only during hot-weather months when
demand was high.)

The distinctive Coca-Cola bottle was introduced in 1916. Bottlers were said to
have been worried that the straight-sided bottle was easily confused with imitators. The
distinctive contour bottle became one of the few packages ever granted trademark
status by the U.S. Patent Office.

• By the early 1920s there were more than 1,000 Coca-Cola bottlers operating in the
U.S. Six-bottle cartons were a hit after their 1923 introduction. A few years later,
open-top metal coolers became the forerunners of automated vending machines.

• By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales.

• Caleb Bradham lost Pepsi Cola after he gambled on the fluctuations of sugar prices
during WWI. (He believed sugar prices would continue to rise but they fell instead

Beverages - Soft Drinks | 23 June 2023 21

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 leaving Bradham with an overpriced sugar inventory.) Pepsi Cola went bankrupt in
1923.

• One of the most famous advertising slogans in Coca‑Cola history “The Pause That
Refreshes” first appeared in the Saturday Evening Post in 1929.

• In 1929, the Howdy Company launched its new drink "Bib-Label Lithiated Lemon-
Lime Sodas". This was later renamed “7 Up”.

The depression and the era of advertising

• The repeal of prohibition had very little impact on Coca-Cola’s sales for soft drinks
filled a very different need than beverage alcoholic drinks. For some, Coca-Cola
replaced coffee as a social drink. Unlike alcoholic beverages, it was suitable for
consumption at all times during the day, and by people of all ages.

• Further, Coca-Cola advertising was prominent on the radio (a new technology) and
in the movies. Its ads were associated with a happy, carefree world and a way to
escape the gloomy reality of the economic climate (depression).

• Santa Claus drinking Coca-Cola first appeared in 1931. Many believe that
these posters were largely responsible for creating the modern image of Santa
Claus as a bearded man in a white-trimmed red suit.

• In 1931, Pepsi Cola was bought by the Loft Candy Company. Charles Guth
reformulated the popular soft drink but struggled to make a success of Pepsi.
Pepsi-Cola declared bankruptcy again.

• International expansion. In the late 1920s/early 1930s, the Coca-Cola Company

began a major push to establish bottling operations outside the US. Plants were
opened in France, Guatemala, Honduras, Mexico, Belgium, Italy, Peru, Spain,
Australia and South Africa. By the time World War II began, Coca-Cola was bottled in
44 countries.

• In 1940, history was made when the first advertising jingle was broadcast
nationally. The jingle was “Nickel” — an advertisement for Pepsi Cola. Pepsi-Cola
volumes took off when it started to offer 12-oz bottles at the same price (5c) that
Coca-Cola charged for 6-oz bottles.

World War II- Coke for the troops

• By the time World War II started Coca Cola was already an American favorite and
symbol. The impact that Coke had on US troops during the war only further
enhanced what the brand embodied; it further represented patriotism and helped to
maintain morale.

• Robert Woodruff, president of the Coca-Cola Company, ordered, “every man in

uniform gets a bottle of Coca-Cola for five cents, wherever he is, and whatever it
costs the company.” Coca Cola was introduced into the soldier’s rations as a war
time necessity.

• Coca Cola established a team called Technical Observers (TO) to deliver the soda.
There were 148 TO’s that were enlisted in the Army, wore uniforms and had a rank,
with the sole purpose to deliver coke, over 5 billion bottles of Coca-Cola were
distributed.

• Shipping soda half way around the world was ineffective. Also, TO’s had difficulty
getting Coke to troops in remote areas of the South Pacific. The Brisbane, Australia
bottlers commissioned a portable soda fountain, like the ones used in drugstores.
Coca-Cola technicians soon created a dispensing fountain known as the “jungle

22 Beverages - Soft Drinks | 23 June 2023

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 fountain,” which combined the concept of a Junior Dole Dispenser and an ice
machine; the new fountain was easily transported with the troops. Soon bottling
plants and fountains were established in military bases, so only Coca Cola syrup has
to be shipped.

• 64 military bottling plants were established around the world during the war and
people aside from troops started to drink Coca –Cola.

• In June 1943— General Dwight D. Eisenhower, who oversaw the Allied campaign in
North Africa, requested, “three million bottled Coca-Cola and complete equipment
for bottling, washing, capping same quantity twice monthly. Preference as to
equipment is 10 separate machines for installation in different localities, each
complete for bottling twenty thousand bottles per day. Also sufficient syrup and
caps for 6 million refills.”

• 1944 — Coca-Cola came with the Allied troops as they advanced into Western
Europe and Normandy on D-Day. Coca –Cola was even used as a password by troops
crossing the Rhine.

• 1945 — after the Allied win, military bottling plants established overseas continued
to operate as non-military factories, for almost three years during the
“reconstruction”.

History of Diet drinks

Low-calorie sweeteners, also known as sugar substitutes, surfaced more than a

century ago with saccharin, the first sugar substitute, appearing in 1879.

According to the American Beverage Association, there are five major low-calorie
sweeteners approved for use in foods and beverages in the United States: 1) acesulfame
potassium (ace-K), 2) saccharin, 3) aspartame, 4) sucralose and 5) neotame. Neotame is
rarely used, but the others are used frequently. With virtually no calories, these
ingredients provide 180x to 13,000x the sweetness of sucrose, otherwise known as table
sugar.
There has been substantial growth and changes in the diet soft drink industry leading to
the introduction of a large variety of diet products. The ingredients of diet soft drinks
are continuously being altered in large to offer a better the taste, alternatives to
controversial ingredients, and an overall better low-caloric profile. The popularity of diet
soft drinks would continue to evolve as long as there are health conscious consumers
looking for a safer and healthier substitute to regular soda.

• 1952 marked the start of diet soda era. Kirsch Bottling, a Brooklyn New York, bottler
launched No- Cal, a sugar free ginger ale which was created for diabetics and not
particularly those looking to diet; the distribution of No-Cal was kept local.

• 1958- Royal Crown Cola announced new product Diet Rite.

• 1962- Dr Pepper started to sell diet versions of their soda.

• 1963- Coca-Cola entered the Diet market with Tab — created for dieters that
wanted to keep “tabs” on their weight. Prior to Tab, Diet Rite was made sugarless.

• 1963- Pepsi released Patio, later renamed Diet Pepsi.

• 1963- Like (Diet 7-Up) was released but later banned in 1969 by the US
government because of its use of cyclamate sweetener and later reintroduced, with
a new formula, in 1970.

Beverages - Soft Drinks | 23 June 2023 23

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• 1982- Coke launched Diet Coke; essentially replacing Tab as Diet Coke was easier
for the consumer to identify with. Tab was discontinued in 2020.

• 1990s many companies introduced their version of a diet beverage.

• 2000s diet soda customized to offer flavors such as vanilla and lemon.

• 2018 — Diet Coke introduces four new flavors/cans that are “millennial-friendly”.
The four new flavors include — Ginger Lime, Feisty Cherry, Zesty Blood Orange and
Twisted Mango and come in a skinny silver can, similar to a Red Bull.

Low calorie sweeteners

The impact on health from low calorie sweeteners is very topical today as consumers
shift to healthier lifestyles and move more towards “natural” foods. Taste, obesity and
other health impacts, as well as other concerns have weighed on diet drinks in recent
years, but the controversy surrounding these products has been raising eyebrows for
decades.

• Artificial sweeteners such as Aspartame and Cyclamates are used to give diet soda
a sweet taste without the use of sugar (or the caloric content). Cyclamates were the
first artificial sweeteners used in diet sodas.

• In 1970 the FDA banned the use of cyclamates after tests showed that the
sweetener caused cancer in lab rats; cyclamates are still used outside the US. After
cyclamates were banned US producers started to use saccharin, which was not
popular with consumers, as some complained that it had a “chemical” aftertaste. In
1971 the FDA tried to ban saccharin claiming it was a carcinogen.

• Today, sucralose (known as Splenda) and acesulfame potassium (ace-k) are the
popular artificial sweeteners

Exhibit 38: Typical calories per 12-oz beverage

Full sugar juices rank high in calories
300

192
200 180
168 168
148
136 135
124 124
99
100

18
2 0 0 0
0

Source: USDA National Nutrient Database for Standard Reference

BofA GLOBAL RESEARCH

A look at US household shifts

These factors signal to us that households would likely require smaller packages and
more away from home options.

24 Beverages - Soft Drinks | 23 June 2023

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• Single-person households made up 13% of US households in 1960 and grew to
29% by 2022.

• Two person households made up 35% of US holds in 2022, +2pts since 2000 or
+7pts since 1960.

• The average number of people per household was 2.5 in 2022. This compares
to 2.62 in 2020 and 3.14 in 1970.

Exhibit 39: Average number of people per household, 1960-2022 Exhibit 40: Number of people per US household, 1960-22 (mns of
The average number of people per household was 2.5 in 2022 vs. a high of households)
3.36 in 1960 64% of Americans live in 1 or 2 member households, up from 59% in 2000
3.50
1 person 2 ppl 3ppl 4ppl
3.00 120,000
5ppl 6ppl >7 ppl
2.50 100,000

2.00 80,000

1.50 60,000

1.00 40,000

20,000
0.50
0
-

1975
1978
1981

2005
2008
2011
2014
1960
1963
1966
1969
1972

1984
1987
1990
1993
1996
1999
2002

2017
2020
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020

Source: U.S. Census Bureau, Current Population Survey, March and Annual Social and Economic Source: U.S. Census Bureau, Current Population Survey, March and Annual Social and Economic
Supplements, 1960 to 2022. Supplements, 1960 to 2022, ppl=people
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 25

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Slicing and dicing 2021 population data
• US census data reported the median income for all households was $70,784 in
2021.

• By race, 78% consider themselves white (65%, white, non-Hispanic), 15% Hispanic,
13% Black and 6% Asian.

• 84% are considered native born, with the remaining 16% either a naturalized citizen
(9%) or not a citizen (8%).

• By region, 39% of these households are in the South, followed by West (23%),
Midwest (21%) and Northeast (17%).

• Urban vs. non-urban dwellers: 86% of these households reside in metropolitan

areas, with 33% of households in cities, 53% outside of principal cities and 14%
outside of metro areas.

• By education, of those over 25 years (95% of householders), 37% have a

bachelor’s degree or higher, 26% attended some college, 25% graduated high
school but no college and 8% do not have a high school diploma.

Exhibit 41: Number of US households by type of household (mns) Exhibit 42: Number of US households by age
There were an estimated 131.2mn households in 2021, with ~36% in non- ~73% of US householders are under 65 years of age
family households
120
80
95
61
60
80

40
24 23
16 40
36
20
7 21 23 22 24

0 6
Married couple Female Male householder, Female Male householder
householder, no no spouse householder 0
spouse present present Under 65 ...15 to 24 ...25 to 34 ...35 to 44 ...45 to 54 ...55 to 64 65 years and
years years years years years years older
Family households Non-family households
Source: U.S. Census Bureau, Current Population Survey, 2021 and 2022 Annual Social and
Source: U.S. Census Bureau, Current Population Survey, 2021 and 2022 Annual Social and
Economic Supplements (CPS ASEC).
Economic Supplements (CPS ASEC). BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Exhibit 43: 2021 US population by income

The largest income group is $50-74,999 with 16.2% of American households. It is followed closely by
$100-149,000 with 15.9%

$150,000 $15,000
to Under $15,000 to
$200,000+ 9%
$199,999 $24,999
12%
8% 8%
$25,000
to
$100,000 $34,999
to 8%
$149,999
16% $75,000 $35,000
$50,000
to to
to
$99,999 $49,999
$74,999
12% 11%
16%

Source: U.S. Census Bureau, Current Population Survey, 1968 to 2022 Annual Social and Economic Supplements (CPS ASEC).
BofA GLOBAL RESEARCH

26 Beverages - Soft Drinks | 23 June 2023

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Caffeine
Caffeine consumption is popular and the sources, quantity of consumption, and
demographics are all different areas to examine when trying to understand the trends of
caffeine intake in the US. In a recent survey by the International Life Sciences Institute
examining caffeine intake in the US, it was concluded that the average daily intake of
caffeine grew from 120 mg per day in 1999 to 165mg per day in 2010. From the 165mg
per day of caffeine intake 105 mg/day (coffee), 28 mg/day (CSDs), 29 mg/day (tea), and
2.6mg/day (energy drinks). The increase in caffeine servings per day is derived from
there being more occasions. The study also found that out of the following sources of
caffeine: coffee, tea, carbonated soft drinks, and energy drinks — that coffee was the
most popular source. From 1999 to 2010 there has been an increase in the amount
(actual sizing oz.) of coffee consumed while the amount of CSDs consumed has declined.

Demand for higher caffeine levels. Pre pandemic Americans were stressed. With the
onset of the pandemic, Americans battled increased levels of anxiety, stress and
insomnia given the uncertainties of the pandemic and its lingering impact and
increasingly looked to caffeine to help manage their lives. Caffeine consumption
continues to rise, not just in coffee but in other product forms such as energy drinks,
sports drinks, carbonated beverages, sparkling water with added caffeine and some
coffee manufacturers turning to higher caffeine options. (i.e. Dunkin Donut’s Extra
Charged Coffee or Death Wish Coffee.)

Exhibit 44: Global hot coffee retail $ (US$bns) for take home Exhibit 45: US hot coffee volume as a % of global hot coffee volume
The US represented 17.3% of global hot coffee $ in 2022 The US represents ~12% of global coffee volume
$120
Asia Pac Australasia E Europe LatAm US as a % of global take home volume
$100 ME, Africa No America W Europe US as a % of global foodservice volume
15% US as a % of global total volume
$80
14%

$60
13%

$40 12%

$20 11%

$- 10%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 46: US$ hot coffee per capitas at retail (2022) Exhibit 47: US household per capita for hot coffee (US$) for take
home consumption
Western Europe ranks highest at $55 but Australia/US near at $54 Pandemic closures drove per capita consumption up in 2020-22
$60 $60
$54.1
$49.7
$48.0
$40 $42.8 $42.9
$42.7

$40

$20

$20
$-
2017 2018 2019 2020 2021 2022
W Europe Australasia No America E Europe LatAm ME, Africa Asia Pac

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 27

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Caffeine consumption rises as we age, then appears to slip as we retire as you can see
in the Exhibit below.

Exhibit 48: Mg/day of caffeine by age and source

Caffeine usage appears to peak in the 50-64 age group

300
Total coffee Total CSD Total tea Total energy drinks

200

100

0
All ages 2-5 6-12 13-17 18-24 25-34 35-49 50-64 >65

Source: International Life Sciences Institute

BofA GLOBAL RESEARCH

Caffeine content for select beverages

Exhibit 49: Caffeine content for select beverage categories
Mg of caffeine content by beverages varies widely
Type of drink Size (fluid oz) Caffeine (milligrams)
Coffee
Brewed 8 oz. (237 mL) 95-200 mg
Brewed, decaffeinated 8 oz. (237 mL) 2-12 mg
Brewed, single-serve varieties 8 oz. (237 mL) 75-150 mg
Brewed, single-serve varieties, decaffeinated 8 oz. (237 mL) 2-4 mg
Espresso, restaurant-style 1 oz. (30 mL) 47-75 mg
Espresso, restaurant-style, decaffeinated 1 oz. (30 mL) 0-15 mg
Instant 8 oz. (237 mL) 27-173 mg
Instant, decaffeinated 8 oz. (237 mL) 2-12 mg
Specialty drink (latte or mocha) 8 oz. (237 mL) 63-175 mg
Tea
Brewed tea
Black tea 8 oz. (237 mL) 14-70 mg
Black tea, decaffeinated 8 oz. (237 mL) 0-12 mg
Green tea 8 oz. (237 mL) 24-45 mg
Iced tea
Instant, prepared with water 8 oz. (237 mL) 11-47 mg
Ready-to-drink, bottled 8 oz. (237 mL) 5-40 mg
Source: Mayo Clinic (Adapted from Journal of Food Science, 2010; Pediatrics, 2011; Journal of Analytical Toxicology, 2008; USDA
National Nutrient Database for Standard Reference, Release 26; Journal of Analytical Toxicology, Company reports)
BofA GLOBAL RESEARCH

28 Beverages - Soft Drinks | 23 June 2023

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 -

-
15
45
60

30
-

6
12
18
24
160

120

40
80
Bizzy Cold Brew Black Label Brewed

Lipton Natural Energy Tea Stumptown Nitro Cold Brew Very Strong Coffee
Stumptown Cold Brew Coffee Devils Brew Extreme Caffeine
Oregon Chai Tea
Black Insomnia Coffee
Chameleon Cold Brew RTD
Lipton Tea Biohazard Coffee

Source: Caffeineinformer.com
Source: Caffeineinformer.com
Source: Caffeineinformer.com
Califia Farms Cold Brew Coffee
Bigelow Tea Death Wish Coffee
Morning Thunder Tea Biggby Espresso
La Colombe Cold Brew Peet's Coffee Espresso
K Cup Tea
Caribou Canned Cold Brew Stipe Miocic Extra Strength
Teavana Tea Death Wish Latte
Starbucks Bottled Iced Coffee
Tejava Iced Tea Dripdash Kyoto Coffee
Dunkin' Donuts Iced Coffee

Bizzy Cold Brew tops the list below with 47mg/fl

Teas' Tea Oolong Robusta Coffee
Dunkin' Donuts Latte
Gloria Jean's Coffee

Most teas are at the low end of the caffeine spectrum

Honest Iced Tea McDonalds Iced Coffee Costa Coffee
Pure Leaf Iced Tea
Maxwell House Max Boost
McDonalds Sweet Tea Wide Awake Coffee Cold Brew Illy Issimo Cafe
Exhibit 50: Select brewed coffee brands (mg of caffeine/fl oz)

Dunkin' Donuts Iced Tea Dunkin' Cold Brew Seattle's Best Brewed Coffee
Coffee Bean & Tea leaf Coffee
Gold Peak Tea

Exhibit 52: Select tea brands (including RTDs), mg of caffeine/fl oz

Stok Cold Brew
Caribou Brewed Coffee
Exhibit 51: Select RTD coffee/cold brew brands (mg of caffeine/fl oz)
Snapple Tea Biggby Iced Coffee
7 Eleven Brewed Coffee
Arizona Iced Tea Dare Iced Coffee Peet's Brewed Coffee
Nestea Iced Tea Barista Bros Iced Coffee Peet's Brewed Coffee

Crystal Light Iced Tea Starbucks Bottled Frappuccino Dunkin' Donuts Brewed Coffee

Lipton Iced Tea

Eight O'Clock Coffee
Fuze Iced Tea Dunkin' Donuts Iced Latte
Folgers Coffee
Chick-fil-A Iced Coffee
Peace Tea Maxwell House Coffee
Starbucks Pink Drink Cafe Bustelo
Brisk Iced Tea
BofA GLOBAL RESEARCH

McDonalds Coffee

BofA GLOBAL RESEARCH

BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023

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29
 30
-

-
4

2
6

15
30
45

-
100
300

200
400
Redline Xtreme Energy Coca-Cola With Coffee
Java Monster 300
Bang Energy

310
Pepsi Zero Sugar

Energy
C4 Ultimate Energy Drink
Celsius Heat Energy Drink Mountain Dew Zero Sugar
Reign Total Body Fuel

Source: Caffeineinformer.com
Source: Caffeineinformer.com
Source: Caffeineinformer.com
Rockstar Thermo Sun Drop Soda

303
C4 On The Go

Energy Max Hit

Celsius Energy Drink Mountain Dew
Starbucks Triple Shot Energy
Java Monster Dr Pepper 10

Shot
130
Caffeine levels in energy shots vary widely
3D Energy Drink

The 10-12mg range appears most common

C4 Energy Drink Mello Yello

Beverages - Soft Drinks | 23 June 2023

Arizona Energy Drink Rx
Starbucks Refreshers Canned
Muscle Monster

119
Monster Rehab

Extra Strength
Soda Stream
4C Energy Drink Mix

Exhibit 54: Select energy drinks (mg of caffeine/fl oz)

Caffeine levels are relatively modest for CSDs versus coffee

Full Throttle Energy Drink

Diet Coke
Hi Ball Energy Drink

Exhibit 55: Select energy shot brands (mg of caffeine/fl oz)

104
Exhibit 53: Select soft drink/CSD brands (mg of caffeine/fl oz)

Monster Energy Pepsi Max (UK)

Vital 4U Liquid Screamin 7-Eleven Energy 5 Hour Energy 5 Hour Energy

NOS Energy Drink
Rockstar Energy Drink (Original) Red Bull Simply Cola
V8 +Energy Drink

100
Venom Death Adder

Bang Shot
Zevia Cola
Zevia Energy Drink
Bai Boost Dr Pepper
Coca-Cola Energy

90

Shot
Red Bull Pepsi
XL Energy Drink (EU)
Bodyarmour Edge Diet Pepsi
Gatorade Bolt 24 Energize

Gel
83
SoBe Energy Citrus Coca-Cola Zero Sugar

Kirkland Energy Clif Shot Energy

Crystal Light Energy Mix
Barqs Root Beer
Mountain Dew Spark

BofA GLOBAL RESEARCH

BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

CR
 -
12
16

4
8
Perrier Energize

Arti Sparkling Water

Source: Caffeineinformer.com
GURU Sparkling Energy Water

MiO Energy Water Enhancer

Caribou BOUsted Sparkling Water

Poland Spring Sparkling Energy Water

In recent years, water with caffeine has become more common

Sparkling Ice +Caffeine

Exhibit 56: Select water brands with added caffeine (mg of caffeine/oz)

Hint Caffeine Kick Water

Bubly Bounce Sparkling Water

AHA Sparkling Water

VitaminWater Energy
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023

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31
Key US non-alcoholic beverage categories
Liquid refreshment beverages (LRBs)

LRBs= liquid refreshment beverages and includes all non-alcoholic beverages

from bottled water to sports drinks

The US is a significant market for the Liquid Refreshment Beverage (LRB) category,
accounting for ~24% of global (all channel) value and 16% of volume in 2022.
Total US LRB volume reached 123.3bn liters in 2022, +1.0% YoY and +1.1% annually
over the 5-year pandemic period. This compared to global LRB volume of +3.9% YoY
and +2.0% over the 5-year period.
In value $ terms, US LRB sales (foodservice + take home) totaled $231.1bn, +11% YoY
and +3.5% over the 3Y pandemic period. This compares to +15.2% global growth in
2022 to $968.1bn, or +5.1% growth over 5-year period.
Exhibit 57: Total US LRB volumes (mn liters) and carbonates as a % Exhibit 58: US share of global volume/value sales, 2022
of total LRBs In 2022, the US represented 16% of global LRB volumes but 24% of
Carbonates (soda) are losing share to other LRBs value
60%

50%
51%
On-trade Volume Volume Value
Off-trade Volume
Carbonates as a % of total LRB volume 40%
140,000 45%

30%
26%

25%
24%
24%
120,000

22%

21%
20%

20%

19%
42%
16%
100,000

14%
14%
13%
20%

11%
80,000
39%
60,000

1%
40,000 36% 0%
20,000
0 33%
2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 59: Total volume/value growth US and World LRB markets in 2022 (YoY and 5Y CAGR)
Pricing/mix was a big sales growth driver in 2022
Total value Total volume Implied price/mix
YoY 5Y CAGR YoY 5Y CAGR YoY 5Y CAGR
World LRBs 15% 5% 4% 2% 11% 3%
Bottled Water 18% 7% 4% 3% 14% 4%
Carbonates/CSDs 16% 5% 4% 1% 12% 4%
Concentrates 11% 5% 1% 1% 9% 4%
Juice 12% 3% 1% -1% 10% 3%
RTD Coffee 6% 3% -1% 1% 7% 2%
RTD Tea 10% 2% 2% 0% 8% 3%
Energy Drinks 18% 9% 10% 8% 8% 1%
Sports Drinks 14% 7% 6% 5% 7% 2%
USA LRBs 11% 4% 1% 1% 10% 2%
Bottled Water 12% 4% 1% 3% 11% 1%
Carbonates/CSDs 9% 2% 0% -1% 8% 3%
Concentrates 5% 2% 1% 3% 5% -2%
Juice 12% 2% 0% -1% 12% 2%
RTD Coffee 8% 11% -1% 7% 9% 4%
RTD Tea 9% 4% 1% 0% 8% 4%
Energy Drinks 13% 7% 5% 7% 8% 1%
Sports Drinks 13% 10% 5% 7% 8% 3%
Source: Euromonitor
BofA GLOBAL RESEARCH

32 Beverages - Soft Drinks | 23 June 2023

CR
Share of stomach volume and value
Exhibit 60: Global/US volume share of LRBs by sub-segment (2022) Exhibit 61: Global/US value share of LRBs by sub-segment (2022)
Globally bottled water is the most popular (49%) while in the US bottled By value, carbonates/CSDs are largest in value terms in the US and the global
water is tied with carbonates/CSDs (at 38% each) markets
60%
Global USA
49% Global USA 40%
50% 35%36%

38% 38% 29%

40% 30%
31% 24%
30%
20% 16%
15%
20%
9%
9% 10% 10% 7% 7% 7%
10% 5% 5% 6% 6%
2% 3% 2% 2% 1% 2% 2% 3%
0% 0% 1% 1%
0% 0%

Source: Euromonitor Source: Euromonitor

% of total volume (take-home and foodservice) % of total value (take home and foodservice)
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 62: Top US LRB brands in 2022 (volume share %)

Gatorade overtook Coca-Cola to be the top LRB brand in the US last year
6.0

4.0

2.0

0.0

Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 33

CR
US LRB volume/value by major segment
Exhibit 63: US LRB volume (mns of liters) all channel Exhibit 64: US LRB value ($mns) all channel
Bottled water volumes are ~500,000 liters larger than CSDs In 2022, CSD $ surpassed 2019 levels
160,000 $300,000
Bottled water Carbonates/CSDs Non-carbs Bottled water Carbonates/CSDs Non-carbs

120,000
$200,000

80,000

$100,000
40,000

$-
0

2008
2009

2017
2018
2019
2020
2010
2011
2012
2013
2014
2015
2016

2021
2022
2009

2011

2016

2018

2021
2008

2010

2012

2013

2014

2015

2017

2019

2020

2022
Source: Euromonitor
Source: Euromonitor
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

The pandemic clearly impacted volumes and value across categories as you can see in
the Exhibit below.

Exhibit 65: US LRB vol % chg by type Exhibit 66: US LRB value % chg by type Exhibit 67: Total US LRB vol vs. value
2022 total volume +1%, with bottled water $ sales +12% YoY, with bottled water +12%, growth
+1%, non-carbs +2% and carbonates +0.4% non carbs +11% and carbonates +9% Volume +1%, Implied price/mix of +10% for
25% overall value growth of +11% in 2022
Bottled water Bottled water
Carbonates/CSDs Carbonates/CSDs 20%
20% Non-carbs LRB volume LRB value
12% Non-carbs
Total LRBS Total LRBS
15%
8%
10% 10%
4%
5%
0%
0%
-4% 0%
-5%
-8%
-10%
-12% -10%
-15%
2011

2015
2016

2019
2020
2009
2010

2012
2013
2014

2017
2018

2021
2022

2011
2012

2016

2020
2021
2009
2010

2013
2014
2015

2017
2018
2019

2022
2011
2012

2015
2016

2020
2009
2010

2013
2014

2017
2018
2019

2021
2022

Source: Euromonitor Source: Euromonitor

Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Exhibit 68: US LRB off-trade volume share Exhibit 69: US LRB foodservice volume Exhibit 70: US LRB volume share (off trade
(2022) share (2022) +foodservice), 2022
3pts separate KO and PEP in take home In Foodservice, KO leads PEP by >28pts KDP holds a 7% share in both off trade and
foodservice

KO
20% Other
Other KO
Other 26% KO
25% 24%
40% Private 40%
label
PEP 6%
17% Private PEP
Primo label 16%
KDP Water 19%
PEP
7% 2% KDP 12%
Private Primo 7% Primo Blue
BlueTriton KDP
label MNST Water Water Triton
6% BlueTriton 7%
6% 2% 2% 2% 7%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

34 Beverages - Soft Drinks | 23 June 2023

CR
The Coca-Cola Company and PepsiCo are the two top players in the take home channel
with LRB share of 20.1% and 17.3% respectively.

Exhibit 71: Top 10 US LRB share by manufacturer (% for take home)

KO, PEP and KDP each lost share since 2019
2017 2018 2019 2020 2021 2022
Coca-Cola Co 21.4 21.1 20.7 19.6 20.3 20.1
PepsiCo 18.2 17.9 17.7 17.9 18.0 17.3
Keurig Dr Pepper 7.7 7.7 7.6 7.3 7.2 7.1
BlueTriton - - - - 6.3 6.3
Primo Water 2.3 2.5 2.4 2.3 2.2 2.1
Monster Beverage 1.5 1.5 1.5 1.5 1.6 1.7
Unilever Group 1.5 1.5 1.4 1.4 1.4 1.4
Red Bull 0.7 0.7 0.7 0.7 0.8 0.9
Hornell Brewing 1 0.9 0.9 0.9 0.9 0.9
Tropicana Brands - - - - - 0.8
Top 10 54.3 53.8 52.9 51.6 58.7 58.6
Source: Euromonitor
Note: Primo Water is the former Cott Corp; Triton Brands was part of Nestle and Tropicana used to be owned by PepsiCo
BofA GLOBAL RESEARCH

In foodservice, the gap between #1 (KO at 40.5%) and #2 (PEP at 12.1%) widened.

Exhibit 72: Top 9 US LRB share by manufacture (%, foodservice)

KO won 1.3pts of share since 2019
2017 2018 2019 2020 2021 2022
Coca-Cola Co 40.0 39.5 39.2 41.9 40.7 40.5
PepsiCo Inc 12.5 12.3 12.1 12.1 12.2 12.1
Blue Triton 6.9 6.8 6.6 5.9 6.6 7.0
Keurig Dr Pepper 6.4 6.4 6.4 7.2 6.7 6.5
Primo Water Corp 1.9 1.9 2.0 1.7 2.0 2.0
Unilever Group 1.6 1.6 1.5 1.6 1.6 1.6
Otsuka Holdings 0.6 0.7 0.8 0.8 0.9 0.8
Tropicana Brands - - - - - 0.4
Monster 0.2 0.2 0.2 0.1 0.2 0.2
Top 9 70.1 69.4 68.8 71.3 70.9 71.1
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 35

CR
The Coca-Cola Company
Exhibit 73: 2, %)
take home share
80
Foodservice Take home Overall

58.8
60

43.4
40.5
40 36.6
33.6
28.8 28.6
24.4
20.1 19.9
17.4 16.8
20 14.7
9.5 11.0 7.4
10.5
6.5
4.1 4.3
1.2 1.2
0
LRBs Bottled Water Carbonates Concentrates Juice RTD Coffee RTD Tea Sports Drinks

Source: Euromonitor
BofA GLOBAL RESEARCH

PepsiCo
Exhibit 74: 2, %)
-home
90 82.6
Foodservice Take home Overall

69.0 69.2

60

30 25.5 22.9 25.7 25.7

17.3 16.2 17.1
12.1
8.1 8.6 8.5 6.8 6.6

0
LRBs Bottled Water Carbonates Concentrates Energy Drinks Sports Drinks

Source: Euromonitor
BofA GLOBAL RESEARCH

Keurig Dr Pepper
Exhibit 75: 2, %)

24.0
Foodservice Take home Overall

17.6
18.0
15.8

11.8
12.0
8.1 8.1
6.5 7.1 7.0 7.0
6.0 5.0

0.2 0.2
-
LRBs Bottled Water Carbonates Juice RTD Tea

Source: Euromonitor
BofA GLOBAL RESEARCH

36 Beverages - Soft Drinks | 23 June 2023

CR
Private label
19% share in total LRBs
Private label brands represent ~19% of liquid refreshment beverages, or LRBs. Private
label brands are most entrenched in bottled water, holding 40% share overall and 46% in
take-home. This high percentage is not surprising given the commodity type nature of
the bottled water business.

Exhibit 76:
Private label juice is also popular in foodservice juice
60
Foodservice Take home Overall

45.5
45 41.5
39.7

30
22.4
20.7
18.9 17.4
15
7.2 6.9 6.9 6.9 6.2 6.4
5.5 5.1
3.5
1.5 1.4 0.4 0.4
0
LRBs Bottled Water Carbonates Concentrates Juice RTD Coffee RTD Tea Sports Drinks

Source: Euromonitor
BofA GLOBAL RESEARCH

Improved US LRB profit pool

We estimate that the US non-alcohol beverage industry profit pool (defined as non-
alcoholic, ready to drink beverages) stands at roughly $17.4bn as of year-end 2022,
rising at a CAGR of ~5% over the last ten years. A shift in strategy by KO (balancing
value with volume) appears to be lifting the profit pool across the CSD category despite
demand declines in carbonated beverages, rising input costs, and economic pressure on
impulse channels.

Exhibit 77: US LRB profit pool (US $bns), and YoY % change
We estimate that the beverage profit pool grew 14% YoY in 2022
$24 16%
$17.4

12%
$18
$15.2
$13.9
$13.6
$13.0
$12.8
$12.7

8%
$11.7

y/y % change
$11.2
$11.1
$11.0
$11.0

$11.0

$11.0
$ (billions)

$10.8
$10.7

$10.6
$10.2

$12
$9.8
$9.3
$8.7

4%

$6
0%

$0 -4%
2002

2005

2008

2011

2014

2017
2018

2020
2021
2003
2004

2006
2007

2009
2010

2012
2013

2015
2016

2019

2022

Source: BofA Global Research

BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 37

CR
Carbonated soft drinks (CSDs)
According to the American Beverage Association (ABA), the term “soft drink” is derived
from the phrase “soda water,” dating back to 1798. At that time, soft drinks were made
individually at soda fountains by pharmacists. As a result, the local pharmacy became a
popular place to visit in American towns, with the soda fountain providing beverages
that were part science and part refreshment.

• In 1835, the first bottled soda water was produced in the United States.

• By 1876, root beer was introduced; five years later the first cola-flavored beverage
was unveiled.

• In 1886, John Pemberton, a pharmacist from Atlanta, GA invented a drink. According

to The Coca-Cola Company’s official version, he was a tinkerer who stumbled on the
right combination of ingredients by accident while he was trying to devise a cure for
headaches.

• In 1888, Asa Chandler secured the rights to the Coca-Cola formula following John
Pemberton’s death for $2300.

• According to ABA, it would be more than 70 years before the first “official” diet soft
drink was introduced in 1952, but others soon followed. In 1958, RC Cola
introduced Diet Rite, the first nationally distributed diet soft drink. Tab, Fresca and
Diet Pepsi entered the marketplace in the 1960s; Sugar-free 7UP was introduced in
1970; and Diet Coke made its debut in 1982.

In 2022, carbonate (sparkling) value rose 8.5% to $82.34bn. Take home $

advanced +4.5% while foodservice value jumped 14.5% as traffic continued to
recover. Carbonate sales for take home accounted for 57% of total sales in 2022.
US carbonate volume rose +0.4%, with take home volumes -2.6% and foodservice
(on-premise) +8% as consumers became more mobile.

Exhibit 78: US take-home carbonate share Exhibit 79: US foodservice share for Exhibit 80: US carbonate share for both
(2022) carbonates (2022) take-home and foodservice (2022)
KO held a 37% share in retail (ex. foodservice)
channel at 59% share
Private
Label
5% Private
Label
Zevia Other Other 4% Other
0.6% 13% 12%
KO Talking 13%
Talking
37% KDP Rain KO
Rain
12% 1% 43%
2%
KDP KDP
18% 16%
KO
PEP 59%
17%
PEP PEP
25% 23%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

38 Beverages - Soft Drinks | 23 June 2023

CR
 Exhibit 81: Top US soft drink brands ( 22) Exhibit 82: Top US colas (2022) Exhibit 83: Top US non-cola soft drinks
Regular Coca-Cola is the top selling CSD with a In colas, Coca- at 31%, ~9pts ahead -cola witha
14% share of market of Pepsi-Cola 13% share in 2022

Private
Coca- Pepsi Coca- label
Cola Cola 5% Other
(PEP)
(KO) Zero Other 55%
9%
14% Sugar 9%
Other (KO) Coca-
45% 8% Cola
Mountain
Dew (PEP) (KO)
Diet
8% 31%
Pepsi
(PEP) Diet Private Mountain
Diet 10% Coke label Dew
Coke (KO) 5% Dr (PEP)
Pepsi
(KO) 16% Sprite Pepper
Dr (PEP)
Private 7% Canada (KO) (KDP)
Pepper 21%
label (KDP) Dry 11% 12%
Sprite
5% 6% (KDP)
(KO)
6% 4%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Diet vs. regular colas

Exhibit 84: Top full calorie colas (2022) Exhibit 85: Reduced calorie cola share (2022)
Coca- Diet Coke and Coca-Cola Zero Sugar held volume share of 41% and 21%
respectively in 2022
Cherry Coke
(KO) Private label
4% 5%
Other
Other Private label 7%
6% 5%
Pepsi (PEP)
35% Coca-Cola Zero Diet Coke (KO)
Sugar (KO) 41%
21%
Coca-Cola (KO)
50%

Diet Pepsi
(PEP)
26%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Diet vs. regular non-colas

Exhibit 86: Top full calorie non colas CSDs (2022) Exhibit 87: Top reduced sugar non-cola CSDs
Mountain Dew and Dr Pepper appear to be the favorite full calorie brands Again, Diet Mountain Dew and Diet Dr Pepper top the list of the top reduced
sugar non-cola CSDs

Mountain Dew
(PEP)
Diet Mtn Dew
17%
Others (PEP)
31% 21%
Other Dr Pepper
45% (KDP)
14% Diet Dr Pepper
Sprite Zero (KDP)
Sprite (KO) (KO) 19%
Fanta (KO) 13% 6%
Zevia Sparkling Ice
5%
Private label 6% (Talking Rain)
6% 17%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 39

CR
 Exhibit 88: Top lemon/lime CSDs (2022) Exhibit 89: Top tonic water/mixers (2022) Exhibit 90: Top orange CSDs (2022)
Sprite is the clear favorite KDP is the leader in this subsegment with Canada Fanta takes the top spot with 42% share
Dry and Schweppes

Sierra Diet 7-
Mist Up (KDP)
4% Other
(PEP)
10%
6% Other Other Private
Sprite 7% 22% label
8% Fanta
Zero Crush (KO)
Canada
(KO) (KDP) 42%
Seagram's (KO) Dry
6% 13%
7-Up 12% (KDP)
(KDP) 51% Sunkist
Sprite Schweppes
10% (KO) (Sunkist
(KDP) Growers)
67% 15% 27%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 91: : US carbonated soft drink growth by type

On-premise sales grew faster than take home/off-trade sales in 2022
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Carbonates Off-trade 4.5% 4.5% 3.4% -2.6% -2.6% -0.7% 7.1% 7.1% 4.0%
On-trade 14.5% 14.5% 0.6% 7.8% 7.8% -1.9% 6.7% 6.7% 2.5%
Total 8.5% 8.5% 2.1% 0.4% 0.4% -1.0% 8.2% 8.2% 3.2%
Regular Carbonates Off-trade 4.6% 4.6% 2.9% -2.5% -2.5% -1.2% 7.0% 7.0% 4.1%
On-trade 15.3% 15.3% 0.5% 8.9% 8.9% -2.0% 6.4% 6.4% 2.5%
Total 9.1% 9.1% 1.8% 0.9% 0.9% -1.4% 8.2% 8.2% 3.3%
Reduced Sugar Carbonates Off-trade 4.2% 4.2% 4.7% -3.1% -3.1% 0.8% 7.3% 7.3% 3.9%
On-trade 11.8% 11.8% 1.0% 4.4% 4.4% -1.6% 7.4% 7.4% 2.5%
Total 6.9% 6.9% 3.2% -1.1% -1.1% 0.1% 8.1% 8.1% 3.1%
Cola Carbonates Off-trade 5.0% 5.0% 3.1% -2.6% -2.6% -1.0% 7.6% 7.6% 4.1%
On-trade 16.0% 16.0% 0.5% 8.2% 8.2% -2.1% 7.8% 7.8% 2.6%
Total 9.2% 9.2% 2.0% 0.6% 0.6% -1.4% 8.6% 8.6% 3.4%
Non-Cola Carbonates Off-trade 4.1% 4.1% 3.5% -2.7% -2.7% -0.4% 6.8% 6.8% 3.9%
On-trade 13.6% 13.6% 0.7% 7.4% 7.4% -1.7% 6.1% 6.1% 2.4%
Total 8.1% 8.1% 2.2% 0.2% 0.2% -0.8% 7.9% 7.9% 3.0%
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 92: US off-trade (take home) CSD volume/value growth Exhibit 93: US on-trade (bars, restaurants) CSD volume/value %
Price/mix of +7% drove 2022 sales growth Off-trade/foodservice suffered in 2020 due to pandemic related closures
8.0% 40.0%
Off-trade Volume On-trade Volume Implied px/mix
Implied px/mix
Off-trade Value On-trade Value

4.0%

0.0%

0.0%

-4.0% -40.0%
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

40 Beverages - Soft Drinks | 23 June 2023

CR
Juice and juice drinks

US juice sales +11.5% in 2022 to $36.9bn; with take home $ +6.3% and
foodservice $ +20%, now surpassing pre pandemic levels. Juice volume was
flattish (-0.1%) to 12.8mn liters, with take home -1.5% and foodservice +9.4%.
Juice take-home sales accounted for 86% of total US juice sales.

• According to the ABA, individual-serving-sized bottled juices first became available

during the 1970s and 1980s, which drove on-the go consumption and expanded
beverage occasions away from the breakfast day part.

• Key juice brands include Simply (KO), Minute Maid (KO), Ocean Spray (Ocean Spray),
Tropicana (Tropicana Products, formerly PEP), Hawaiian Punch (KDP) and Capri-Sun
(Kraft Heinz).

• Top players in take home juice are The Coca-Cola Company (15.2% share), Kraft
Heinz (7.4%), Keurig Dr Pepper (6.9%), Tropicana Products (6.6%) and Ocean Spray
(6.1%). Private label accounted for 16.2% of the juice category.

• Juice asset shifts. In July 2020, KO made the decision to discontinue the Odwalla
brand and its products; Zico Coconut Water followed in October 2020. (Note: In
January 2021, the founder of Zico Water repurchased the brand.) In July 2021, KO
divested the super-premium Suja brand line to an investor group after first
acquiring a stake in 2015. In August 2021, PEP agreed to sell Tropicana, Naked
and other North American juice brands for pretax proceeds of $3.3bn. PEP also
received a 39% stake in a newly formed JV with buyer PAI Partners, a French private
equity firm. PEP has the exclusive US distribution rights for the juice brands for
certain channels.

• Health trends. As consumers focused on health during the pandemic, 100% juice
saw its first volume sales improvement in over a decade in 2020 with consumers
interested in products with potential immune benefits (including Vitamin C and D).
The boost appears to be temporary, as 100% juice volumes dipped below 2020
levels. High-end juice bars have increasingly become places consumers shop for
products that they think would help them maintain health and preventative health.

• Juice drinks. Lower fruit content beverages enjoyed positive volume growth in
2022. Working from home and family meal occasions in home during the pandemic
likely contributed to growth in juice drinks over the pandemic period.

• Local sourcing. As consumers look more “local”, some premium juice producers
are blending domestically available fruits/vegetables with spices like ginger or
turmeric to appeal to those who want variety and health benefits.

• Coconut-water rebound. 2019 was a difficult year for coconut water. Over the
2020 -22 period the sector regained growth due to improved distribution across the
country. Vita Coco is gaining share as KO wound down its Zico Water business
during the pandemic.

• Niche products: So far other plant waters, such as birch and maple water remain
niche as these products to date have not captured the same level of consumer
interest as coconut waters.

• Watch out: Juice has struggled to overcome challenges associated with high sugar
content. While consumers are aware of the health benefits of fruit, they understand
that not all juices are created alike. Consumers are scrutinizing food/beverage
labels more closely especially for sugar content. Kraft Heinz has removed added
sugars from a line of Capri Sun. We would look for others to follow.

Beverages - Soft Drinks | 23 June 2023 41

CR
 Exhibit 94: Take home volume by juice type Exhibit 95: Take home value by juice type
Juice drinks (up to 24% juice) accounts for 48% of US take home drink Higher priced 100% juice accounts for 52.7% of US take home juice $,
volume, -110bps over the last 5 years +90bps over the 5-year period

100% Juice Juice Drinks (up to 24% Juice) 100% Juice Juice Drinks (up to 24% Juice)
Nectars (25-99% Juice) Coconut and Other Plant Waters Nectars (25-99% Juice) Coconut and Other Plant Waters
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Juice terminology
There is a spectrum of juice and juice drink types. According to the ABA and the
Juice Products Association, the definitions are below:
• 100% pure or 100% juice — Juice that is directly squeezed from a fruit or
vegetable. It can be made from juice concentrate that is reconstituted with water,
and contain certain other ingredients such as vitamins or minerals.
• Juice Drink — A juice drink is a drink that contains less than 100% juice. It may
also contain sweeteners and water. Juice drinks are also known as cocktails, punch,
drinks, sparklers, blends and other beverages. Under U.S. laws, juices and juice
drinks are required to list the total percent of juice content just above the nutrition
facts panel.
• Squeezed Juice — This term refers to the manner in which juice was extracted
from fruit or vegetables. Squeezed juice is not pasteurized and must be kept under
refrigeration.
• Pasteurized Juice — Juice is heated (pasteurized) before packaging to increase
shelf life, ensure safety and minimize nutrient loss.
• Chilled, Ready-to-Serve — Juice made from frozen concentrates and/or
pasteurized juice. It is packaged in paper cartons, plastic or glass containers.
• From Concentrate — Juice that was manufactured as a frozen concentrate and
later reconstituted.
• Not from Concentrate — Juice that was packaged after it is squeezed. It has never
been concentrated.
• Frozen Concentrate — Juice is concentrated and frozen. Prior to consumption, it
must be reconstituted with water per the instructions on the container.
• Frozen — Juice that is packaged and frozen without pasteurizing or further
processing.
• Canned Juice — Fruit or vegetable juice that has been heated and sealed in cans to
provide for an extended shelf life. Once opened, canned juice should be refrigerated
in a container other than the can it came in, and consumed within one week.
• Juice in Aseptic Containers — This is a shelf-stable product that requires no
refrigeration. It is pasteurized juice or juice from concentrate, packaged in sterilized
containers or preserved by a specific sterilization technique. Juices of this kind may
be found in many kids’ lunches.

42 Beverages - Soft Drinks | 23 June 2023

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Exhibit 96: Overall US juice volume share* Exhibit 97: Overall US juice share in Exhibit 98: Overall US juice share (take
by company (2022) foodservice channels in 2022 home + foodservice) 2022
, Private
nearly double that of KDP (8%) take home share juice business

KO KO
15% Other 17%
19% Other
KO
KDP 34%
Other 34% KDP
8%
43% 7%
Tropicana Tropicana
7% 6%
Tropicana Ocean
Private
Ocean 6% Private Spray
Private Label
Spray Label 5%
Label 41%
17% 6% 21%
Capri
Capri Sun Harvest KHC
Sun
4% Hill 3%
4%
3%

Source: Euromonitor *Take home volume share Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 99: Top US juice brands (2022) Exhibit 100: Top US 100% juice brands Exhibit 101: Top US juice drink* brands
Private label held >17% share Private label held >31% share vs. 11% for top Capri Sun inched up 30bps, while Minute Maid
brand Tropicana in 2022 fell 80bps, allowing for Capri to become top
Simply Ocean brand
(KO) Spray Minute Tropicana (Tropicana Brands)
8% (Ocean Maid 11% 60

44
Spray) (KO) Simply
6% 6% (KO) 45
10%
Tropicana Other 30
(Tropicana 35% Minute
Brands) Maid 15

9
8
8
7
7

7
6
(KO)

5
Other 5%
50% 5%
Capri- 0
Private Sun Florida's
label Private Natural
(Capri
17% label Mott's (Citrus
Sun)
31% (KDP) World)
Kool-Aid 4%
4% 4%
(KHC)
4%
Source: Euromonitor Source: Euromonitor *up to 24% juice
Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 43

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 Exhibit 102: Top US nectar brands (2022) Exhibit 103: Top coconut and & other plant
Ocean Spray is the largest nectar brand with a waters brands (2022)
20% share Vita Coco clearly holds the leading position
45 with a 44% share
37

30
20
17
15 Vita
7 6 6 Coco (All
4
2 All other Market)
0 54% 44%

Zico
2%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH Note: In 2021 Zico was sold by KO back to its founder. PEP
exited the Coconut water business in 2020
BofA GLOBAL RESEARCH

Exhibit 104: US off-trade (take home) Juice volume/value growth Exhibit 105: US on-trade (bars, restaurants) Juice volume/value %
Price/mix drove sales $ % in 2022 Price/mix accelerated in the last two years, increasing +10% in 2022
10.0% 80.0%
On-trade Volume
Implied px/mix
On-trade Value
40.0%

0.0% 0.0%

Off-trade Volume -40.0%

Implied px/mix
Off-trade Value

-10.0% -80.0%
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 106: US juice growth by type

Overall juice volume growth has been modest over the 3-year pandemic period at +0.4%
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Juice Off-trade 6.3% 6.1% 3.1% -1.5% 1.2% -0.1% 7.8% 4.9% 3.2%
On-trade 19.8% 0.8% -0.1% 9.4% -4.3% -3.4% 10.4% 5.0% 3.2%
Total 11.5% 3.7% 1.7% -0.1% 0.4% -0.6% 11.6% 3.4% 2.2%
100% Juice Off-trade 5.3% 6.7% 3.4% -1.2% 2.2% 0.3% 6.4% 4.5% 3.2%
On-trade 18.5% 0.4% -0.5% 7.7% -4.9% -3.9% 10.8% 5.3% 3.3%
Total 11.4% 3.4% 1.4% 0.6% 0.5% -0.7% 10.8% 2.9% 2.1%
Juice Drinks (up to 24% Juice) Off-trade 5.9% 4.7% 2.4% -2.1% 0.2% -0.5% 8.0% 4.5% 2.9%
On-trade 25.1% 2.1% 1.2% 14.1% -2.7% -2.0% 11.0% 4.8% 3.2%
Total 11.2% 3.9% 2.0% -0.9% 0.0% -0.7% 12.2% 3.9% 2.7%
Nectars (25-99% Juice) Off-trade 10.1% 7.5% 3.6% 1.5% 3.3% 1.2% 8.6% 4.2% 2.5%
On-trade 17.2% 0.7% 0.0% 8.6% -3.6% -2.6% 8.6% 4.3% 2.7%
Total 12.1% 5.3% 2.5% 2.1% 2.6% 0.8% 10.0% 2.7% 1.7%
Coconut and Other Plant Waters Off-trade 16.9% 7.0% 3.1% -4.3% -1.8% -0.9% 21.2% 8.9% 4.0%
On-trade 9.0% -7.5% -3.4% 3.4% -9.9% -4.6% 5.6% 2.3% 1.2%
Total 16.7% 6.5% 2.9% -4.2% -2.0% -0.9% 20.9% 8.5% 3.8%
Source: Euromonitor
BofA GLOBAL RESEARCH

44 Beverages - Soft Drinks | 23 June 2023

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Energy drinks
An energy drink is a non-alcoholic beverage that contains a stimulant, usually caffeine,
which are said to provide mental and physical stimulation. They often contain
supplements or vitamins or food additives (such as taurine and other amino acids). The
top players in energy are Monster Beverage and Red Bull.

Energy drink value $ sales grew by 13.1% to $21.7bn in 2022; including a

+12.3% growth for take home consumption dollars and +16.9% for foodservice.
Energy volumes were up 4.8%, led by an 8.1% rise in foodservice volume. Take
home volume +4.7%. Over 96% of energy drink $ is for take home consumption.

• The energy drink category is skewed to take-home consumption, with 96% of its
2022 volume and 83% of its take home value for home usage/consumption.

• Red Bull first entered the US in 1997, although energy drinks first appeared in
Europe and Asia in the 1960s.

• Energy drinks have many different formulations geared to meeting the tastes and
demands of different consumers – everyone from college students to corporate
executives. The current trend is sugar reduction and targeting health/wellness benefits.

• By company, Monster Beverage led US energy drinks with a 48% retail value share
in 2022, followed by #2 player Red Bull North America (26.5% share). Bang (owned
by Vital Pharmacies) held a 9.0% share in 2022. Bang retail value share declined
-70pts YoY in 2022 and continued to cede share at an accelerated pace in 2023
following disputes that saw Bang exit PepsiCo’s national distribution system. With
Celsius Holdings and Pepsi’s relationship now well-established, the energy drink
category saw Celsius’ market share climb to 6.4% at the end of 2022.

• By retail $, Red Bull and MNST tied for the top spot with a 37.9% share each in the
take home channel. Vital Pharmaceuticals (Bang) ranked #3 with a 7.7% dollar
share, while CELH and PEP held $ shares of 6.2% and 4.3% respectively. Category
market share has shifted notably so far in 2023 however, with Bang’s distribution-
related disruptions taking a toll.

• A new brand rises, challenging incumbents CELH now comfortably holds the #3
spot in US energy with over 7% market share at retail as of May 2023. Taking full
advantage of their distribution agreement with Pepsi, Celsius has used the
partnership to turbocharge distribution and capitalize on shelf-space openings left
by the pullback on Bang

• Flavor innovation. Energy drink manufacturers increased the number of available

flavors in recent years, perhaps widening the appeal to individuals who do not like
coffee or plant water-based sources of energy. Consumers have come to expect
new flavor SKUs regularly, with seasonal launches and creative formulations
launched to drive trial

• Performance energy drink offerings. A typical energy drink SKU contains 9-

10mg of caffeine per ounce, while performance energy drinks may contain more
than 2x this amount. The leader in the “performance energy” space has been Bang,
which is zero calories, artificially sweetened and contains creatine to promote
muscle development. Other performance energy drinks include Reign (MNST),
Celsius (CELH), C4 (Cellucor) and Quake (private label, 7-eleven option).

• Finding a new audience. The rise of performance energy brands has onboarded an
untapped demographic of younger female consumers into the energy category. As

Beverages - Soft Drinks | 23 June 2023 45

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 with Gatorade before it, consumers are also finding new occasions to indulge in
brands like Celsius around meals and snacks, relegating consumption less and less
around physical activity or late-night energy boosts.

• Reduced sugar options wining share. Reduced sugar options have significantly
outperformed full calorie options, as “guilt-free” indulgences become more
important. Over the pandemic period (2020-2022), take home regular energy drink
volume grew at a CAGR of +3.3%, below reduced sugar (+8.0.% CAGR). Take home
value growth CAGRs for the same period was +5.3% for full sugar and +11.2% for
reduced sugar energy drinks.

• Producers looking at alcohol drink options. Energy drink producers are looking
beyond non-alcoholic beverages and are experimenting with alcoholic drink options.
In January 2022, MNST acquired CANarchy Craft Brewery Collective, a leading beer
brewer and distributor in Colorado (US$330mn). PEP’s alcohol distribution arm,
Blue Cloud Distribution, began selling a Hard Mountain Dew (flavored malt
beverage) line in 2022. PEP also announced the launch of Mtn Dew Energy in March
2021, a caffeinated juice based product with vitamins A, C and zinc for immune
support.

• Natural ingredient products. In May 2021, MNST announced the introduction of

True North, an organic energy drink containing additional ingredients to promote
immune support. True North is marketed as a “pure energy seltzer” rather than an
energy drink and does not contain sugar or artificial sweeteners. In early 2022 PEP
announced Rockstar Unplugged, a zero sugar, lower-caffeine energy drink that
contains natural ingredients such as hemp seed oil, B vitamins and botanical oils.

• Energy moves into “other need states”. Leading energy drink brands are now
integrating functional ingredients beyond caffeine to address consumer needs. Per
Euromonitor, this frequently includes creatine and/or branch chain amino acids
(BCAA) intended to help in muscle growth and alleviate muscle fatigue. We would
look for energy drinks to continue to push the boundaries to serve other sports
nutrition need states.

Exhibit 107: US energy drink $ (bns) Exhibit 108: US energy drink vols (mn liters) Exhibit 109: Take home energy drinks
Total energy drink dollars +13% to $21.6bn Vols +5% to 3.3bn liters drivers
$30,000 4,000 Volume +5%, price/mix +12% in 2022
Off-trade Value On-trade Value 20.0%
Off-trade Volume On-trade Volume

3,000
$20,000
10.0%
2,000

$10,000
1,000 0.0%

Off-trade Volume
Implied px/mix
$- 0 Off-trade Value
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 -10.0%
2018 2019 2020 2021 2022
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH Source: Euromonitor
BofA GLOBAL RESEARCH

46 Beverages - Soft Drinks | 23 June 2023

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Exhibit 110: US energy drinks take home Exhibit 111: US energy drinks foodservice Exhibit 112: US energy drinks (take home +
share (2022) share (2022) foodservice share), 2022
6pts foodservice share is a leading 32% Overall, MNST holds a 48
since 2017, it still holds a 22pt lead over Red Bull 26% share

Other Other
Celsius Celsius 5%
3%
PEP 6% PEP 6%
7% MNST 6%
Vital 32% Vital
Pharma Pharma
MNST MNST
9% Other 9%
48% 48%
50%

Red Bull Red Bull

27% Red Bull
26%
18%

Source: Euromonitor Source: Euromonitor

Source: Euromonitor BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Exhibit 113 2) Exhibit 114: Top reduced sugar energy drinks Exhibit 115: Top regular energy drink brands
Brands over all top brand is Monster with a 43% MNST was the leader in regular energy drinks in
share 30% is ~6pts ahead of as of 2022 2022
40
60
Celsius 30 51
(Celsius 30
Holdings) RockStar (PEP) 25
6%
Bang 17 40
20 34
(Vital 15
Other
Pharma) 9%
9% 10 7 7
20
Red Bull
(Red 0 7 6
Bull) 2 1 1
Monster
27% (MNST) 0
43%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 116: Take home company volume share trends % Exhibit 117: Take home company value share trends %
Monster and Rockstar lost share over the 3-year pandemic period Red Bull maintained share, while MNST, Rockstar and NOS shed value share
2019 2020 2021 2022 2019 2020 2021 2022
Monster Bev 47.4 47.9 48.9 48.3 Red Bull 36.1 25.7 38.2 37.9
Red Bull 24.6 25.0 26.6 26.5 Monster Bev 41.5 39.9 38.8 37.9
Vital Pharma 9.7 9.1 9.7 9.0 Vital Pharma 8.9 8.3 8.3 7.7
PepsiCo 9.4 8.9 7.7 6.8 Celsius Holdings 2.9 6.2
Celsius Holdings 3.0 6.4 PepsiCo 7.0 6.3 4.9 4.3
Others 8.9 9.1 4.1 3.0 Others 6.5 9.8 6.9 6.0
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 47

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 Exhibit 118: US energy growth by type
Energy drink growth was driven by reduced sugar drinks
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Energy Drinks Off-trade 12.3% 7.3% 8.6% 4.7% 5.0% 6.9% 7.6% 2.3% 1.7%
On-trade 16.9% 2.4% 1.8% 8.1% -0.4% 0.0% 8.8% 2.7% 1.8%
Total 13.1% 6.4% 7.2% 4.8% 4.7% 6.5% 8.2% 1.7% 0.7%
Regular Energy Drinks Off-trade 10.1% 5.3% 4.9% 2.5% 3.3% 3.1% 7.6% 2.0% 1.8%
On-trade
Total
Reduced Sugar Energy Drinks Off-trade 16.5% 11.2% 17.9% 8.7% 8.0% 16.1% 7.8% 3.2% 1.8%
On-trade
Total
Source: Euromonitor
BofA GLOBAL RESEARCH

Performance Energy is driving category growth

Following the success of Red Bull and Monster in the category over the past 20 years in
traditional energy and multiple challenger brands (Rock Star, Mountain Dew), the
industry experienced its next iterative step as “performance energy” brands were
launched in the late 2010’s including Bang and MNST’s response “Reign” as well as the
rise of Celsius. Performance energy products contained more functional elements for
workout and recovery in addition to caffeine that were a natural evolution of the
category, in our view.

In 2023, PEP launched Gatorade FastTwitch, an energy drink intended for pre-workout or
sports performance. Each 12-oz bottle of FastTwitch includes zero sugar, electrolytes
and 200mg of caffeine.

Exhibit 119: Mix of US energy drink category: 1.0 vs 2.0 (rolling Exhibit 120: US scanned channel sales growth: 1.0 vs 2.0 (rolling
52wk data ending 05/20) 52wk data ending 05/20)
Energy 2.0 sales share expanded by 14pts since 2018 E2.0 has averaged 26% YoY sales growth since 2020, leading E1.0 by 16 pts.

Energy 1.0 Energy 2.0 Energy 1.0

7% 32%
30%
13% 14% 16% Total Energy Drinks
19% 26%
80% Energy 2.0

18%
14% 14% 13%
12% 12%
40% 9% 10%
8%

0%
2018 2019 2020 2021 2022 2020 2021 2022 Avg. 3yr growth

Source: Nielsen xAOC+C, BofA Global Research Source: Nielsen xAOC+C, BofA Global Research
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

The primary engine of Performance Energy’s growth has been its wider appeal beyond
traditional energy consumers – particularly with younger women (Celsius). Onboarding of
new consumers into the category, as well as new occasions (fitness, casual consumption
with meals) has allowed nascent functional energy brands to gain market share by
expanding the category rather than competing directly against incumbent category
leaders for share of stomach.

48 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 121: Brand-related Instagram posts by gender (Sept 2022) Exhibit 122: Brand-related Instagram posts by Age (Sept 2022)
We estimate the Energy 1.0 audience skews as much as 75% male vs 50% We estimate 50% of the Energy 2.0 audience is between the ages of 21-29
for Energy 2.0 vs 40% for Energy 1.0

9% 10% 4% 3% 6% 2% 2% 10% 1% 10%

E1.0 E2.0 Age 45
30% and over
39%
42% 39%
24% 23% 25% 23% 21% 34% 52% 38%
32% 44% 55%
39% 48%
51% 54% Age 30-
44
82% Male

64% Age 21-

76% 77% 75% 77% 79% Female 51%
68% 50% 49% 54% 48% 29
61% 43% 45%
38% 38%
49% 46%

18% Age 20
5% 4% 4% 5% 5% 8% 4% 2% 2% 4% and
under

Celsius
C4
Red Bull

ZOA
Alani Nu
Monster

Bang

Reign
Rockstar

Ghost
Red Bull

Celsius
C4
Alani Nu

ZOA
Reign
Bang
Monster

Rockstar

Ghost

Source: Social Standards, BofA Global Research Source: Social Standards, BofA Global Research
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

In terms of potential growth catalysts, the demographic appeal and wider set of
consumption occasions of functional energy brands represents the largest opportunity
for expansion of the category, in our view.

Exhibit 123: Energy drink consumption and frequency among the Exhibit 124: Caffeinated beverage consumption among the college-
college-aged (~20yrs old) aged
Men consume energy drinks at 2x the rate women do Men tend to drink more sports and carbonated beverages than women
60% 3.0 90%
% Consuming any energy Consumption Freq. (days/mo) Male Female

50% 2.5

40% 2.0 60%

30% 1.5

30%
20% 1.0

10% 0.5

46% 31% 0%
0% 0.0 Green tea Coffe-based Tea CSDs Sports
Male Female drinks drinks
Source: Miller KE. Wired: energy drinks, jock identity, masculine norms, and risk taking. J Am Coll Source: Miller KE. Wired: energy drinks, jock identity, masculine norms, and risk taking. J Am Coll
Health. 2008 Mar-Apr;56(5):481-9. doi: 10.3200/JACH.56.5.481-490. PMID: 18400659; PMCID: Health. 2008 Mar-Apr;56(5):481-9. doi: 10.3200/JACH.56.5.481-490. PMID: 18400659; PMCID:
PMC2562885., BofA Global Research PMC2562885., BofA Global Research
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 49

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Sports drinks
Sports drinks are functional beverages used to replace water and electrolytes (such as
sodium, potassium and chloride) before, during or after physical activities. The leading
sports drink in the US is Gatorade, owned by PepsiCo.

US sports drink value rose 13.1% to $13.0bn in 2022; with take home $
+12.8% and foodservice $ +18.7%. Sports drink volume increased +5.2%, with
take home volume +5.1% and foodservice +10.6%. Sport drink sales $ for take
home represent 98% of total sports drinks $. Reduced sugar volumes dipped
2.8% for take home vs. +6.8% for regular/full sugar sports drinks. In value terms,
reduced sugar and regular sports drinks posted sales increases of +5.8% and
+14.3% respectively.

• The original sports drink is Gatorade, owned by PepsiCo. In 1965, Gatorade

was invented by Dr. Robert Cade and a team of scientists at the University of
Florida, in an effort to create a beverage that would alleviate dehydration and
muscle cramps experienced by University football players. The result was Gatorade,
which restores fluids, carbohydrates and electrolytes lost during exercise in the
heat.

• Traditionally sports drinks were formulated as still, glucose -based drinks, with
water, salt (electrolytes) and carbohydrates (sugar) in the isotonic range – generally
defined (per Euromonitor) as a similar concentration to human blood, 6-8%
carbohydrates. This formulation shows the original intent of sports drinks – to aid
in athletic recovery and replenishment after exercise.

• By the 1990s, sports drinks were used by the average consumer who sought
hydration. Competing brands were introduced, including PowerAde (owned by KO),
Capri SUN Sport (owned by Kraft Heinz), Propel (PEP) and All Sport (developed by
PEP and sold to Monarch Beverages when PEP acquired Quaker — Gatorade’s
parent — in 2000). Body Armor (previously distributed by KDP and now owned by
KO4) also participates in the sports drinks space.
• On-premise sports drink consumption is low, representing just 1.6% of sports drink
$ sales and 4.7% of sports drinks volume in 2022.
Gatorade remains dominant. PEP is the #1 player in sports drinks, holding a 69%
take home volume share and a 71% value share in 2022. KO ranks a distant #2 with
a volume share of 28.8% (Powerade + Body Armor) and a value share of 26.7%.
• Everyday hydration: manufacturers have shifted to marketing just towards
athletes to the population as a whole. Sports drinks have begun to be regarded as
everyday (casual) drinks with males (15-45 years). Increasingly women and elderly
adults are interested in the functional benefits of sports beverages. Older
individuals are increasingly being advised to avoid chronic dehydration with
electrolytes. These shifts are blurring the lines between semi-pharmaceutical
brands like Pedialyte (Abbott Pharmaceutical) and Electolit (Grupo Pisa).
• PEP launched Gatorade “G Zero” in 2018. PEP launched G Zero, its first no-
sugar version in June 2018. G Zero was intended to round out Gatorade’s Hydration
Portfolio and is designed to address consumers’ different workout scenarios and
intensities. Note that KO’s Powerade Zero product has been available for several
years. In 2021, Body Armor Lyte, a low calorie, no added sugar line extension was a
top performer in sports drinks.

4 In mid-2018, KO purchased a minority stake of Body Armor. In November 2021 it acquired the remaining 85% stake in
the company. Purchase price $5.6bn. Body Armor was KO’s largest single brand acquisition for Coca -Cola.

50 Beverages - Soft Drinks | 23 June 2023

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• “Natural” sports drinks. KO’s Body Armor is positioned as a “natural” sports drink
alternative due to its coconut water based in the formulation. ROAR Organic is a
100% organic certified sports drink and participates largely in premium
supermarkets and natural food retailers.
• Caffeinated sports drinks. The blurring of energy/sports drinks is happening with
the addition of caffeinated hydration drinks such as Body Armor Edge (introduced
2021). This hybrid product combines 1000mg of electrolytes with 100mg of added
caffeine (slightly more than a standard cup of coffee). Another product is Gatorade
Bolt24 Energize (2019), its first caffeinated sports drink with 75mg of caffeine.
• Flavor innovation. New flavor introductions is a key driver for the category.
• Format innovation. Nestle Health Sciences acquired Nunn (a dissolvable
electrolyte and vitamin drink tablet) in 2021. These tablets are intended for on-the-
go use. In 2021, Gatorade introduced the GX Sweat Patch, a single-use wearable
patch that provides data on hydration and performance. A 2-patch pack retails for
~$25 at Dick’s Sporting Goods. Gatorade.com and elsewhere.

Exhibit 125: US sports drink $ (bns) Exhibit 126: US sports drink vols (mn liters) Exhibit 127: Take home sports drinks
Total sports drink dollars grew 13% to $13.0bn Volumes grew +5% to 7.5bn liters drivers
$16,000 9,000
Price/mix a bigger driver of sales growth in
Off-trade Value On-trade Value Off-trade Volume On-trade Volume 2021/22
20.0%
Off-trade Volume
$12,000
Implied px/mix
6,000 15.0%
Off-trade Value

$8,000 10.0%

3,000 5.0%
$4,000
0.0%

$- 0 -5.0%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 128: US sports drink volume share Exhibit 129: US sports drinks share in Exhibit 130: US sports drink share (take
by company* (2022)) foodservice (2022) home + foodservice), 2022
While PEP is the clear #1 player, it has lost
3.6pts of share since 2017 below 70% for the 1st time in since at least
2017

Other
KO Other
2%
17% 2%
KO Other KO
29% 1% 29%

PEP PEP
69% 69%
PEP
82%

Source: Euromonitor *Take home volume share Source: Euromonitor

Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 51

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 Exhibit 131: Top sports drink brands (2022) Exhibit 132: Top reduced sugar sports drinks Exhibit 133: Top regular sports drinks (2022)
Gatorade ranks #1 in LRBs and holds a 69% of e is divided Since KO acquired Body Armor, its share
the sports drink category (including G Zero) between Gatorade and G Zero expanded 7pts

G Zero All other

(PEP) 2% Others
6% 5% Powerade
Other
(KO)
2%
Powerade Powerade G Zero
(KO) (KO) (PEP)
14% 26% 38% Bodyarmor
(KO)

Gatorade
Bodyarmor Gatorade (PEP)
(KO) (PEP) 69%
Gatorade
63% (PEP)
31%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 134: Sports drink company volume take home share trends % Exhibit 135: Sport drink company take home value share trends %
KO gained 3pts of share* while PEP lost 3pts over the 5-year period
Since 2019, PEP has shed 4.7pts of value share, largely to KO (+4.1pts)
2019 2020 2021 2022 2019 2020 2021 2022
PepsiCo 72.0 72.2 70.0 69.0 PepsiCo 75.2 75.0 72.3 70.5
Coca-Cola 25.8 25.5 27.7 28.8 Coca-Cola 22.6 22.4 25.2 26.7
Private Label 0.5 0.4 0.4 0.4 Private Label 0.5 0.4 0.4 0.4
Others 1.7 1.9 1.9 1.8 Others 1.7 2.2 2.1 2.4
Source: Euromonitor *KO on a pro forma basis for its acquisition of Body Armor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 136: US sports drinks growth by type

Regular sports drinks outpaced their reduced sugar varieties in 2022
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Sports Drinks Off-trade 12.8% 12.3% 10.5% 5.1% 8.3% 7.3% 7.7% 3.9% 3.2%
On-trade 18.7% 2.7% 2.5% 10.6% -0.9% 0.1% 8.1% 3.6% 2.4%
Total 13.1% 11.7% 10.0% 5.2% 8.2% 7.2% 7.9% 3.6% 2.9%
Regular Sports Drinks Off-trade 14.3% 11.9% 8.9% 6.8% 8.8% 5.9% 7.6% 3.1% 3.0%
On-trade
Total
Reduced Sugar Sports Drinks Off-trade 5.8% 14.5% 22.2% -2.8% 6.1% 17.3% 8.6% 8.5% 4.9%
On-trade
Total
Source: Euromonitor
BofA GLOBAL RESEARCH

52 Beverages - Soft Drinks | 23 June 2023

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Brewed and RTD (ready-to-drink) coffee

Coffee drinkers were shown by Starbucks and later Keurig Green Mountain that
there are numerous ways of consuming coffee, rather the traditional standard brew.

According to the National Coffee Association of America (NCAA), Arabs were the first to
cultivate and trade coffee in the 15 th century. Coffee was consumed both at home and
at public coffee houses. Coffee houses became very popular in the Arab culture and
became important centers to exchange information.

By the 17 th century, coffee was introduced in Europe and the British colonies. Tea
overshadowed coffee in terms of popularity in the American colonies until the Boston
Tea party, when the revolt tipped consumption in favor of coffee.

In the US, Starbucks has redefined the coffee business in the US. It brought
excitement into the category by giving Americans several coffee beverage options,
rather than the standard coffee beverage. Keurig Green Mountain expanded on
Starbucks’ inroad with the introduction of the coffee pod. Now better tasting coffee is
available outside of the restaurant/café and available for single serve home brewing.

Per Euromonitor:

• US take home coffee sales grew by 9.1% in 2022 to $18.0bn. Over the 3-year
(pandemic) and 5-year period, sales grew at CAGRs of +8.4% and +5.2%
respectively. Fresh coffee (beans and ground) collectively grew sales in line with
overall coffee, with beans +4% and ground +10%, including a 7% increase in coffee
pods. Instant coffee sales grew 8% to $920mn.

• US hot coffee volume at retail dropped 7.8% in 2022 to 816.4mn tonnes, as

consumers socialized/worked more outside of the home. Over the 3-year and 5-
year period, take home coffee volumes slipped at more moderate -1.5% and -0.5%
CAGRs. Fresh coffee volume (-8% in 2022) was weaker than instant coffee
volume (-6%).

• US take home coffee pod value accounted for 40% of total hot coffee sales for
take home in 2022, easing 1pt from 2021. Take home coffee pod value dipped
2.8% in 2022 but grew +3.4% and +4.7% on 3-year and 5-year annual rates. Coffee
pods volume accounted for 13% of hot coffee volume last year.

• Foodservice coffee volume increased 2.9% in 2022 and accounted for 21% of
overall US coffee volume. Over the 3-year and 5-year periods, coffee volume away
from home expanded +0.6% and +1.0% annually.

• Top US coffee producers included Nestle (Starbucks) was a near 20% value share in
2022. This was followed by Smuckers (13% share) and Keurig Dr Pepper (6%
share). In coffee pods, Nestle/Starbucks held over a 23% value share, followed by
KDP (+15%) and Smuckers (14%).

• On line pod shopping attractive for both consumer and retailer. A shift in
shopper habits to ordering on-line also likely benefitted pod coffee, given the
variety and ease for the consumer and the light weight, shelf stable and high value
components for the retailer.

Beverages - Soft Drinks | 23 June 2023 53

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 Exhibit 137: US (Hot) Coffee volume for take home (tonnes) Exhibit 138: US (Hot) Coffee $ sales for take home ($mns)
Fresh coffee growth over the 3-year pandemic period grew was led by coffee To its premium price position, coffee pods account for a much higher share
pods (+3.4% CAGR) of coffee value than volume
$24,000
Fresh coffee beans Fresh ground coffee pods Fresh coffee beans Fresh ground coffee pods
900,000 Fresh ground coffee Instant coffee Fresh ground coffee Instant coffee

800,000
$18,000
700,000

600,000
$12,000
500,000

400,000

300,000
$6,000
200,000

100,000
$-
-
2017 2018 2019 2020 2021 2022
2017 2018 2019 2020 2021 2022
Source: Euromonitor
Source: Euromonitor
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

• Slow return to office created shifts in coffee usage. While American business
largely returned to normal operating conditions in 2021/22, many office workers
remained remote, hybrid or even full-time remote as options were made more
permanent. This would likely change the way coffee is consumed, given the number
of coffees historically consumed on commutes or in office. We anticipate that
coffee consumption at home would hold a higher share than in years’ past given
inflationary pressures weigh on consumer wallets.

Exhibit 139: US (Hot) Coffee volume for foodservice (tonnes) Exhibit 140: US (Hot) Coffee volumes (take home + foodservice),
Foodservice volume surpassed pre-pandemic levels (2019) in 2022 tonnes
Over the 3Y pandemic period, total hot coffee volume slipped at a 1.2% CAGR
Fresh coffee beans Fresh ground coffee pods and remains short of 2017 levels
Fresh ground coffee Instant coffee 1,200,000
200,000 Take home volume Foodservice volume
180,000
160,000
900,000
140,000
120,000
100,000 600,000
80,000
60,000
40,000 300,000
20,000
-
2017 2018 2019 2020 2021 2022 -
2017 2018 2019 2020 2021 2022
Source: Euromonitor
BofA GLOBAL RESEARCH Source: Euromonitor
BofA GLOBAL RESEARCH

• Recyclable refills. While Keurig and Nespresso have embraced recyclable

pods/refills, many areas of the country lack the facilities to process the type of
recyclable plastic KDP uses. In 2020 KDP announced all of its K-cups were
recyclable.

• Brands with a purpose. Consumers increasingly are looking for consumer brands
that support that values. A key example of such a brand is Black Rifle Coffee, which
focuses on supporting military veterans. Initially on-line only, it is now increasingly

54 Beverages - Soft Drinks | 23 June 2023

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 being sold in brick & mortar venues. Its retail value share was 1.7% in 2022, up
from 0.2% in 2017 and +10bps YoY. It is now larger in $ sales terms than such
known brands as Maxwell House, Folgers, Eight O’Clock Coffee, Café Bustelo and
Gevalia.

• Gen Z likes its coffee cold. Euromonitor data suggest that Generation Z tastes
favor cold coffee over hot, suggesting that over the longer term, cold coffee would
gain share over hot coffee.

Hot coffee volume share by producer and type

Exhibit 141: US take home (hot) coffee share by producer and type (in %, 2022)
Nestle leads in US hot coffee with a near 20% share
Fresh Coffee Fresh Ground Standard Fresh Fresh Ground Instant Standard Instant Coffee
Coffee Fresh Coffee Beans Coffee Ground Coffee Coffee Pods Instant Coffee Coffee Mixes
Nestlé SA** 19.5 17.9 40.0 16.0 9.9 23.3 48.7 30.4 53.6
JM Smucker Co 12.7 12.6 13.7 13.5 13.9 14.9 18.9
Keurig Dr Pepper 6.1 6.4 1.3 6.8 14.9
Kraft Heinz 5.7 5.4 5.8 6.6 4.9 11.2 30.4 6.1
Inspire Brands 2.8 2.9 5.5 2.7 5.0
JDE Peet's 2.5 2.6 2.8 5.2
Tata Consumer 2.0 2.1 4.6 1.9 1.5 2.3
Black Rifle Coffee 1.7 1.8 3.9 1.6 2.1 1.0
Community Coffee 0.8 0.9 0.9 1.7
Massimo Zanetti 0.8 0.9 0.9 1.7
Private Label 11.7 11.7 6.3 12.2 6.8 18.6 9.9 7.8 10.5
Source: Euromonitor *Nestle includes Starbucks
BofA GLOBAL RESEARCH

Top coffee and coffee pod brands, US

Exhibit 142: Top overall hot coffee brands (2022), in % Exhibit 143: Top coffee pod brands (2022), in %
Starbucks gained 30bps YoY to 13.7% share nd Donut Shop
18.0 18.0
15.0
13.7

12.0 12.0
7.9 8.3
7.0 6.5
6.0 4.1 6.0
3.3 2.9 2.8 3.9 3.5 3.5
2.6 2.5 2.0 2.0 3.1
2.3 1.8

0.0 0.0

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

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US hot drink sales growth drivers over the pandemic
Exhibit 144: US hot drink sales $ growth for take home, 2022 % Exhibit 145: US hot drink sales $ growth for take home, 3Y CAGR
Pods underperformed in 2022 as more consumers drank coffee away from Pod coffee volumes performed above other coffee forms during the
home pandemic period as consumers prepared coffee at home
30.0%
Volume Implied px/mix Value Volume Implied px/mix Value
12.0%
20.0% 10.0%
8.0%
10.0%
6.0%
4.0%
0.0%
2.0%

-10.0% 0.0%
-2.0%
-20.0% -4.0%
Coffee Fresh Fresh Fresh Fresh Standard Instant Instant Instant Coffee Fresh Fresh Fresh Fresh Standard Instant Instant Instant
Coffee Coffee Ground Ground Fresh Coffee Standard Coffee Coffee Coffee Ground Ground Fresh Coffee Standard Coffee
Beans Coffee Coffee Ground Coffee Mixes Beans Coffee Coffee Ground Coffee Mixes
Pods Coffee Pods Coffee

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 146: US retail sales drivers of take home coffee over 2017-22 Exhibit 147: Coffee pods as a % of US take home coffee sales/volume
period and foodservice volume
Over the 5 year period, take home coffee sales grew by $4.1bn to $18.08bn Pod value stood at 40% in 2022 vs. 23.9% of global take home sales
50%
Take home value Take home volume Foodservice volume

Instant coffee 40.1% 40.8% 40.0%

38.5% 39.2%
2% 40% 37.6%
Fresh ground Fresh coffee
coffee beans
42% 7% 30%

20%
12.4% 13.1%
Fresh ground 10.8% 11.3% 11.6%
10.2%
coffee pods 10%
49% 4.5% 4.6% 4.7% 4.4% 4.7% 4.6%

0%
2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Global take home hot coffee

• Global hot coffee volume (take home + foodservice) inched up at +0.3% CAGR
during the pandemic (2019-2022), with take home volume up +1.0% and
foodservice volume -2.4%.

• Take home global pod volume increased at a 3Y CAGR of +4.9% to 448,672

tonnes. Take home coffee pod revenue increased by 11.2% over the 3-year period
and +9.6% in 2022.

• Global coffee value grew at a 3Y CAGR of +10% to $103.8bn, with fresh coffee
sales +10% and instant coffee +8%. Fresh coffee bean sales advanced a +15%
CAGR over the pandemic, rising slightly faster than coffee pod sales (+11% CAGR).
Pods represented 23.9% of global $ sales for take home use.

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Exhibit 148: Worldwide (Hot) Coffee volume for take home + Exhibit 149: Worldwide (Hot) Coffee $ sales for take home ($mns)
foodservice (tonnes)
Fresh coffee growth over the 3-year pandemic period was led by coffee Take home coffee $ sales grew at a 11% CAGR over the 3Y pandemic pd, led
beans (+8.8% CAGR) and pods (+6.7%) by beans (+15%) and pods (+11%)
9,000,000 $120,000
Take home Foodservice Fresh coffee beans
Fresh ground coffee pods
Fresh ground coffee
Instant coffee

6,000,000 $80,000

3,000,000 $40,000

0 $-
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 150: Global retail sales drivers of take home coffee over 2017- Exhibit 151: Coffee pods as a % of global take home coffee sales
22 period
Over the 5 year period, take home coffee sales grew by $11.7bn to $103.8bn Pod value stood at 23.9% of take home sales in 2022, easing 70bps YoY
30.0%
Pods value Pod volume
Fresh Coffee 24.2% 24.6% 23.9%
Beans 22.2% 22.9%
21.5%
10%
Intants Coffee 20.0%
33% Ground Coffee
Pods
18%

10.0%
7.2% 7.5% 7.4%
6.1% 6.4% 6.6%

Fresh Ground
Coffee
39% 0.0%
2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

oodservice share by region

Exhibit 152: Regional foodservice volume share of global volume (2022)
Latin America holds the highest coffee on-premise share at >28% global share
World Asia Pacific Australasia E Europe Latin Amer ME, Africa No America US only W Europe
Coffee 100.0% 20.6% 2.5% 4.8% 28.3% 7.7% 14.5% 11.8% 21.6%
Fresh Coffee 93.7% 18.6% 2.5% 3.9% 27.9% 6.6% 14.2% 11.6% 20.1%
Fresh Coffee Beans 42.1% 9.2% 2.2% 3.3% 12.8% 1.8% 1.2% 1.0% 11.6%
Fresh Ground Coffee 51.6% 9.4% 0.2% 0.6% 15.1% 4.8% 13.0% 10.6% 8.5%
Fresh Ground Coffee Pods 1.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 0.5% 0.9%
Standard Fresh Ground Coffee 50.1% 9.3% 0.2% 0.6% 15.1% 4.8% 12.4% 10.1% 7.6%
Instant Coffee 6.3% 2.0% 0.0% 0.9% 0.4% 1.1% 0.3% 0.2% 1.5%
Instant Coffee Mixes 2.4% 1.3% 0.0% 0.3% 0.1% 0.4% 0.2% 0.2% 0.2%
Instant Standard Coffee 3.9% 0.7% 0.0% 0.6% 0.4% 0.8% 0.0% 0.0% 1.3%
Source: Euromonitor
BofA GLOBAL RESEARCH

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 Exhibit 153: Foodservice volume share by region
Ground coffee is most popular in North America with an 86% share of the coffee market (2022)
World Asia Pacific Australasia E Europe Latin Amer ME, Africa No America US only W Europe
Coffee 100% 100% 100% 100% 100% 100% 100% 100% 100%
Fresh Coffee 93.7% 90.3% 98.1% 81.6% 98.5% 85.4% 98.3% 97.9% 92.9%
Fresh Coffee Beans 42.1% 44.7% 88.6% 68.5% 45.2% 22.9% 8.4% 8.1% 53.8%
Fresh Ground Coffee 51.6% 45.6% 9.5% 13.2% 53.3% 62.5% 89.9% 89.9% 39.1%
Fresh Ground Coffee Pods 1.5% 0.2% 0.7% 0.3% 0.2% 0.4% 3.8% 4.6% 4.0%
Standard Fresh Ground Coffee 50.1% 45.4% 8.9% 12.9% 53.1% 62.1% 86.1% 85.2% 35.2%
Instant Coffee 6.3% 9.7% 1.9% 18.4% 1.5% 14.6% 1.7% 2.1% 7.1%
Instant Coffee Mixes 2.4% 6.1% 0.7% 5.5% 0.2% 4.6% 1.7% 2.1% 0.8%
Instant Standard Coffee 3.9% 3.5% 1.2% 12.9% 1.3% 10.0% 0.0% 0.0% 6.2%
Source: Euromonitor
BofA GLOBAL RESEARCH

Coffee pods
In the mid-1970s, coffee pods were invented by a Nestle engineer and were first
marketed around the mid-1980s under the Nespresso name and became popular in
Europe. In the early 1990s, Green Mountain Coffee Roasters, now part of Keurig Dr
Pepper, invested in entrepreneurs who would invent Keurig coffee brewers and single-
serve pod/capsules. Originally created for offices, Keurig soon developed a home model
and by 2003 were made available for sale in high-end department stores. In 2006,
Green Mountain Coffee Roasters acquired Keurig, Inc. Post-acquisition of Dr Pepper
Snapple, the company was renamed Keurig Dr Pepper (KDP).

Exhibit 154: Take home vs. foodservice coffee pod mix by region (2022 Exhibit 155: Share of take home, foodservice and total global coffee
%) pod volume by region (2022)
The US skews more to coffee pods in foodservice than other markets and Europe represented over 62% of total pod volume
the world overall
Take home Foodservice Total volume % of volume Take home Foodservice Total volume
World 94.7% 5.3% 100.0% Asia Pacific 1.7% 2.1% 1.7%
Asia Pacific 93.5% 6.5% 100.0% Australasia 2.4% 1.1% 2.3%
Australasia 97.5% 2.5% 100.0% Eastern Europe 3.0% 0.9% 2.9%
Eastern Europe 98.4% 1.6% 100.0% Latin America 4.3% 2.9% 4.2%
Latin America 96.3% 3.7% 100.0% Mid East, Africa 1.4% 2.2% 1.4%
Mid East, Africa 91.8% 8.2% 100.0% North America 24.6% 35.4% 25.2%
North America 92.5% 7.5% 100.0% USA 21.9% 35.4% 22.6%
USA 91.6% 8.4% 100.0% Western Europe 62.6% 55.4% 62.2%
Western Europe 95.2% 4.8% 100.0% Source: Euromonitor
Source: Euromonitor BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Exhibit 156: Coffee pod volume growth by region and venue (2022 %) Exhibit 157: Coffee pod volume growth over the pandemic period (3Yr
CAGR)
Globally coffee pod volume dipped 1.3% in 2022 despite an 11% increase in Over the pandemic period, volumes grew nearly 5% annually, including +3%
foodservice growth in the US market
2022% growth Take home Foodservice Total volume 3-Year % growth Take home Foodservice Total volume
World -1.9% 11.3% -1.3% World 4.9% 9.6% 4.6%
Asia Pacific 7.1% 2.6% 6.8% Asia Pacific 18.6% -0.8% 16.6%
Australasia 6.1% 0.4% 5.9% Australasia 12.8% 0.4% 12.2%
Eastern Europe 2.1% 15.6% 2.3% Eastern Europe 13.5% 9.3% 13.2%
Latin America 0.5% 2.3% 0.6% Latin America 5.3% 8.0% 5.1%
Mid East, Africa 4.7% 6.9% 4.9% Mid East, Africa 14.1% 6.1% 12.5%
North America -2.4% 1.5% -2.2% North America 3.6% 9.1% 3.3%
USA -2.8% 1.5% -2.4% USA 3.4% 9.1% 3.1%
Western Europe -2.7% 20.1% -1.8% Western Europe 4.4% 10.9% 4.0%
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

58 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 158: Where did the coffee pod volume come from over the 2017-22 period?
North America drove 21% of take home volume and 62% of foodservice volume

Asia Pacific Australasia E Europe LatAm ME, Africa No Amer W Europe

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
Take home Foodservice

Source: BofA Global Research

BofA GLOBAL RESEARCH

Keurig dominates in US single-serve coffee

KDP is the dominant US single-serve company in the market, manufacturing more than
80% of pods by dollar sales through both its owned and licensed brands for the likes of
Starbucks and Dunkin among major US coffee brands, as well as private label k-cups.
KDP is also the front-runner in pod brewer sales.

KDP currently offers a portfolio of >125 owned, licensed and private label brands,
including the top 10 best-selling coffee brands in the US per IRI.

In single serve coffee pods, Green Mountain is the #2 brand in the US, The Original
Donut Shoppe is the #5 K-Cup brand, McCafé is the #5 brand and in Canada, Van Houtte
is the #2 K-Cup brand.

In 2022, KDP launched its K-Café SMART single serve coffee, latte and cappuccino
maker, which has a built in frother to create a range of hot, iced and specialty coffee
drinks.

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 Exhibit 159: Keurig brewer household penetration (mn of households) Exhibit 160: Keurig pods portfolio
As of 2022, total US households with a Keurig brewer reached 38mn Keurig has a wide variety of coffee brands
45 Owned Licensed Partner
Green Mountain Mc Café 1850
38 Donut Shop Swiss Miss Amazon Fresh
36
Tully's Newman's Own Bigelow
33
Motts Laughing Man Café Bustelo
30 Revv Krispy Kreme Celestial Seasoning
30 28
26 Gloria Jean's Caribou Coffee Dunkin'
23 Café Escapes Cinnabon Eight O'Clock
21 Barista Prima Coffee House Panera Bread Folgers
19 French Market Coffee
15 Gevalia
15 Great Value
11 illy
7 Kirkland
Kroger
Lavazza
Lipton
0
Luzianne
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Maxwell House
Source: Company reports New England Coffee
BofA GLOBAL RESEARCH Peet's Coffee
Seattle's Best
Starbucks
Tazo

Twinnings
Source: KDP 2021 Investor Day and KDP website
BofA GLOBAL RESEARCH

Types of coffee
Coffee is grown in more than 50 countries around the world. While there are
many types of coffee, in the commercial coffee industry, there are two important coffee
species -- Arabica and Canephora, more commonly called Robusta.

Coffee arabica
Coffee arabica is descended from the original coffee trees discovered in Ethiopia. These
trees produce a fine, mild, aromatic coffee and represent ~70% of the world's coffee
production.

On the world market, arabica coffees bring the highest prices. The better arabicas are
high grown coffees -- generally grown between 2,000 to 6,000 feet above sea level --
though optimal altitude varies with proximity to the equator. They also are more costly
to cultivate due to steep terrains and tend to require more care and attention than
robusta.

Arabica beans are flatter and more elongated than robusta and lower in caffeine.

Coffee canephora (robusta variety)

Most of the world's robusta is grown in Central and Western Africa, parts of Southeast
Asia, including Indonesia and Vietnam, and in Brazil.

The robusta tree is heartier than the arabica, more disease and parasite resistant, which
makes it easier and cheaper to cultivate. It also has the advantage of being able to
withstand warmer climates, preferring temperatures between 75 to 85 degrees, which
enables it to grow at far lower altitudes than arabica.

Compared with arabica, robusta beans produce a coffee which has a distinctive taste
and about 50-60% more caffeine. Robusta is primarily used in blends and for instant
coffees.
The robusta bean tends to be slightly rounder and smaller than an arabica bean.

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Coffee Beverages
While there are numerous variations of coffee beverages, below are a few of the more
popular hot coffee drinks found in coffee shops in the US and around the globe.

▪ Traditional Coffee - A regular brewed coffee.

▪ Espresso is a concentrated beverage brewed by forcing a small amount of
nearly boiling water under pressure through finely ground coffee beans.
Espresso has more caffeine per unit volume than most beverages, but the usual
serving size is smaller
▪ Cappuccino - 2 parts espresso, 1 part steamed milk, topped with milk froth
▪ Cafe Latte - 1 part espresso, 1 part steamed milk and very little milk froth
▪ Cafe Au Lait - 2 parts espresso, 2 parts hot milk. The term 'café au lait' has
been used for espresso and milk since the 1950s in among other places the UK,
Netherland, Belgium, Germany, Denmark, Norway and Sweden.
▪ Cafe Americano - 1 part espresso and 3 parts hot water.
▪ Macchiato - 1 part espresso and topped with milk foam.
▪ Cafe Con Leche - 1 part espresso and 1 part steamed milk plus 1 tablespoon
of sugar
▪ Cafe Mocha - 1 part espresso and 2 parts steamed milk with 1 tablespoon of
cocoa powder.
▪ Cafe Breve - 1 part espresso 1 part steamed half and half.
▪ Espresso Con Panna - 1 part espresso - topped with whipped cream.
▪ Instant coffee is a beverage derived from brewed coffee beans. Through
various manufacturing processes the coffee is dehydrated into the form of
powder or granules. These can be rehydrated with hot water to provide a drink
similar to conventional coffee.
▪ Cold brewed coffee — the key difference between cold-brew and other
methods of making coffee is the temperature of the water that is used. Most
coffee, including traditional iced coffee, is brewed at a temperature of ~200
degrees. Cold brews use room temperature water with extended brewing
times. Recipes take anytime from two to twenty four hours to brew, and as a
result, generally have more caffeine than a traditional brewed cup. Most
recipes treat cold-brew coffee as a concentrate and mixed with water or milk.
Ready-to-drink (RTD) coffee

US RTD coffee volumes fell 1.5% to 814mn liters in 2022; $ sales up 8% to

$5.6bn. Off-trade volume (-1.9%) trailed (+6.9%) foodservice gains due to ending
of pandemic disruptions. Off trade value +7%, RTD coffee foodservice value
+17%. Take home $ for RTD coffee account for 92% of overall sales.

Note: foodservice sales above represents only packaged RTD products sold through
foodservice channels, not cold coffee beverages prepared in a coffee shop for
immediate consumption.

• The RTD coffee category is transitioning to a functional product, with higher

caffeine cold brew, nitro and new canned options. Once an indulgence product, RTD
coffee is now competing with energy drinks for user occasions.
• Starbucks-branded coffees dominate with a take home value share of 62.4%
as of 2022. Danone/Whitewave sells International Delight Iced Coffee and Stok
and collectively holds an 11% share, moving up to the #2 spot in 2002. Monster fell

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 to #3 with its Java Monster brand at 10.7% share. KO ranks #4 with a 4.1% take-
home share and includes brands such as Dunkin’ Donuts, among others.
• Cold brew: Unlike regular coffee, cold brew is never exposed to heat. Over time,
the cold brew process uses water to extract coffees color, flavor and caffeine. The
extraction process is said to be less acidic than the regular drip coffee or espresso.
• Protein-infused coffees are becoming more popular to provide a longer-energy
boost than simple caffeine. Other additives such as antioxidants and probiotics are
small but growing.

Exhibit 161: US RTD coffee $ (bns) Exhibit 162: US RTD coffee vols (mn liters) Exhibit 163: Take home RTD coffee drivers
Total RTD coffee dollars +8% to $5.6bn Take home accounted for 95% of RTD coffee Price/mix was a key driver to sales growth in
volume 2022 (+7%)
$6,000 900 30.0%
Off-trade Value On-trade Value Off-trade Volume On-trade Volume Off-trade Volume
Implied px/mix
Off-trade Value
20.0%
$4,000 600

10.0%

$2,000 300
0.0%

$- 0 -10.0%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 164: US RTD coffee volume share by Exhibit 165: US RTD coffee volume share in Exhibit 166: US RTD coffee volume share
company* (2022) foodservice (2022) (take home + foodservice), 2022
Starbucks lost 8pts of share since 2017 as Both Starbucks and KO have lost share over 0.1% in 2022, -
Danone and new entrants win share the last 5 years 270bps since 2020

Califia
Califia Farms
Farms KO 2%
KO 2% Others
4%
4% Others Others 11%
10% 25%

MNST
MNST
10%
11% KO
Starbucks
62% 7% Starbucks Starbucks
Danone Danone
68% 63%
11% 10%

Source: Euromonitor *Take home volume share Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

62 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 167: Top RTD coffee brands (2022)
the category

Dunkin' Donuts (KO)

4% Other
12%
Stok (Danone)
5%
International Delight
(Danone)
6%
Monster Starbucks
(MNST) (Starbucks)
11% 62%

Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 168: US RTD coffee company take home volume share trends% Exhibit 169: US RTD coffee company take home value share trends%
Over the pandemic (19-22) period, Starbucks and Monster lost share to Over the pandemic period, Starbucks shed 3.7bps of value share, while
Danone and other RTD coffee brands Monster Beverage lost 2.3pts
2019 2020 2021 2022 2019 2020 2021 2022
Starbucks 63.9 64.5 64.3 62.4 Starbucks 63.6 63.1 61.9 59.9
Danone Group 7.5 8.9 10.3 11.0 Monster Bev 15.1 15.5 13.1 12.8
Monster Bev 13.0 13.3 10.7 10.7 Danone Group 4.1 5.1 6.3 7.1
Coca-Cola Co 4.8 4.6 4.2 4.1 Coca-Cola 4.7 4.5 4.1 3.8
Others 10.8 8.7 10.5 11.8 Others 12.5 11.8 14.6 16.4
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 170: US RTD coffee growth by type

Total value +8% in 2022, led by foodservice/on-trade (+17%)
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
RTD Coffee Off-trade 7.1% 13.7% 10.9% -1.9% 7.4% 6.9% 9.1% 6.3% 4.0%
On-trade 16.9% 6.0% 7.5% 6.9% -0.2% 3.1% 10.0% 6.2% 4.4%
Total 7.8% 13.0% 10.6% -1.5% 6.9% 6.6% 9.3% 6.1% 3.9%
Source: Euromonitor
BofA GLOBAL RESEARCH

History of tea and ready to drink (RTD) Teas

The “Camellia sinensis” plant is native to the region of Southeast Asia that is today
Northeast India, Southwest China, and Tibet. Tea is thought to have many restorative
and medicinal properties and played a significant role in Asian cultures for centuries.
Usage of tea quickly spread as explorers and merchants visited Asia for trade.

• Tea was introduced to Portuguese priests and merchants in the 16 th century.

By the early 17 th century, the Dutch East India Company brought the first tea
leaves from China to Amsterdam. Demand for tea quickly spread throughout
Europe.

• The British began consuming tea in the 1660s post the marriage of King
Charles II to a Portuguese princess, who brought tea to the English court. By
the mid-1700s, tea had become the national drink of England.

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Tea history in America- the start of a revolution
Tea was first brought to North America by the Dutch in the 17th Century. The Dutch
colony of New Amsterdam (now known as New York) was purchased by the English and
they passed on many of the tea drinking customs that were common in England.

Tea trade between the colonies and England were centered in the major cities of New
York, Boston and Philadelphia. The British heavily taxed tea and tea smuggling was
prevalent.

In 1767, a tea tax caused dissent and rebellion among the American colonists. American
ports began refusing shipments of duty paid goods, including teas, causing ships to turn
around with their cargo in some cases.

The Tea Act of 1773 which was intended to boost profits for the East India Company by
bypassing local tea merchants and selling tea directly to the colonists was the last and
final straw.

The Boston Tea Party. Members of the political group the Sons of Liberty in Boston,
led by Samuel Adams, plotted to raid an upcoming shipment of tea and prevent it from
being unloaded. On the same evening in December 1773, another group of protesters
decided to dump the tea into Boston Harbor. The disguised protestors, along with the
Sons of Liberty and a large crowd of Bostonians, boarded three British East India
Company ships. Over three hours, the protesters dumped 342 chests of tea into the
Boston Harbor. This event marked the beginning of the American Revolution.

Types of tea: There are thousands of varieties of tea, but all tea is derived from
the camellia sinensis plant. Tea varies by growing region, time of year harvested,
and processing method.

Black tea is the most popular type of tea in the US. Black tea is dried longer and
becomes more oxidized than other tea varieties. It generally has a stronger flavor
and contains more caffeine than other teas.

Oolong Tea — Oolong tea is dried and oxidized for roughly half the time as black
tea. This traditional Chinese tea shares a flavor profile more robust than green tea,
but not as powerful as black tea.

Green Tea — Green tea undergoes minimal oxidation since it is comprised of

leaves that are dried but not permitted to oxidize. Green tea contains the highest
concentration of antioxidants known as polyphenols. It has a slightly grassy flavor
and less caffeine than black teas.

White Tea — White tea is made from the buds and young leaves of the Camellia
sinensis plant. Like green tea, it is minimally oxidized; therefore it retains more
antioxidants. White teas have a slightly sweet flavor and even less caffeine than
green teas.

Herbal teas can come from any number of plants and fruits.

Tea sales and volume

According to Euromonitor:

• Retail (take home) sales of (hot) tea fell 3.1% in volume terms to 36.3mn tonnes.
In value terms, take home sales expanded +4.1%, implying price/mix of +7.2% in
2022.

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• Over the 3-year period, hot tea value grew at a 6.8% CAGR, led by strong gains in
fruit/herbal (+9.1%) and green tea (+7.6%) as consumers tried to enhance their
immune systems to fight off COVID. In value terms, hot tea accounted for 14.3% of
total hot drink sales in 2022, easing 90bps from its recent 2020 peak of 15.4%.

Exhibit 171: Hot tea: take home value, volume and implied price/mix growth %
Price/mix has been the clear driver of value in the last two years
20%

15%

10%

5%

0%

-5%
Take home volume Take home price/mix Take home value
-10%
2018 2019 2020 2021 2022

Source: Euromonitor
BofA GLOBAL RESEARCH

• Hot tea take-home volume dipped at a 1.2% CAGR over the 3-year (pandemic
period), with a strong volume gain in 2020 (+13%) followed by two years of volume
declines. Over the 3-year period, take-home sales were strongest for fruit/herbal
tea (+3.8% CAGR) and green tea (+1.6%). Hot tea accounted for 4.5% of hot drink
volume in 2022 for take home, up 20bps vs. 2017.

• Consumers sought immune support during the pandemic. Tea drinkers look to
the tea category to help ease many ailments or for preventative measures and the
global pandemic drove staying healthy to top of mind. All tea types with an immune
support positioning fared well during the pandemic, but would likely ease as
routines return to more normal levels. Teas that address mental health concerns,
sleep concerns and other functions however continue to gain traction with
consumers. Celestial Seasonings’ Sleepytime tea is a prime example of a functional
tea.

• Foodservice rebounded in 2021 and continued into 2022. In 2022,

foodservice volume climbed 3.5% as consumers continued to return to shops and
restaurants. Over the 3Y pandemic period, foodservice volumes inched up 0.3%,
while take home advanced 1.2%. Hot tea represented 15.7% of foodservice hot
drink volume in 2022, +20bps YoY and compared to 15.6% in 2017.

• Black tea losing share. Over the 2017-2022 period, black tea shed 590bps of
share, largely to fruit/herbal tea (+540bps) and green tea (+70bps). While it has
been consistently losing share to fruit/herbal teas and green teas that have better
health positioning, black tea does hold more caffeine than non-black teas and is
bucking the move to more caffeine, not less.

• Unilever sold most of its global tea business in July 2022. In July 2021
Unilever management announced that it decided to spin off its tea business into a
new division called ekaterra. Then on November 18, 2021, Unilever announced that
it has entered into an agreement to sell its global tea business, ekaterra, to CVC
Capital Partners Fund VIII for €4.5bn on a cash-free, debt-free basis. ekaterra has
34 global tea brands including Lipton, PG Tips, Pukka, T2 and Taza. Completion of
the transaction was completed in July 2022. The business generated sales of

Beverages - Soft Drinks | 23 June 2023 65

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 ~€2.0bn in 2020. Per a Unilever press release, the transaction excluded Unilever’s
Tea business in India, Nepal and Indonesia, as well as Unilever’s interests in the
Pepsi Lipton ready-to-drink Tea joint ventures and associated distribution
businesses.

Exhibit 172: US (hot) tea take-home Exhibit 173: US (hot) tea $ for take home by Exhibit 174: US(hot) tea volume (000
volume by type type (US$mns) tonnes) volume for take home vs.
(Black tea accounts for 44% of take home Hot tea sales +4% in 2022 but +7% over the 3- foodservice
volume but just 30% of $ sales year pandemic period Foodservice volume +0.3% over the 3Y period,
while take home +1.2%
$4,000 45,000
Black Tea Fruit/Herbal Tea Black Tea Fruit/Herbal Tea Take home volume Food service volume
45,000
Green Tea Other Tea Green Tea Other Tea

$3,000
30,000
30,000

$2,000

15,000 15,000
$1,000

- $- -
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor *take home in tonnes Source: Euromonitor *take-home Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

• Loose tea gaining ground. US tea drinks are increasingly turning towards loose
tea, reflecting stronger demand for gourmet teas and the willingness to spend more
time and effort in preparation of their beverage.

Exhibit 175: 2022 hot tea share by company and type in the US (take home)
Ekaterra held a 17.7% share in 2022, over 10pts higher than the #2 ranked company, Bigelow
Associated
British East West Traditional Hain Tata Private
Ekaterra RC Bigelow Foods Tea Medicinals Celestial Stash Tea Reily Foods Consumer Numi Inc ITO EN Label
Tea 17.7 7.1 6.2 5.8 4.7 3.6 1.8 1.8 0.8 0.8 0.2 4.5
Black Tea 34.5 9.3 12.3 1.5 2.1 6.0 2.6 1.1 8.4
Fruit/Herbal Tea 7.8 4.5 2.6 11.8 9.5 4.0 1.0 2.7
Green Tea 23.7 14.3 8.8 8.0 4.3 2.9 1.5 4.2
Source: Euromonitor
BofA GLOBAL RESEARCH

Iced tea. English and American cookbooks suggest that tea has been served cold at
least since the early 19 th century, when cold tea “punches” (with liquor) became popular.

However, ice tea’s popularity is said to have gained traction post the development of
refrigeration. Commercial manufacture of pure ice is said to been available by the
middle of the 19 th century in the US.

Until the early 1990s, the iced tea category was largely a homemade one, with
consumers brewing their own tea at home using tea leaves, tea bags or powdered tea.
In the early 1990s, the ready-to-drink market gained steam, with a number of new ready
to drink (RTD) teas became available.

Iced tea sales remain popular in foodservice sales and the sub-segment’s recovery would
come as overall foodservice returns. Digital ordering and personalization rose during the
pandemic, which may complicate the reopening path for some specialist outlets that rely
on human interaction.

66 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 176: Top US (hot) tea producers (2022) % take-home Exhibit 177: Top US (hot) tea brands (2022) % take home value
value share Yogi (BFY tea) gained 70bps over the 2017-2022 period as Lipton shed
330bps of take home value share
10 9.2
9
8 7.1
7 6.2
Ekaterra 5.8
18% 6
4.7
5
4 3.6
3.3
Bigelow
7% 3
1.8 1.8
Other Assoc British 2
0.8
50% Foods 1
6%
0

East West Tea

6%
Traditional
Medicinals
Private label Hain Celestial 5%
4% 4%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Ready-to-drink tea
Current popular ready-to-drink tea brands include Lipton, Pure Leaf and Brisk
(PEP/Unilever), Snapple (KDP), Arizona (Hornell Brewing Company), Gold Peak (KO), Fuze
(KO) and Peace Tea (Monster). There are hundreds of RTD drinks available in the US.
The largest brand for take home in 2022 was AriZona with a 16.8% share.

RTD tea volume grew by 1.2% in 2022 to 5.8bn liters; with take home volumes
down 1.6% and foodservice +6%. RTD tea $ rose by 8.7% to $15.1bn, with take
home $ +4.6% and foodservice +13.9%. Take home represented 62%/54% of
RTD volume/sales last year. Products that performed well tend to be positioned
as natural, often with “clean” labels, with few additives including sugar.

Digestive health and probiotics. Higher end/healthier products include Unilever’s

Pure Leaf, Snapple’s all-natural Straight Up line, and Kombucha (carbonated tea). In
2016, PEP acquired KeVita, a sparkling pro biotics line of tea. Sales of carbonated tea
began to slow pre-pandemic, with distribution growth easing and a wider variety of
specialty digestive health products and beverages being introduced. More recently the
kombucha category is facing more competition from alternative digestive health
offerings, such as water kefir5. Probiotic seltzers is also an adjacent category.

Stress relief and wellness. RTD tea is another category seeking to address the
growing interest in immune support ingredients and general wellness post pandemic.
Stress relief and relaxation is an important part of wellness and addressing sleep is a
growing area of development for teas and other products (such as cannabis). According
to a 2020 Euromonitor survey 27% of Americans who are trying to reduce their alcohol
intake cite the desire for better sleep as one of their motivations.

• The Pepsi-Lipton Partnership distributes Unilever’s6 RTD tea brands. It holds a

leading 30% take home share. This is followed by KO (14.2% share), AriZona
(14.2% share), and KDP (7.2% share).

5
Water kefir is a probiotic combin ation of sugar, water and kefir grains that can serve as a more accessible probiotic than
brewed kombucha.
6 Unilever will retain this business.

Beverages - Soft Drinks | 23 June 2023 67

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• Top brands for Pepsi-Lipton are Pure Leaf, Brisk, and Lipton; for KO top brands are
Gold Peak, Honest Tea, Peace Tea and Fuze Tea; KDP’s top RTD tea brands is
Snapple.

• On May 25, 2022, KO announced it is dropping Honest Tea from its RTD lineup.
Similar to Zico Coconut Water, the discontinuation is part of a larger KO strategy to
“reflect consumer choice” and an effort to focus on “fewer, bigger brands”, along
with simplifying its product line up. KO has cut ~200 brands in the process.

Exhibit 178: Top RTD tea brands (2022) Exhibit 179: Top non-carbonated RTD teas Exhibit 180: Top carbonated teas and
AriZona is the largest RTD brand with a 17% Arizona Tea is the largest still tea RTD brand Kombucha brands (2022)
share (Share in %) carbonated/kombucha tea with
30
a 39% share (share in %)
45.0 39.4
23

Other Arizona 20 17 30.0

18% (Hornell 22.2
14
Private Brewing) 18.1
11 11
label 17% 9 15.0 11.1 9.2
Pure Leaf 10 8
6% 6
(Unilever)
Milo's (Milo's
14%
Tea) 0.0
7%
Lipton 0
(Unilever)
Snapple 11%
Gold
(KDP)
Peak
8% Brisk
(KO)
(Unilever)
9%
10%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 181: US RTD Tea company take home volume % share trends Exhibit 182: US RTD Tea company take home value % share trends
Over the pandemic period, Unilever gained 80bps of share, while Hornell, KO KO shed 1.7pts of value share, KDP lost 90bps over the 2019-22 period
and KDP shed share
2019 2020 2021 2022 2019 2020 2021 2022
Unilever Group 34.7 35.1 35.7 35.5 Unilever Group 31.8 32.5 33.1 33.1
Hornell Brewing Co 17.1 16.5 16.4 16.8 Hornell Brewing Co 15.4 14.9 14.5 14.5
Coca-Cola 12.4 12.8 12.2 10.5 Coca-Cola 13.2 13.6 13.0 11.5
Keurig Dr Pepper 9.0 8.9 8.1 8.1 Keurig Dr Pepper 10.7 10.5 9.6 9.8
Others 26.8 26.7 27.6 29.1 Others 28.9 28.5 29.8 31.1
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

68 Beverages - Soft Drinks | 23 June 2023

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Exhibit 183: US RTD tea volume share by Exhibit 184: US RTD tea volume share in Exhibit 185: US RTD tea volume share (take
company* (2022) foodservice (2022) home + foodservice), 2022
Unilever enjoyed a 35.5% share in 2022, in line 40bps 6.5% in 2022, -120bps
with 2017 YoY to 18.1% YoY
Private
Label
6% Other
Unilever
Milo's 16%
18%
Tea Unilever
KDP Private 29%
7% Other
8% label 39%
7%
KO
11% Unilever Hornell
Hornell 35% Other Brewing
Brewing 75% 10%
Milo's KO
17% Tea KDP 7%
Private 4% 5%
Label
6%

Source: Euromonitor *Take home volume share Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 186: US RTD Tea growth by type

RTD Tea value +9%, with carbonated tea/kombucha +7% and still RTD tea +9%
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
RTD Tea Off-trade 4.6% 5.0% 4.0% -1.6% 1.1% 0.7% 6.2% 3.9% 3.3%
On-trade 13.9% 4.5% 3.8% 6.0% -0.8% -0.1% 7.9% 5.4% 3.9%
Total 8.7% 4.8% 3.9% 1.2% 0.3% 0.4% 7.5% 4.4% 3.5%
Carbonated RTD Tea and Kombucha Off-trade 5.4% 5.1% 12.2% -2.6% 0.3% 8.8% 7.9% 4.9% 3.5%
On-trade 14.9% 4.2% 13.9% 5.7% -0.9% 9.7% 9.2% 5.1% 4.2%
Total 7.4% 4.9% 12.6% -1.5% 0.1% 8.9% 8.8% 4.8% 3.7%
Still RTD Tea Off-trade 4.5% 5.0% 3.3% -1.6% 1.1% 0.5% 6.1% 3.8% 2.8%
On-trade 13.9% 4.6% 3.5% 6.0% -0.8% -0.2% 7.8% 5.4% 3.7%
Total 8.8% 4.8% 3.4% 1.3% 0.3% 0.2% 7.5% 4.4% 3.2%
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 187: US RTD tea $ (bns) Exhibit 188: US RTD tea vols (mn liters) Exhibit 189: Take home RTD tea drivers
Total sports drink dollars grew 9% to $15.1bn Volumes grew +1.2% in 2022 after a +13% Volumes were soft in the take home channel
increase in 2021 in 2022
$18,000 8,000 8.0%
Off-trade Volume On-trade Volume Off-trade Volume
Off-trade Value On-trade Value
Implied px/mix
Off-trade Value

6,000
$12,000 4.0%

4,000

$6,000 0.0%
2,000

$- 0 -4.0%
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 69

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Other hot beverages
Other hot beverages include powdered flavor drinks (chocolate, malt or non-chocolate
flavored) and are served hot or cold.

• The largest brands in this category for take home are Swiss Miss (CAG) at a 9.7%
value share (Nesquik at a 9.0.% share and Carnation with a 6.1% share) and Ovaltine
(Associated British Foods) with a 5.1% share. Private label represents 9% of
segment.

• Total “other” hot beverage volume fell by 1.3% over the 3-year pandemic period and
remains below pre pandemic levels. Take home volume was +0.7% over the
pandemic period, while foodservice volume dipped at a 3.2% CAGR.

• Take home “other” hot drink $ sales grew at a 6% CAGR to $638mn. This segment
accounted for 2.9% of retail hot drink sales and 4.0% of hot drink volumes in 2022.

• Culture favors foodservice channel. For many Americans, hot chocolate is an

important element of cold weather rituals and for many they visit cafes, restaurants
or ski lodges to indulge in this winter time beverage. Many are willing to pay more
for premium beverages with whipped cream, etc. for an occasional treat.

Exhibit 190: Exhibit 191: US take-home sales drivers Exhibit 192: Take home value ($mns)
foodservice + take-home volume
in 2022 remains Price/mix is the main driver of sales growth CAGRs of +6.4%/+2.9% over the 3-year/5-year
below pre-pandemic (2017-19) levels over the last two years periods
90,000 $25,000
Retail volume Foodservice volume 20% Take home price/mix
Take home volume
$20,000
Take home sales
60,000
10% $15,000

$10,000
30,000 0%
$5,000

- -10% $-
2017 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 193: (2022)

Nestle is the top producer in this small segment with a 15% share

Nestlé
15%

ConAgra
10%
Assoc British
Foods
Other 5%
61%
Private Label
9%

Source: Euromonitor
BofA GLOBAL RESEARCH

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Bottled/tap water
Water consumption can be traced back to the earliest civilizations; however, bottled
water is a more recent innovation, as consumers strive for healthier beverages in
portable form. Some US bottled water brands dated back more than 100 years,
including Mountain Valley, Poland Spring, Deer Park, and Arrowhead, all owned by
Nestle’s Blue Triton Brands NBO. Other brands, such as Aquafina (PEP) and Dasani (KO),
were introduced in the 1990s, and today the bottled water category is still expanding
with newer products like Smartwater (KO), Lifewtr (PEP) and Nestlé Pure Life.

Only China and Nigeria have bigger still bottled water markets than the US.

Private label is big in bottled water. In 2022, private label (PL) held a 39.7% share
overall, with a 45.5% share in the take home channel and a 7.2% share in foodservice.
Private label’s strategy of value pricing has pushed established competitors out of the
market, with Nestle shifting to a premiumization strategy and selling its less premium
US water brands to form Blue Triton in 2021.

Sparkling water remains dynamic. Flavored sparkling water continued to garner high
levels of interest from consumers as Americans moved from CSDs to sparkling bottled
water, many of which have no sweeteners, are low/no calories and are naturally flavored.

Expanded fountain concepts. In institutional and select on-premise setting, KO’s

Dasani Purefill technology is seen as a big part of meeting single use packaging
reduction targets. For take home use, PEP has Soda Stream.

Functional water: Innovation continues in this sub segment with key 2021 launches of
Coca-Cola Smartwater+ (new flavors and functional claims), Evian Mind (cognitive
health), Propel Health (immune support).
Caffeinated water: PEP’s Bubly has innovated with its introduction of caffeinated
water “Bubly Bounce” with 35mg of caffeine per 12-ounce serving (vs. ~95mg of 8oz
coffee). Other caffeinated bottled waters include Hint, Water Joe, Cafeina Caffeinated
Spring Water, Perk 2.0, Phocus and others.

Watch out: Some young (and not so young), ethical-minded consumers are increasingly
opting for tap water (99% of US consumers have access to clean tap water) or drinking
fountains to reduce their environmental footprints. Carrying refillable bottles with them
present a threat to growth within bottled water.

How much water do I need?

Water intake is essential for human life but the amount you need may vary depending on
age, weight and other factors such as temperature or activity. Water represents ~60%
of one’s body weight and needs to be constantly replenished. About 20% of our total
water intake comes not from beverages but from water rich foods like lettuce,
cucumbers, summer squash, celery, berries and melons. Excluding water rich foods, the
National Academy of Medicine recommends:

Exhibit 194: Daily adequate water intake by age

Fever, exercise, alcohol consumption and caffeine intake among other factors may shift water intake needs
Age Ounces Cups
1-3 years 32 4
4-8 years 40 5
9-13 years 56-64 7-8
14-18 years 64-88 8-11
men, 19+ 104 13
women 19+ 72 9
pregnant women 80 10
breastfeeding women 104 13
Source: National Academy of Medicine
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 71

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 Take-home bottled water volume +1.1% in 2022, including +11.8% in
foodservice and -0.6% for take home. Take home value up +12.4%, with take
home +6.2% and foodservice +20.3%. Take home accounts for 85% of US
bottled water volume but just 53% of value.

Exhibit 195: US bottled water by type for home/on-premise Exhibit 196: Bottled water foodservice volume as a % of total volume
consumption (mns of liters)
Total bottled water volume grew by 1.1% in 2022, with strongest gains in Foodservice was approaching a 20% share pre pandemic
functional and carbonated water
60,000 20% 19% 19% 19%
Still bottled water Flavored bottled water
Functional bottled water Carbonated bottled water
15%
16%
14%
40,000
12% 11%

8%
20,000

4%

0%
0
2017 2018 2019 2020 2021 2022
2017 2018 2019 2020 2021 2022
Source: Euromonitor
Source: Euromonitor
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Exhibit 197: Bottled volume and value share by venue (2022%)

Still bottled water commands the highest overall volume share at >86%
Foodservice Take-home Overall
Volume Value Volume Value Volume Value
Bottled Water
Carbonated Bottled Water 4.3% 4.5% 2.4% 5.4% 2.7% 5.0%
Flavored Bottled Water 3.0% 3.0% 7.0% 12.9% 6.4% 8.2%
Functional Bottled Water 1.0% 1.5% 5.1% 13.9% 4.5% 8.1%
Still Bottled Water 91.8% 91.0% 85.5% 67.8% 86.4% 78.7%
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 198: Share of take home volume and value by bottled water type for 2022
Flavor bottled water and functional bottled water skew very high for take home usage
120%
Volume Value
97%
93% 91%
85% 83% 84%
80% 76%

58%
53%
46%

40%

0%
Bottled Water Carbonated Bottled Water Flavoured Bottled Water Functional Bottled Water Still Bottled Water

Source: Euromonitor
BofA GLOBAL RESEARCH

72 Beverages - Soft Drinks | 23 June 2023

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Exhibit 199: Share of take home water volume/value over the 2017-22 period
Take-home volume/value jumped during the height of the pandemic
120%
Value Volume

89% 86%
90% 81% 81% 81% 85%

63%
56% 53%
60%
48% 48% 48%

30%

0%
2017 2018 2019 2020 2021 2022

Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 200: US bottled water take-home Exhibit 201: US bottled water in food- Exhibit 202: US bottled water share overall
volume share by company (2022) service volume share by company (2022) (take-home and foodservice) in 2022
Over the 2017-22 pd, KO shed 1.8pts of share, Blue PL gained 7.2 points of volume share since
PEP gained 1.0pt higher than take-home 2017

Other
14% BlueTriton Other BlueTriton
15% 18% 17%
Other BlueTriton
KO 25%
33%
9%
KO
11%
PEP
9%
Private PEP
Private Private
Label KO Primo 8%
Label Label
46% Primo Primo 20% Water
7% 40%
Water Water 6%
7% PEP
5%
8%
Nestle
2%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 73

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Top bottled water brands by sub-category
Bottled water
Exhibit 203: Top US bottled water brands for the take home channel (2022%)
The bottled water category is very fragmented, with the top brands holding just a 6% share

Aquafina (PEP)
6%
Other
29%
Pure Life (BlueTriton)
6%
Poland Spring
Dasani (KO) (BlueTriton)
5% 3%

Ozarka (BlueTriton)
2%
Deer Park (BlueTriton)
Private label 2%
45%
Ice Mountain
(BlueTritonz)
2%

Source: Euromontior
BofA GLOBAL RESEARCH

Flavored water
While flavored water has been available for several years, National Beverage’s La
Croix, a carbonated flavored water brand, hit a sweet spot a few years ago as consumers
are turning away from sugars/artificial sweeteners in search of low calorie, healthy and
natural alternatives.

• La Croix is sold in several natural flavors (essences or oils derived from the named
fruit.) It held a 16.3% share in 2022, down from its recent high of 24.4% in 2018.

• In early 2018 PEP introduced a seltzer water called “Bubly”. Bubly comes numerous
flavor combinations, contains no artificial flavors, sweeteners or calories. Some of
its products also contain caffeine. Bubly’s share has climbed from 5% in 2018 to
11.0% last year.

• Based in Worcester, MA, privately-held Polar Beverage is the country’s largest

independent soft-drink bottler. Polar has been “making bubbles since 1882” and
sells a variety of flavored seltzers, carbonated soft drink flavors and mixers. It held
an 8.9% share in 2022. In July 2020, KDP and Polar entered into a long-term
franchise agreement that provides national distribution of Polar Seltzer sparkling
seltzer waters, Polar Seltzer’ade and Polar Seltzer Jr brands across all channels
through KDP’s DSD and manufacturing network. Polar has manufactured and
distributed key KDP brands in the Northeast for over 30 years.

• Private label holds a 37.6% share in flavored water, +3.3pts since 2017.

74 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 204: Flavored water take home volume share (2022%)
While La Croix has lost share over the last 5-years, it remains the top flavored water brand with a 16.3%
share

Other La Croix (Nat

20% Bev)
16%
Bubly (PEP)
11%
Polar (Polar)
Private label 9%
37% Schweppes (KDP)
2%
Poland Spring
Perrier (Nestlé) (BlueTriton)
Canada Dry (KDP) 2% 2%
1%

Source: Euromonitor
BofA GLOBAL RESEARCH

Functional water
As consumer tastes shift healthier, functional water has grown in popularity. A
functional beverage is a drink typically intended to convey a health benefit. Some include
ingredients like electrolytes, probiotics, herbs, vitamins, minerals, amino acids, or
additional raw fruit or vegetables.

Over the 2017-2022 period, KO’s Glaceau Smartwater and VitaminWater brands have
lost 7.3pts and 8.3pts of share respectively. PEP’s LifeWtr and Propel brands gained
9.8pts and 1.6pts of share, while its SoBe brand shed 3.0pts of share. The Essentia
brand has garnered 5.3bps over the 5 year period. PEP also introduced Soulboost, a
functional water brand in 2 varieties Lift and Ease.

Exhibit 205: Functional water take-home volume share (2022%)

Other Glacéau Smartwater

Essentia (Essentia (KO)
Water) 9%
26%
9%

LIFEWTR (PEP)
16%

Propel (PEP)
Glacéau VitaminWater 20%
(KO)
20%

Source: Euromonitor
BofA GLOBAL RESEARCH

Carbonated bottled water

Carbonated bottled water is the smallest bottled water segment in the US with a 3%
volume share overall in 2022, including 2% for take home and 5% on-premise. In value
terms, it held a 5.0% dollar share overall, with a 5.4% take home share and a 4.5%
foodservice share.

In 2022, total value of carbonated bottled water reached $2.7bn, rising +11% YoY and at
a 4.7% CAGR over the 5-year period. Total carbonated bottled water volume reached
1,263 mn liters last year, growing at a +2.8% 5Y CAGR, +10bps ahead of the bottled
water category overall.

Beverages - Soft Drinks | 23 June 2023 75

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 Exhibit 206: Carbonated bottled water take-home share (2022%) Exhibit 207: Topo Chico take home share trends
Perrier share has declined by 2.3pts since 2017 -years
18.0
15.5 15.6 15.8

12.3
Topo Chico 12.0
Other (KO) 9.6
40% 16% Perrier
8.3
(Nestlé)
12%
6.0

S Pellegrino
Private label (Nestlé)
15% 11%
Poland Spring
0.0
(BlueTriton)
2017 2018 2019 2020 2021 2022
6%
Source: Euromonitor
Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Still bottled water

Still bottled water is the largest subsegment of bottled water in the US with an 86%
volume share and a 79% value share in 2022. In the food service channel it leads other
water subsegments with a 92% volume share and 91% value share. In take-home,
bottled water vole share was 86% in 2022 with a 68% value share.

Total still bottled water sales totaled $43bn in 2022, +13% YoY and +2.9% over the 5 -
year period. Bottled water volume grew +0.9% and +2.3% for the 2022 and 5 -year
period respectively.

Exhibit 208: Still bottled water volume share (2022%)

Private label share has grown steadily from 41% in 2017 to 50% in 2022

Aquafina (PEP)
Pure Life (BlueTriton)
7%
7%
Dasani (KO)
Other 6%
23%
Poland Spring
(BlueTriton)
3%

Ozarka (BlueTriton)
2%
Private label
50%
Deer Park
(BlueTriton)
2%

Source: Euromonitor
BofA GLOBAL RESEARCH

76 Beverages - Soft Drinks | 23 June 2023

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Bottled water share by brand and type
Exhibit 209: Bottled water share by brand and type (2022 %)
Some brands participate in more than one sub-segment
Carbonated Bottled Functional Bottled
Bottled Water Water Flavored Bottled Water Water Still Bottled Water
Aquafina (PEP) 6.0 0.5 7.0
Pure Life (BlueTriton) 5.9 0.8 6.8
Dasani (KO) 4.9 0.2 5.7
Poland Spring (BlueTriton) 2.8 5.7 1.7 3.0
Deer Park (BlueTriton) 1.9 2.2
Ozarka (BlueTriton) 1.9 2.3
Ice Mountain (BlueTriton) 1.6 1.8
Crystal Geyser (Otsuka Holdings) 1.4 1.6
Glacéau Smartwater (KO) 1.3 26.5
Arrowhead (BlueTriton) 1.2 1.3
La Croix (National Bev) 1.1 16.3
Glacéau VitaminWater (KO) 1.0 19.5
Propel (PEP) 1.0 19.7
Zephyrhills (Nestlé) 1.0 1.2
Bubly (PEP 0.8 11.0
LIFEWTR (PEP) 0.8 15.7
Fiji (Wonderful Co) 0.6 0.7
Polar (Polar Bev) 0.6 8.9
Essentia (Essentia Water) 0.5 9.4
Evian (Danone) 0.4 0.5
Perrier (Nestlé) 0.4 12.5 1.7
Topo Chico (KO) 0.4 15.8
S Pellegrino (Nestlé) 0.3 10.6
Canada Dry (KDP) 0.1 1.2
Fruit2O (Sunny Delight) 0.1 1.0
Schweppes (KDP) 0.1 1.9
SoBe (PEP) - 0.3
Private label 45.5 15.2 37.6 49.7
All other 16.4 40.2 17.2 8.9 16.2
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 210: US bottled water growth by type

Bottled water value +12% in 2022, with strong value growth by each sub-segment
Value Volume Implied px/mix
Data Type 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Bottled Water Off-trade 6.2% 7.0% 6.0% -0.6% 3.4% 3.5% 6.9% 3.6% 2.5%
On-trade 20.3% -0.2% 1.6% 11.8% -4.3% -1.2% 8.5% 4.1% 2.8%
Total 12.4% 3.4% 3.8% 1.1% 2.0% 2.7% 11.3% 1.3% 1.1%
Carbonated Bottled Water Off-trade 5.7% 7.5% 8.0% 0.5% 4.5% 4.8% 5.2% 3.0% 3.2%
On-trade 18.4% -4.3% 1.0% 9.7% -8.3% -2.2% 8.8% 4.0% 3.2%
Total 10.8% 1.8% 4.7% 2.6% 0.8% 2.8% 8.2% 1.1% 1.9%
Flavored Bottled Water Off-trade 8.0% 11.0% 10.1% 0.7% 6.4% 6.9% 7.3% 4.6% 3.2%
On-trade 18.3% 3.5% 3.4% 12.8% 0.3% 1.7% 5.5% 3.2% 1.8%
Total 9.6% 9.6% 8.8% 1.4% 5.9% 6.5% 8.1% 3.7% 2.3%
Functional Bottled Water Off-trade 9.3% 10.0% 9.6% 3.3% 7.1% 7.9% 5.9% 2.8% 1.7%
On-trade 19.2% -2.9% 0.1% 9.8% -6.7% -2.7% 9.4% 3.8% 2.8%
Total 10.1% 8.5% 8.5% 3.5% 6.5% 7.5% 6.5% 2.0% 1.1%
Still Bottled Water Off-trade 5.3% 5.7% 4.6% -1.0% 2.9% 3.0% 6.3% 2.8% 1.6%
On-trade 20.5% -0.1% 1.6% 11.9% -4.3% -1.2% 8.5% 4.2% 2.8%
Total 13.0% 2.4% 2.9% 0.9% 1.6% 2.3% 12.1% 0.8% 0.7%
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 77

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 Exhibit 211: US off-trade (take home) Bottled Water volume/value Exhibit 212: US on-trade (bars, restaurants) Bottled Water
growth volume/value growth
Volume spiked for bottled water during the first year of the pandemic On trade volume continues to rebound as mobility increased
12.0% 80.0%
Off-trade Volume Implied px/mix On-trade Volume Implied px/mix

Off-trade Value On-trade Value

8.0% 40.0%

4.0% 0.0%

0.0% -40.0%

-4.0% -80.0%
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Milk and other non-dairy drinks

More and more Americans are looking to avoid certain allergens such as milk, soy, and
wheat from their diets — whether for health or perceived health reasons. Many fruit
juices are fortified with calcium, as are non-dairy alternatives such as almond and
coconut milk. From lactose intolerance issues to going vegan or dairy-free, there are
numerous options to day for consumers to choose from. Here are 8 dairy free varieties
with puts/takes from the Clevelandclinic.org:

1. Almond milk. Almond milk is rich in vitamin E and is lower in calories than
cow’s milk; however it provides minimal protein and fiber. A cup of
unsweetened almond milk generally contains 30-45 calories per 8oz cup and 2
grams of fat.

2. Cashew milk. Popular with vegans and those with lactose intolerances,
cashew milk has vitamin E and is low calories (25-35 calories for an
unsweetened cup). Similar to almond milk, it is lacks fiber and protein and can’t
be used by those with nut allergies.

3. Coconut milk. If unsweetened it contains no carbs and can offer a thick and
creamy plant-based alternative.
4. Hemp milk. This type includes heart healthy omega-3 fatty acids and lower
calories than whole milk but is not available everywhere. A cup contains ~80
calories, 7 grams of fat and 2 grams of protein.

5. Oat milk. Oat milk generally comes with added calcium, vitamin D, vitamin A
and riboflavin. Typically it is higher in protein (3-5grams/cup) but usually is
higher calories/carbs than other alternatives.

6. Rice milk. A dairy alternative for those with nut, soy or lactose allergies, it has
a sweeter taste. Negatives include its being high in carbs and calories (120-
140 calories per cup) and it being low in protein/fiber.

7. Raw or unpasteurized milk. According to the CDC, unpasteurized milk is

150x more likely to cause foodborne illnesses than pasteurized milk and is 13x
more likely to lead to hospitalization.

8. Soy milk. One of the original nondairy milk alternatives, soy milk is cholesterol
free and low in saturated fats and high in protein. An unsweetened cup
typically contains 80-90 calories.

78 Beverages - Soft Drinks | 23 June 2023

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Opportunities for growth in dairy include the value -added milk business. Value-
added dairy products have been growing steadily in the United States, in contrast to the
traditional fluid milk category, with great-tasting, nutrient-dense fairlife milk products
playing a significant role in that growth.

In January 2020 KO announced that it has acquired the remaining stake in fairlife LLC
from its joint venture partner Select Milk Producers. Coca-Cola now owns 100% of
fairlife, up from its previous 42.5% minority stake. Fairlife ultra-filtered milk was
launched in 2014, with sales surpassed $500mn in retail sales (per Nielsen) in 2020.

Overseas PEP has steadily expanded its dairy drinks interests with the purchase of
Wimm-Bill-Damm (2011, Russia)7 and setting up a JV with the Muller Group, named
Muller Quaker Dairy.

Exhibit 213: Calories per cup by type of milk (8-oz)

Flavored whole milk is higher calorie than unflavored

300

200

100

0
Chocolate milk Chocolate milk Chocolate milk Whole milk 2% unflavored 1% unflavored Fat-free
(whole) (2%) (1%) (unflavored) milk milk unflavored milk

Source: USDA National Nutrient Database for Standard Reference.

BofA GLOBAL RESEARCH

Cow’s milk take home sales totaled $13.8bn in 2022, -0.5% YoY with fresh milk -0.8% to
$13.5bn and shelf stable milk +9% to $337mn.

Goat milk
Goat milk is a small but growing category with take home sales of $66mn in 2022 vs.
$42mn in 2017. In 2022, goat milk sales increased by 9.6%.

Plant-based dairy
Plant based milk sales increased by 10.1% in 2022 to $3.2bn and accounted for 82% of
all plant-based dairy take home sales. Soy-based drinks are falling with take home sales
of $297mn in 2022, -2.1% YoY and compared to $439mn in 2017. Other plant-based
milk drinks are gaining in popularity with take home sales +11.5% in 2022 to $2.9bn up
$1.14bn since 2017.

7
While the company has suspended sales of CDS/snacks due to Russia’s invasion of Ukraine, the company would
continue to sell dairy products including milk, as well as baby food and formula, it has said. In May 2022 the Russian
government approved the purchase of PEP owned Wimm-Bill-Dann Beverages to a local cheesemaker. I

Beverages - Soft Drinks | 23 June 2023 79

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 Exhibit 214: Exhibit 215: Milk alternatives for take home use, US$mns
slipped 0.5% YoY to $13.9bn Milk alternative growth was strong at +10% in 2022 to $3.1bn; led by a 12%
rise in non-soy alternatives
categories in 2022
$18,000 $1,800
Fat-free Fresh Milk Semi Skimmed Fresh Milk
Full Fat Fresh Milk Shelf Stable Milk Soy Drinks Other Plant-based Milk
Goat Milk

$12,000 $1,200

$6,000 $600

$- $-
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Powdered drinks/concentrates
Soda Stream and Kraft Heinz (KHC) are the market leaders in the overall concentrate
category with a 27% and 21% volume share. Key KHC brands include Mio, Kool-Aid, and
Crystal Light. KO’s Dasani brand also has a small liquid concentrate business.

Concentrate volumes inched up +0.5% in 2022 to 18.4mn liters, all in the take
home channel. Concentrate dollars advanced 5.2% to $1.84bn.

Powered concentrates appeared to be consumed by 2 main groups — diet conscious

women and young children. In powdered concentrate, Kraft Heinz is the market leader
with a 46% share. It is followed by Unilever (5%) and PEP (5%). Private label holds a
25% share.

In liquid concentrate, PEP’s Soda Stream holds the top spot with at 27% share,
followed by KHC at 21% volume share.
Low calorie concentrates, such as Crystal Light allow weight conscious women to
consume a flavored drink with minimal calories. Further, multi-serve packs allow these
products to be consumed at home or on the go.

Young children like powder concentrates such as Kool-Aid, Tang and other brightly
colored, sugar-sweetened drinks. These beverages are more economical and offer
convenience that heavier pre-bottled beverages do not. Note however that parents are
generally shifting away from these beverages due to their high calorie/sugar content.
Liquid concentrates such as KHC’s Mio and KO’s Dasani Drops offer variety and
portability as a flavored water enhancer with low calories.

Exhibit 216: US powdered drink/concentrate growth by type

Concentrate volume +5%, with powder concentrates growing slightly faster than liquid concentrate
Value Volume Implied px/mix
2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Concentrates Off-trade 5.2% 3.4% 1.7% 0.5% 4.3% 3.4% 4.7% -0.9% -1.7%
On-trade 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 5.2% 3.4% 1.7% 0.5% 4.3% 3.4% 4.7% -0.9% -1.7%
Liquid Concentrates Off-trade 4.2% 4.5% 3.5% 0.5% 4.3% 3.4% 3.6% 0.1% 0.2%
On-trade 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

80 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 216: US powdered drink/concentrate growth by type
Concentrate volume +5%, with powder concentrates growing slightly faster than liquid concentrate
Value Volume Implied px/mix
2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR 2022 3Y CAGR 5Y CAGR
Total 4.2% 4.5% 3.5% 0.5% 4.3% 3.4% 3.6% 0.1% 0.2%
Powder Concentrates Off-trade 5.6% 3.1% 1.1% -1.5% -0.1% -1.7% 7.1% 3.2% 2.8%
On-trade 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total 5.6% 3.1% 1.1% -1.5% -0.1% -1.7% 7.1% 3.2% 2.8%
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 217: US concentrate take-home Exhibit 218: US off-trade (take home) Exhibit 219: Top concentrate brands (2022)
volume share by company (2022) Concentrate volume/value growth Soda Stream has gained 2.9pts of share since
PEP is the market leader with a 26% share Price/mix rather than volume led sales % in 2017
2022
20.0%
Off-trade Volume
Implied px/mix
Private Other
Off-trade Value
KO Label 24% SodaStream
1% 7% Others (PEP)
10.0% 26% 26%
Nestlé
8% Private Oregon
Kerry label Chai
Group PEP 7% (Kerry
15% (Sodastream) 0.0% Group)
26% Mio
(KHC) 15%
Kool-Aid
(KHC) 15%
KHC 3%
19% Chameleon
-10.0% (Nestlé)
2018 2019 2020 2021 2022 8%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Obesity & sugar

Govt says Americans should limit their added sugars consumption
According to the U.S. Department of Agriculture, U.S. Department of Health and Human
Services report “2015-2020 Dietary Guidelines”, Americans should keep their intake of
added sugars to less than 10% of their total daily calories as part of a healthy diet. The
study noted that i) Americans, aged 6 years and older, consumed about 14% of total
daily calories from added sugars in 2003–2010. ii) The leading sources of added sugars
in the U.S. diet are sugar-sweetened beverages, grain-based desserts like cakes and
cookies, candy, and dairy desserts like ice cream. iii) Reducing the amount of sugary
drinks and sugary foods each day and replacing these with plain water and fruit might be
a good way to reduce added sugar intake.

The Economic Impact of Obesity

According to the CDC, over the past 20 years, there has been a dramatic increase
in obesity in the United States and rates remain high.

More than one-third of U.S. adults (34.9%) and approximately 17% (or 12.7
million) of children and adolescents aged 2—19 years are obese.

According to the CDC, 34.9% of adults (78.6mn people) and ~17% of youth (12.7mn
children aged 2- 19) were obese. Obesity-related conditions include heart disease,
stroke, type 2 diabetes and certain types of cancer (endometrial, breast, and colon),
some of the leading causes of preventable death.

Beverages - Soft Drinks | 23 June 2023 81

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• In 2010, the Congressional Budget Office (CBO) reported that ~20% of the increase
in US health care outlays (from 1987-2007) was caused by obesity.

• Annual health costs related to obesity in the US is ~$200 billion.

• Researchers estimate that if obesity trends continue, obesity related medical costs,
alone, could rise by $43bn to $66bn in the US by 2030.

• Per capita medical spending is $2,700 higher for people with obesity than for
normal weight individuals.

According to CDC data for 2013:

• No state had a prevalence of obesity less than 20%.

• 7 states and the District of Columbia had a prevalence of obesity between 20%
and <25%.

• 23 states had a prevalence of obesity between 25% and <30%.

• 18 states had a prevalence of obesity between 30% and <35%.

• 2 states (Mississippi and West Virginia) had a prevalence of obesity of 35% or

greater.

• The South had the highest prevalence of obesity (30.2%), followed by the
Midwest (30.1%), the Northeast (26.5%), and the West (24.9%).

US Per capita consumption

Per capita consumption by beverage type
According to the Center for Disease control (CDC), sugar-sweetened beverages (SSBs) or
sugary drinks are leading sources of added sugars in the American diet. Frequently
drinking sugar-sweetened beverages is associated with weight gain/obesity, type 2
diabetes, heart disease, kidney diseases, non-alcoholic liver disease, tooth decay and
cavities, and gout.

Exhibit 220: Carbonated soft drinks (liter) Exhibit 221: Bottled water (liter) Exhibit 222: Sports drinks (liter)
Over the 5Y period, LRB per caps fell at a 1% Bottled water per caps rose at a 5Y CAGR of Sports drink per caps rose at a 5Y CAGR of
CAGR in take home and -2.8% in on-premise +2.3%, including +3.1% at home +6.8% to 23 liters
180 30
Off-trade Volume On-trade Volume Off-trade Volume On-trade Volume Off-trade Volume On-trade Volume
160

140
120 20
120

100

80

60 60 10

40

20

0 0 0
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

82 Beverages - Soft Drinks | 23 June 2023

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Exhibit 223: RTD Coffee (liter) Exhibit 224: Juices (liter) Exhibit 225: RTD tea (liter)
RTD coffee per caps rose at a 6% 5Y CAGR to Juice per caps dipped at a 1% 5Y CAGR to 38.6 RTD tea per caps fell during the initial phase of
2.4 liters liters the pandemic but recovered
3 45 24
Off-trade Volume On-trade Volume Off-trade Volume On-trade Volume Off-trade Volume On-trade Volume

18
2 30

12

1 15
6

0 - 0
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 226: US Take home LRB per caps by type (2022) Exhibit 227: US On-premise LRB per caps by type (2022)
Take home per caps was 270 liters (vs. 278 in 2019 or pre pandemic) On-premise per caps was 77 liters in 2022 (vs 85 liters in 2019)

Juice
CSDs 7%
Juice
33% RTD coffee CSDs
11%
1% 55%
RTD tea
Energy 4% RTD tea
3% 9% Energy
0%
Sports Sports
8% 1%
Bottled water
Bottled water 28%
40%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 228: US Per capita LRB volume trends (liters)

On trade per caps remain below pre pandemic levels
400
Off-trade Volume On-trade Volume

290 297 293

300 273 275 278

200

85 86 85 77
100 71
55

0
2017 2018 2019 2020 2021 2022

Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 83

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 Exhibit 229: Take home LRB per caps $ (2022, household) Exhibit 230: On-premise LRB per caps $ (2022, household)
In 2022, households spent $430 on LRBs vs $361 in 2019 In 2022, households spent $264 on LRBs vs. $260 in 2019

RTD
Sports coffee
9% Juice
17% RTD tea
Energy Bottled water
8%
12% 20%
Energy
RTD tea 4%
6%
RTD coffee Sports
4% 1%
CSDs
Juice CSDs 40% Bottled water
15% 33% 29%
Concentrate
1%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 231: US Per capita LRB volume $ trends ($)

On-trade/foodservice per cap $ passed 2019 levels in 2019 as traffic normalized
600
Off-trade Value RSP On-trade Value RSP

430
450 404
379
349 361
340

300 255 258 260 264

226
166
150

0
2017 2018 2019 2020 2021 2022

Source: Euromonitor
BofA GLOBAL RESEARCH

84 Beverages - Soft Drinks | 23 June 2023

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CDC 2019 Youth Risk Behavior Study
The Center for Disease Control (CDC) noted that sugar-sweetened beverages were that
primary source of added sugars in high schoolers diets. Sugared soft drink consumption
in 2019 (15%) has declined significantly since 2009 levels (29%) with declines by both
females and males and across major ethnicity groups.

Exhibit 232: Dietary behaviors of US high school students (2019, %)

Males drank more sugar sweetened CSD and sports drinks than females in 2019
White, Black,
non- non-
Dietary behaviors Total Female Male Hispanic Hispanic Hispanic
Ate fruit or drank 100% fruit juices <1 time/day 41.8 43.0 40.6 42.1 47.8 39.5
Ate vegetables <1 time/day 40.7 40.4 41.1 35.5 54.8 46.8
Did not eat breakfast on all 7 days during the 7 days before the survey 16.7 16.7 16.6 15.3 21.1 16.9
Drank sugar-sweetened soda or pop =1 time/day 15.1 11.7 18.2 15.2 16.9 16.1
Drank a sports drink =1 time/day 10.6 7.1 14.0 9.3 15.6 11.9
Drank <3 glasses/day of plain water 44.6 44.1 45.0 44.2 54.8 44.2
Source: CDC Youth Risk Behavior Study
BofA GLOBAL RESEARCH

Exhibit 233: Drank sugar- (%)

Black, non-Hispanics posted the biggest drop in sugar sweetened CSD consumption (2019 vs 2009)
2009 2011 2013 2015 2017 2019
Total 29.2 27.8 27.0 20.4 18.7 15.1
Female 23.3 24.0 24.1 16.4 15.4 11.7
Male 34.6 31.4 29.9 24.3 22.3 18.2
White, non-Hispanic 29.0 28.8 29.0 19.7 19.6 15.2
Black, non-Hispanic 33.7 28.0 30.2 22.7 21.5 16.9
Hispanic 28.1 27.0 22.6 21.7 17.0 16.1
Source: CDC Youth Risk Behavior Study
BofA GLOBAL RESEARCH

Exhibit 234: Drank a sports drink (%)

Overall sports drink incidence dipped 3.2pts in 2019 vs. 2015
2009 2011 2013 2015 2017 2019
Total -- -- -- 13.8 12.4 10.6
Female -- -- -- 8.8 8.2 7.1
Male -- -- -- 18.7 16.9 14.0
White, non-Hispanic -- -- -- 12.4 10.7 9.3
Black, non-Hispanic -- -- -- 19.7 21.1 15.6
Hispanic -- -- -- 15.7 13.5 11.9
Source: CDC Youth Risk Behavior Study
BofA GLOBAL RESEARCH

Exhibit 235: Drank a<3 glasses/day of plain water (%)

Water incidence is improving overall but remains low
2009 2011 2013 2015 2017 2019
Total -- -- -- 50.5 48.7 44.6
Female -- -- -- 51.9 48.8 44.1
Male -- -- -- 49.0 48.6 45.0
White, non-Hispanic -- -- -- 50.1 48.8 44.2
Black, non-Hispanic -- -- -- 60.9 52.7 54.8
Hispanic -- -- -- 49.7 47.5 44.2
Source: CDC Youth Risk Behavior Study
BofA GLOBAL RESEARCH

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Beverage consumption trends among US high school
students, 2007-20158
During 2007-2015, daily soft drink (i.e. soda or carbonated soft drink) consumption
decreased significantly from 33.8% to 20.5%. Daily milk/juice consumption also
declined from 44.3%/27.2% to 37.4%/21.6% respectively. Beverages contribute
approximately 20% of calories to the diets of children/adolescents and can contain
important nutrients, but also contain added sugars and calories. According to the CDC,
several factors may be contributing to the fall in high sugar content beverage
consumption including:

1. New federal Smart Snacks in school nutrition standards were required at the
beginning of the 2014-2015 school year which eliminated the sale of non-diet
soda/CSDs in high schools. Before federal standards changed, many states/local
school districts limited the sale of soft drinks or other sugar-beverages.

2. Community-based educational campaigns focused on reducing sugar sweetened

beverages (SSB) consumption were implemented as recently as 2012 (e.g. “Rethink
your drink” or “Soda Free Summer” campaigns).

3. The 2015-2020 Dietary Guidelines for Americans emphasize primarily whole fruit vs.
juice given higher fiber content in whole fruit.

Exhibit 236: Beverage consumption trends among US high school students, 2007-2015
Soda consumption has decreased as parents shift kids away from sugar
2007 2009 2011 2013 2015
SODA consumption 33.8% 29.2% 27.8% 27.0% 20.4%
School grade
9th 35.6% 30.5% 29.7% 29.3% 19.4%
10th 33.2% 29.2% 27.3% 25.4% 20.8%
11th 32.8% 28.5% 26.6% 26.9% 20.5%
12th 33.1% 28.3% 27.0% 26.0% 21.0%
Sex
Female 29.0% 23.3% 24.0% 24.1% 16.4%
Male 38.6% 34.6% 31.4% 29.9% 24.3%
Race/ethnicity
White, non-Hispanic 34.0% 29.0% 28.7% 29.0% 19.7%
Black, non-Hispanic 37.6% 33.7% 28.0% 30.2% 22.7%
Hispanic 33.4% 28.1% 27.0% 22.6% 21.7%
School level FRPL eligibility
Low 27.0% 24.3% 24.9% 21.0% 15.6%
Mid 39.8% 31.7% 29.5% 29.4% 26.0%
High 38.3% 37.8% 35.4% 33.2% 24.5%
MILK consumption 43.1% 43.9% 44.4% 40.3% 37.5%
School grade
9th 45.4% 45.9% 46.8% 42.1% 38.6%
10th 44.8% 46.4% 47.1% 42.7% 39.6%
11th 40.3% 41.7% 42.5% 37.5% 35.8%
12th 40.9% 40.9% 40.2% 38.1% 35.2%
Sex
Female 35.0% 34.2% 34.8% 31.7% 28.2%
Male 51.1% 52.8% 53.4% 49.0% 46.2%
Race/ethnicity
White, non-Hispanic 47.8% 49.9% 48.8% 44.5% 41.2%
Black, non-Hispanic 28.1% 26.0% 29.0% 26.2% 25.1%
Hispanic 40.4% 40.4% 40.7% 38.9% 36.2%
School level FRPL eligibility
Low 47.6% 46.3% 45.0% 44.1% 39.2%
Mid 41.5% 41.3% 43.4% 38.8% 34.3%
High 35.6% 37.6% 41.1% 38.7% 34.8%

8 Latest info available as of June 2023.

86 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 236: Beverage consumption trends among US high school students, 2007-2015
Soda consumption has decreased as parents shift kids away from sugar
2007 2009 2011 2013 2015
JUICE consumption 28.6% 28.4% 28.2% 24.6% 21.6%
School grade
9th 29.4% 29.1% 27.7% 25.1% 22.5%
10th 30.1% 29.1% 30.6% 23.9% 21.3%
11th 26.6% 27.4% 27.4% 25.5% 21.9%
12th 27.3% 27.3% 26.9% 23.6% 20.5%
Sex
Female 24.3% 24.3% 23.9% 20.9% 17.7%
Male 32.7% 32.0% 32.2% 28.3% 25.3%
Race/ethnicity
White, non-Hispanic 25.6% 26.9% 26.3% 21.0% 19.0%
Black, non-Hispanic 35.0% 33.3% 33.2% 32.8% 27.6%
Hispanic 31.2% 28.4% 30.0% 28.0% 23.9%
School level FRPL eligibility
Low 28.4% 27.7% 28.2% 22.5% 20.7%
Mid 27.4% 29.0% 26.5% 26.3% 20.1%
High 31.2% 28.4% 29.1% 26.8% 25.3%
Source: CDC, Youth Risk Behavior Surveys
FRPL= free/reduced price lunch eligibility
BofA GLOBAL RESEARCH

Beverage consumption among US adults, 2015-2018

The 2015-2020 Dietary Guidelines for Americans recommend that water, fat-free/low-
fat milk and 100% juice be the primary beverages consumed daily. During the 2015 -18
period, the US Dept of Health and Human Services (HHS) found that water accounted for
more than half of total non-alcoholic beverage consumption amongst adults.

• Men consumed more coffee, sweetened beverages and fruit beverages than
women, and less water and tea.

• Water and sweetened beverage daily consumption decreased with age, while
coffee, tea, milk and diet beverages rose with age.

• Coffee consumption was highest among non-Hispanic whites (17%), followed

by Hispanics (13%), non-Hispanic Asians (9%) and non-Hispanic blacks (7%).

Exhibit 237: Share of stomach among US adults, 20+ by sex, age and race %
Water consumption decreased as one ages, while coffee/tea, milk and diet beverage consumption rose
Non-Hispanic Non-Hispanic Non-Hispanic
Overall Men Women 20-39 yrs 40-59 yrs 60+ yrs white black Asian Hispanic
Water 51.2 48.2 54.0 56.5 49.3 46.9 50.0 51.9 60.7 52.4
Coffee 14.9 16.0 13.9 9.2 16.1 20.5 17.3 7.3 8.9 12.6
Sweetened bevs 10.2 11.8 8.7 13.5 10.4 5.9 9.0 14.5 4.4 14.3
Tea 8.7 7.8 9.6 6.7 9.6 10.3 9.3 7.1 13.6 5.5
Fruit beverages 5.6 6.1 5.2 6.5 5.1 5.2 3.9 13.0 5.3 7.8
Milk 5.5 5.8 5.2 5.0 5.2 6.4 5.7 4.5 5.3 5.3
Diet bevs 3.8 4.2 3.5 2.6 4.4 4.9 4.9 1.8 1.3 2.0
Source: National Center for Health Statistics, National Health and Nutrition Examination Survey, 2015-18, published in September 2020
BofA GLOBAL RESEARCH

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Economic indicators
US unemployment
Since 1948, the US unemployment rate averaged 5.7%, with the lowest rate of
unemployment was 2.5% (1953) and the highest was 14.7% (April 2020) and driven by
pandemic-related closures across the country.

Exhibit 238: US unemployment, 2010-present

The May 2023 unemployment rate was 3.7%
19%
Unempl rate TTM unemployment rate %

15%

11%

7%

3%
Dec-17

Sep-21
Sep-11

Dec-12

Sep-16

Dec-22
Apr-16
Apr-11

Oct-13

Apr-21
Oct-18
Jun-10

Jun-15

Jun-20
Aug-14

Aug-19
May-18
May-13

May-23
Mar-14

Mar-19
Nov-15
Nov-10

Nov-20
Jan-10

Jan-20
Jan-15
Feb-12

Feb-17

Feb-22
Jul-12

Jul-17

Jul-22
Source: US Department of Labor, BofA Global Research
BofA GLOBAL RESEARCH

Consumer sentiment index

The long-term average is 86 and ahead of May 2023’s 57.7 level

Exhibit 239: TTM average US consumer sentiment index

As of May 2023, the preliminary consumer sentiment index was 57.7, depressed by inflationary
pressures. The long-term average is 86.2.
120
TTM Average
110

100

90

80

70

60

50
9/1/1985

9/1/1990

9/1/1995

9/1/2000

9/1/2005

9/1/2010

9/1/2015

9/1/2020
3/1/1983
6/1/1984

3/1/1988
6/1/1989

3/1/1993
6/1/1994

3/1/1998
6/1/1999

3/1/2003
6/1/2004

3/1/2008
6/1/2009

3/1/2013
6/1/2014

3/1/2018
6/1/2019

3/1/2023
12/1/1981

12/1/1986

12/1/1991

12/1/1996

12/1/2001

12/1/2006

12/1/2011

12/1/2016

12/1/2021

Source: Bloomberg, University of MI Consumer Sentiment Index

BofA GLOBAL RESEARCH

88 Beverages - Soft Drinks | 23 June 2023

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US Consumer price index
Exhibit 240: Annual CPI for all items, food/beverages, CSDs, snacks and beverage alcohol
CSD and snacks CPI % was 12.9% and 9.6% in 1Q23
Take home On-premise
All items Food/Bev CSD Snacks Beer Spirits Wine Whiskey Beer Spirits Wine
1992 3.0% -- 1.7% -- 3.7% -- -- -- -- --
1993 3.0% -- 0.9% -- -0.2% 1.2% 1.1% -- -- --
1994 2.6% -- -0.2% -- 0.1% 0.8% -0.5% -- -- --
1995 2.8% -- 3.3% -- 0.3% 1.0% 0.2% -- -- --
1996 3.0% -- 0.3% -- 2.4% 1.2% 4.3% 1.6% -- -- --
1997 2.3% -- -1.3% -- 0.5% 2.2% 4.5% 2.4% -- -- --
1998 1.6% -- -0.7% 1.2% 0.2% 1.3% 1.2% 0.9% -- -- --
1999 2.2% -- 1.1% 2.6% 2.3% 2.3% 1.4% 2.2% 3.0% 2.6% 2.1%
2000 3.4% 2.3% 3.9% 3.7% 3.2% 3.9% 1.5% 2.4% 3.3% 3.6% 3.7%
2001 2.8% 3.1% 1.7% 1.6% 2.5% 3.5% -0.1% 3.0% 2.7% 4.6% 6.0%
2002 1.6% 1.8% 0.1% -0.2% 2.5% 2.0% 0.5% 2.2% 2.9% 3.0% 6.9%
2003 2.3% 2.1% 0.0% 2.6% 2.3% 1.0% 0.5% 2.0% 3.2% 3.5% 1.7%
2004 2.7% 3.4% 1.8% 0.3% 3.6% 1.3% 0.5% 1.8% 3.5% 4.0% 2.8%
2005 3.4% 2.5% 3.1% 2.8% 1.0% 1.2% 1.6% 1.5% 2.5% 3.4% 4.5%
2006 3.2% 2.4% 1.7% 1.5% 1.0% 1.3% 2.3% 2.3% 4.4% 4.1% 3.9%
2007 2.8% 3.9% 4.4% 2.1% 3.4% 0.7% 1.9% 2.2% 3.8% 4.9% 4.7%
2008 3.8% 5.4% 4.9% 8.1% 3.4% 2.2% 3.6% 1.9% 3.9% 4.9% 4.4%
2009 -0.4% 1.9% 4.8% 6.7% 3.7% 2.3% 2.0% 3.7% 2.6% 1.9% 4.1%
2010 1.6% 0.8% 0.4% 1.6% 1.8% -0.2% -1.4% 0.4% 2.6% 1.6% 1.5%
2011 3.2% 3.6% 2.6% 3.2% 2.5% 0.1% -0.8% 0.4% 2.5% 0.1% 1.9%
2012 2.1% 2.5% 1.4% 6.8% 1.8% 0.0% -0.1% 1.2% 1.9% 3.9% 2.9%
2013 1.5% 1.4% -0.9% 1.8% 1.7% 1.1% 1.8% 1.8% 2.4% 2.8% 2.3%
2014 1.6% 2.3% -0.4% 0.5% 1.3% 0.7% -0.2% 1.9% 1.9% 1.8% 1.7%
2015 0.1% 1.8% 0.5% 2.6% 0.6% 0.1% -0.3% 0.3% 2.0% 3.4% 0.3%
2016 1.3% 0.3% 0.9% 0.7% 1.8% 0.4% -0.1% 0.2% 1.7% 3.0% 0.2%
2017 2.1% 0.9% 0.3% -0.2% 1.8% -0.4% -0.3% -0.2% 2.5% 1.7% -0.2%
2018 2.4% 1.4% 1.3% 0.6% 1.4% -0.3% 1.2% -1.8% 1.8% 2.2% 1.8%
2019 1.8% 1.8% 3.6% -0.6% 1.8% 1.5% 1.1% 1.8% 0.8% 0.7% 1.8%
2020 1.2% 3.3% 5.6% 2.9% 3.9% 0.8% 0.2% 0.9% 1.4% 4.3% 0.9%
2021 4.7% 3.8% 3.9% 1.7% 1.3% 2.9% 1.1% 2.0% 3.0% 3.8% 2.4%
2022 8.0% 9.6% 10.6% 12.2% 5.0% 1.5% 2.3% 2.1% 7.4% 5.5% 5.9%
1Q23 5.8% 9.1% 12.9% 9.6% 7.3% 2.9% 2.9% 0.9% 7.0% 4.5% 5.5%
Source: US Bureau of Labor Statistics
BofA GLOBAL RESEARCH

Exhibit 241: YoY CPI % for overall CPI, soft drinks and snacks (qtrly) Exhibit 242:YoY CPI % (monthly basis)
Inflationary pressures have driven staple products higher While price growth appears to be easing, it remains above normal trends
18% 20%
CPI Food/bev
15% CPI CSD Snacks CSD Snacks
15%
12%
10%
9%

6% 5%

3%
0%
0%
-5%
-3%
Sep-19

Sep-21
Sep-18
Dec-18

Dec-19

Sep-20
Dec-20

Dec-21

Sep-22
Dec-22
Jun-18

Jun-19

Jun-20

Jun-21

Jun-22
Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Mar-23
Jan-16
3Q13

1Q15

1Q16

3Q17

1Q19

3Q20

3Q21

1Q23
1Q13

1Q14
3Q14

3Q15

3Q16
1Q17

1Q18
3Q18

3Q19
1Q20

1Q21

1Q22
3Q22

Source: US Bureau of Labor Statistics Source: US Bureau of Labor Statistics

BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

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Regulation
Sugar taxes
Sugar and artificial sweeteners have a negative connotation with consumers, as the
obesity issue took hold. In addition, scientific studies speculating about the long-term
impact of sugar and artificial sweeteners. Diabetes is a growing health concern in many
developed and developing countries around the world, as is obesity. Consumption of
added sugar in sugar-sweetened beverages has been positively correlated with high
calorie intake, and through it, with excess weight and obesity. Proponents of soda taxes
see the implementation of tobacco taxes worldwide as a guideline for their sugary drinks
tax strategy.

According to the Obesity Evidence Hub, >50 countries have implemented taxes
on sugar-sweetened beverages to date.

USA
US Congress has seen proposals to impose an excise tax on sweetened beverages (no
action to date) along with some state legislatures and by some local governments, with
excise taxes generally ranging in the 1c to 2c per ounce of sweetened beverages.

• In 2015, Berkeley CA became the first US jurisdiction to pass such a measure and a
general tax on of 1c/ounce on sweetened drinks.

• Other jurisdictions that have passed taxes includes Albany, Oakland, San Francisco
(CA), Portland (OR), Cleveland (OH), Boulder (CO), Philadelphia (PA) and Seattle (WA),
some of which have been challenged with litigation.

• Cook County (IL), imposed taxes on the distribution of certain sugar-sweetened

beverages. However the sugar tax in Cook Country proved so unpopular that it was
repealed in 2017.

• History shows that sugar levy had only a one-off impact on volumes in France (Jan
2012) and Mexico (Jan 2014), and that in Romania and Denmark it was
relinquished shortly after implementation.

• However, a tax on sugary beverages in Philadelphia, PA in June 2016 had a

dramatic short-term impact on regional consumption as prices rose ~21%. Data
suggests that there was an average reduction of 8.5oz of taxed beverages
purchased per shopping trip after the tax. The study also noted that while adults
reduced their sugar consumption, the same effect was not seen in children. 9

Finland
Finland has a long history of using price policies to influence food consumption. Since
1948, free school meals, paid by tax income, have been offered to all pupils at
elementary schools and university students have benefitted from subsidized meals if
nutritional quality criteria are met. Since 2011, excise duties have been levied on sweets,
chocolate and non-alcoholic beverages (Act 1127/2010).

Mexico
In 2013, the government of Mexico enacted broad based tax reform, including a one
peso per liter tax on the manufacturing of certain sugar-sweetened and other beverages,
which went into effect January 1, 2014.

9Cawley J, Frisvold D, Hill A, and Jones D. The impact of the Philadelphia beverage tax on purchases and consumption by
adults and children. Journal of Health Economics, 2019; 67:102225.

90 Beverages - Soft Drinks | 23 June 2023

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Mexico implemented two taxes: 1) a 1 peso/liter excise tax on any non-alcoholic
beverage with added sugar (powder, concentrates or ready-to-drink), which is paid by
the producer and represented about a 10% increase in price; and, 2) an 8% ad valorem
tax on the purchase price for a list of non-essential energy-dense foods (snacks,
confectionery products, chocolate and other products derived from cacao, puddings,
flans, ice cream, candies, peanut butter), that contain 275 calories per 100 grams or
more.

• The sugar tax led to a price increase of ~11% for soft drinks and a slightly smaller
increase for other sweetened beverages10

• On January 1, 2020, a reform to the Mexican excise tax went into effect that
expanded the definition of energy drink subject to this tax to include products with
any amount of caffeine (previous threshold was 20mg/per 100mg) and “taurine,
glucuronolactone or thiamine and/other substance that products similar simulating
effects.

Portugal
A two-tiered SSB tax was introduced in Portugal in 2017 of €0.8/liter and €0.16/liters
increases in average prices for drinks with sugar contents of <80 g/L and ≥80 g/L. Data
suggest that nearly 100% of the tax was passed through to consumers.

• A 7% reduction in sales of SSBs was reported in the first year, with reformulation
leading to an 11% reduction of total energy intake through consumption of SSBs.11

Saudi Arabia
Saudi Arabia began imposing hefty taxes on tobacco, sugary soft drinks, and energy as
of 2Q17. A 50% tax was levied on soft drinks and a 100% tax was placed on cigarettes
and energy drinks.

Norway
Norway has had a generalized sugar tax measure on refined sugar products since 1922,
introduced to boost state income.

United Kingdom
The UK budget announced on March 16, 2016 included a sugar levy on the soft drinks
industry. The sugar tax is levied on companies and implemented in 2 years later (April
2018), leaving time for soft drink companies to adjust their mix. In reality many products
are already skewed to low or no sugar. The tax is assessed on volumes of sugar in drinks
(two bands: sugar content >5g/100ml and > 8g/100ml). In 2016, Ireland approved a
soda tax to start in April 2018, around the same time that the UK’s was implemented.

• The UK sugar tax led to widespread reformulation of soft drinks to reduce sugar
levels.

• Between 2015 and 2019, the percentage of beverages with sugar content of >5g
per 100ml fell from 49% to 15% 12

10
.Colchero MA, Salgado JC, Unar-Munguía M, Molin a M, Ng S, et al. Changes in prices after an excise tax to sweetened
sugar beverages was implemented in Mexico: Evidence from urban areas. PLoS One, 2015; 10(12):e0144408.
Goiana-da-Silva F, Cruz ESD, Gregório MJ, Mirald o M, Darzi A, et al. The future of the sweetened beverages tax in
11

Portugal. Lancet Public Health, 2018; 3(12):e562.

12
Scarborough P, Adhikari V, Harrington RA, Elhussein A, Briggs A, et al. Impact of th e announcement and implementation
of the UK Soft Drinks Industry Levy on sugar content, price, product size and number of available soft drinks in the UK,
2015-19: A controlled interrupted time series analysis. PLoS Medicine, 2020; 17(2):e1003025.

Beverages - Soft Drinks | 23 June 2023 91

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• Studies suggest that one year post implementation of the tax, the total volume of
soft drinks was largely unchanged despite the amount of sugar fall by 10% (~30g).13

South Africa also implemented a sugar tax as of April 2018 called the Health Promotion
Levy. This was a tax of 0.021 ZAR per gram of sugar, in drinks with over 4g of sugar per
100 mL. Twelve Carbonated drinks increased in price by an average of 1.006 ZAR per
liter after the introduction of the new tax, but the prices of non-carbonated drinks that
were subject to the tax did not increase.

• Per the Obesity Evidence Hub, purchases of carbonated drinks by households fell by
an average of 29% after the tax was introduced. The amount to sugar purchased
fell by 51%.14

Poland recently enacted a tax on drinks with added sugars (ex. fruit juices), specifically
targeting beverages with caffeine and taurine.

Other countries are likely considering such measures.

Types of tax
Excise tax is a tax levied on a particular product at the point of manufacture. An excise
tax can be either i) specific, i.e. based on quantity (volume or sugar content) or ii) ad
valorem, i.e. calculated on a percentage of wholesale or retail price.

Value added tax is a consumption tax placed on a product whenever value is added at
each stage of the supply chain, from production to point of sale.

Tiered excise tax is a tax that applied different rates depending on the sugar content.

Exhibit 243: Countries that have implemented sugar taxes for sweetened beverages
Between 2014 and 2019 there were a flurry of sugar taxes implemented. The pandemic appears to have slowed down passage in recent years
Countries When introduced Type of tax Tax design Tiered?
Norway 1981 (modified yearly) Specific excise Volumetric
Samoa 1984 Specific excise Volumetric
Northern Mariana Islands 1995 Specific excise Volumetric
American Samoa 2001 Specific excise for locally produced beverages; plus import tax Volumetric (specific excise)
French Polynesia 2002 Specific excise for locally produced beverages; plus import tax Sugar content (specific excise) YES
Latvia 2004 Specific excise Volumetric
Republic of the Marshall Islands 2004 Import tax
Nauru 2007 Import tax Ad valorem
Tuvala 2009 Ad valorem excise and import tariff
Finland 2011 Specific excise Volumetric
Hungary 2011 Sales tax Volumetric
Tonga 2013 Specific excise Sugar content YES
Chile 2014 Ad valorem YES
Cook Islands 2014 Specific excise Sugar content
Kiribati 2014 Ad valorem
Mexico 2014 Specific excise Volumetric
St Helena 2014 Specific excise Volumetric
Barbados 2015 Ad valorem
Dominica 2015 Ad valorem
Vanuatu 2015 Specific excise and import tariff Volumetric
Belgium 2016 Specific excise Volumetric
Ecuador 2016 Specific excise and Ad valorem Sugar content (specific excise) YES
Fiji 2016 Specific excise for locally produced beverages; ad valorem for imported Volumetric (specific excise)
Mauritius 2016 Specific excise Sugar content
Bahrain 2017 Ad valorem
Brunei 2017 Specific excise Volumetric
France 2017 Specific excise Volumetric YES

13Pell D, Mytton O, Penney TL, Briggs A, Cummins S, et al. Changes in soft drinks purchased by British households
associated with the UK soft drinks industry levy: controlled interrupted time series analysis. BMJ, 2021; 372:n254.
14Stacey N, Mudara C, Ng SW, van Walbeek C, Hofman K, et al. Sugar-based beverage taxes and beverage prices:
Evidence from South Africa's Health Promotion Levy. Soc Sci Med, 2019; 238:112465.

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 Exhibit 243: Countries that have implemented sugar taxes for sweetened beverages
Between 2014 and 2019 there were a flurry of sugar taxes implemented. The pandemic appears to have slowed down passage in recent years
Countries When introduced Type of tax Tax design Tiered?
India 2017 Increased rate of Goods and Services Tax
Maldives 2017 Import tariff Volumetric
New Caledonia 2017 Excise and import tariff
Portugal 2017 Specific excise Volumetric and sugar content YES
Saudi Arabia 2017 Ad valorem
Sri Lanka 2017 Specific excise Sugar content
Thailand 2017 Ad valorem and specific excise Sugar content (specific excise) YES
United Arab Emirates 2017 Ad valorem
Bermuda 2018 Ad valorem
Estonia 2018 Specific excise Sugar content YES
Republic of Ireland 2018 Specific excise Sugar content YES
Peru 2018 Ad valorem YES
Philippines 2018 Specific excise Volumetric
South Africa 2018 Specific excise Sugar content
United Kingdom 2018 Specific excise Volumetric YES
Malaysia 2019 Specific excise Volumetric
Morocco 2019 Value-added tax Sugar content YES
Oman 2019 Ad valorem
Panama 2019 Ad valorem
Qatar 2019 Ad valorem
Seychelles 2019 Specific excise Volumetric
Poland 2021 Specific excise Volumetric and sugar content YES
Spain 2021 Value-added tax
Nigeria 2022 Specific excise Volumetric
Source: Obesityevidencehub.org.au
BofA GLOBAL RESEARCH

Limits on caffeine content

Legislation has been proposed to limit the amount of caffeine that may be contained in
beverages, including energy drinks. Per Monster, in Canada15, the maximum amount of
caffeine cannot exceed 180 mg per single-serving container or per serving (500 ml) in
the case of a multi-serving container.

The caffeine limit set by Health Canada is 400mg per liter. The drinks are required to
follow food labeling regulations including ingredient, nutrition facts and allergen labeling,
and are required to feature certain label statements, such as: “high source of caffeine”,
“do not mix with alcohol” and “not recommended for children, pregnant/breastfeeding
women, individuals sensitive to caffeine.”
• The Mayo Clinic website states that “up to 400mgs of caffeine/day appears to be
safe for most healthy adults. That’s roughly the amount of caffeine in 4 cups of
coffee, or 10 cans of colas or two energy shot drinks”.

European Food Safety Authority

In May 2015, the European Food Safety Authority (EFSA) published its Scientific Opinion
on the safety of caffeine. The opinion estimates acute and daily intakes that raise no
safety concerns for the general healthy population.

Data suggests that there were large differences among countries regarding kid
contribution sources from caffeine, including chocolate, coffee, cola beverages, tea and
or hot chocolate.

EFSA has established maximum limits to the amounts of caffeine that can be safely
consumed. For adults, for example, the maximum safe daily dose is equivalent to four to
six cups of coffee.

15 Rule finalized in 2012 and took effect in early 2013.

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 Exhibit 244: EU caffeine consumption
While coffee is the predominant source of caffeine for adults, contributing between 40% to 94% of total
intake
Age group Consumption
Very elderly (75 years+) 22-417mg
Elderly (65-75 years) 23-362mg
Adults (18-65 years) 37-319mg
Adolescents (10-18 years) 0.4-1.4mg/kg bw
Children (3-10 years) 0.2-2.0mg/kg bw
Toddlers (12-36 months) 0-2.1mg/kg bw
Source: EFSA.Europa.eu
Note: bw= by weight
BofA GLOBAL RESEARCH

How much caffeine is it safe to consume?

On the basis of the data available, EFSA’s Panel on Dietetic Products, Nutrition and
Allergies (NDA) reached the following conclusions:

Adults
• Single doses of caffeine up to 200mg – about 3mg per kilogram of body weight
(mg/kg bw) from all sources do not raise safety concerns for the general healthy
adult population. The same amount of caffeine does not raise safety concerns when
consumed less than two hours prior to intense physical exercise under normal
environmental conditions. No studies are available in pregnant women or middle
aged/elderly subjects undertaking intense physical exercise.

• Single doses of 100mg (about 1.4mg/kg bw) of caffeine may affect sleep duration
and patterns in some adults, particularly when consumed close to bedtime.

• Intakes up to 400mg per day (about 5.7mg/kg bw per day) consumed throughout the
day do not raise safety concerns for healthy adults in the general population, except
pregnant women. – Source: efsa.europa.eu.

Exhibit 245: Estimated average caffeine levels in the EU

Below is a guideline for caffeine consumption, but caffeine content varies by country
100 90
80 80
75

50
50 40

25
25
10

0
A cup of filter An espresso A standard can of A cup of black tea A standard can of A bar of plain A bar of milk
coffee (200ml) (60ml) (220ml) cola (355ml) chocolate (50g) chocolate (50g)
(250ml)

Source: efsa.europa.eu
BofA GLOBAL RESEARCH

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US progress in reducing sugar
In September 2014, the American Beverage Association, KO, KDP, PEP and the Alliance
for a Healthier Generation announced a commitment to help reduce LRB calories in the
American diet nationally by 20% by 2025. Today nearly 60% of US beverage products
sold contain zero sugar.

Exhibit 246: Annual (and cumulative) change in calories per person

From 2014-2020 average LRB calories/person fell by 10%. The average reduction from 2020-25 to reach its
goal is 2.3% per year.
5%
0.5% 0.4%
0%
-0.1%
-1.3% -0.9% -1.8%
-5% -2.7% -2.7%
-5.4% -5.0%

-10%
-10.4%
-15%

-20% Amt of sugar reduced Cumulative amt of sugar reduced

-20.0%

-25%
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2025 goal

Source: American Beverage Association

BofA GLOBAL RESEARCH

In the US, the American Beverage Association is working with the Alliance for
a Healthier Generation, with a goal of reducing beverage calories consumed per
person nationally by an additional 20% by 2025. KO, PEP and KDP are all
members of the ABA.

The Balance Calories Initiative

to beverages with less sugar, and smaller proportions in stores and restaurants
across the country. As of March 2023, nearly 60% of beverages sold in the US
today contain no sugar.

Together, The Coca-Cola Company, Keurig Dr Pepper and PepsiCo are offering
numerous beverages with low or no sugar, including sparkling, flavored and
bottled waters to zero sugar sports drinks, teas and sodas.

The Coca-Cola Company has numerous beverages that are low-and-no calorie
options, and 66% of their brands globally have less than 100 calories per 12-oz
serving. In 2021, 28% of its volume sold were low- or no-calorie. From 2007-
2021 some 900,000 tons of added sugar was removed from its global portfolio
with reformulations of more than 1000 beverages.

Keurig Dr Pepper has 158 products that are 40 calories or less, and in 2020,
sales of smaller size options grew by 50% over the prior year

PepsiCo has over 75 beverages with zero sugar and offers more options like
7.5oz mini cans for consumers who want a little less. In 2021, PEP expanded its
no sugar portfolio beyond colas. No-sugar Gatorade was expanded from 18
markets in 2020 to 21 markets in 2021 and no-sugar Rockstar went from 9
markets (2020) to 12 markets in 2021, nearly doubling sales volume. Pepsi Zero

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 Sugar (also known as Pepsi Black or Pepsi MAX overseas) was available in 118 in
2021 vs. just 28 in 2015.

World Health Organization advocating for sugar taxes on drinks

In September 2016, the WHO released a report in which it urges countries to apply a
20% sugar tax on all sugary drinks, with hopes of decreasing their consumption by 20%.

• According to the WHO, more than 1 in 3 (39%) adults worldwide aged 18 years and
older were overweight (2014). Worldwide prevalence of obesity more than doubled
between 1980 and 2014, with 11% of men and 15% of women (more than half a
billion adults) being classified as obese.

• An estimated 42mn children aged under 5 years were overweight or obese in 2015,
an increase of about 11mn during the past 15 years. Almost half (48%) of these
children lived in Asia and 25% in Africa.

KO Taking more action to reduce sugar footprint

Past business actions by the Coca-Cola Company include 1) focused on zeros (including
global rollout of Coca-Cola Zero Sugar), 2) reformulated to reduce sugar 3) drove pack
changes to small packs (lower calories per package, affordable), 4) downsized select
single serve packs (i.e. from 12-oz to 10-oz) and 5) accelerated portfolio expansion of
low/no sugar added drinks.
As noted at the February 2017 CAGNY conference, KO’s view on sugar has evolved and
KO now supports the WHO added sugar guidelines of 10% limit of total calorie intake. It
is committed to evolving recipes (500+ now in pipeline, 2x previous number) to reduce
sugar, drive small packs (7.5oz mini cans), downsize select single serve packs and
accelerate portfolio expansion of low/no-added sugar drinks.

On average consumers drink eight 8-oz drinks per day

• Globally the Coke system counts for less than ½ of one of those 8 drinks, thereby
leaving plenty of runway for growth for the Coke system overall

• Reducing added sugar: From 2017-2022, KO has taken out 900,000+ tons of
added sugar through the reformulation of >1000 beverage products; KO has
reduced sugar by at least 30% in some of its leading brands around the world
including Coca-Cola, Fanta, Sprite and Fuze Tea.

• Coca-Cola Zero Sugar and Diet Coke (or Coke Light) are available in >100
markets, with more countries planned

• As of 2022, 68% (66% in 2021) of KO’s products have <100 calories per 12-oz
serving

• 246 low or no-sugar products were launched in 2022.

• 29% of its 2022 (+1pt vs 2021) volume was low or no sugar

• Pack size control. Today, about 44% (2022, +2pts YoY) of KO’s sparkling brands
come in packages of 250 mL (8.5 oz.) or less. KO would likely expand availability of
these package sizes across markets.

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PEP
Over the years, the company has moved to reduce the bad stuff and acquire/build the
healthier stuff. It continues to be a work in progress.

Performance with Purpose 2025 goals: <100 calories from added sugars per
12-oz serving in at least 2/3 of its global beverage portfolio; 7mn acres to be
covered by its Sustainable Farming Initiative, provide access to >3bn servings of
nutritious foods/beverages for underserved communities and consumers, 15%
improvement in water-use efficiency, >12.5mn women & girls to benefit from
$100mn in investments, and >20% reduction in absolute GHG emissions by 2030.

• Reduce sugar/fat. In 2009, PEP set a goal to reduce the average amount of added
sugars per serving in key countries by 25% by 2020, compared to a 2006 baseline.
PEP expanded the number of markets in which its zero and lower sugar beverages
are available. In 2020, Pepsi Zero Sugar (also known as Pepsi Black or Pepsi MAX)
was expanded into 118 markets, +28 since 2015. In addition, Gatorade Zero
continued to grow to over $1bn in retail sales in 2020. PEP reformulated 7UP,
Mountain Dew and Mirinda recipes with 30-50% less added sugars in 22 new
markets in 2020 and are entering new markets with 7UP free.

• In 2020 PEP reformulated the Pepsi brand for the first time in Western Europe;
globally PEP replaced full-sugar Pepsi with lower-sugar formulations in 34 markets
since 2017.

• Innovation across product categories to meet added sugars reduction goals include
Bubly sparkling water in the US and PEP flavored soda mixes for SodaStream in
France, Germany and Australia. In tea, PEP continues to lower sugar with Pure Leaf
Unsweetened in the US and an expansion of Lipton Zero into Europe. Other low
sugar brands include LIFEWTR and KeVita.

• M&A: PEP’s 2020 purchase of Pioneer Foods added 13 new beverage brands,
adding to progress of its sugar reduction goals.

• At the end of 2020, 48% of PEP’s beverage sales volume in its top 26 global
markets, was in line with its goal of providing 100 Calories or fewer from added
sugars per 12 ounce serving. This is a 1point improvement YoY. 64% of its foods
portfolio volume does not exceed 1.3mg of sodium per calorie and 71% of its foods
portfolio volumes does not exceed 1.1g of saturated fat per 100 calories.

• Expanding the SodaStream Professional platform into additional markets through

2022

• M&A and JVs in healthier products. PEP acquired the Naked range of 100%
juice products Stacy’s snacks, ONE (US coconut water), Lebedyansky (Russian 100%
juice) Wimm-Bill-Damm (Russian dairy), Sandora (100% juice Ukraine), V Water (UK
fortified water), Amacoca Agua de Coco de Amazonia Ltda (Brazil coconut water),
Soda Stream (carbonated water) Kevita (probiotic beverage).

• Joint Ventures. In 2012, it announced a JV, Muller Quaker Dairy in the US to focus
on products for the breakfast segment. Other JVs include Sabra (US hummus), Tata
Global Beverages (JV to produce healthier, non-carbonated drinks in India), Unilever
(ready-to-drink tea for global market) and Ting Hisn JV (beverages China).

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KDP development pipeline focused on H&W

KDP’s health & wellbeing goals include: i) to ensure 60% of KDP products provide
positive hydration by 2025 and ii) reduce beverage calories by 20% by 2025 as
part of its “Balance Calories Initiative”.

KDP defines a positive hydration product as one that provides a serving of fruits or
vegetables that is below 40 calories/serving with a functional attribute (e.g., hydration
with water; antioxidants to help fight cellular damage from free radicals; immune
support with vitamins A, C, E and zinc; healthy digestive system support with dietary
fiber and relaxation with L-theanine) or at least 10% Daily Value of a nutrient to
encourage (protein, fiber, vitamin A, vitamin C, calcium, iron, vitamin D or potassium .

• Examples of existing positive hydration products include non-caloric coffees and

teas, 100% fruit juice and sauces with no sugar added, low-calorie energy and soft
drinks and sparkling, still and functional waters.

• In 2020, 54% of KDP’s product portfolio provided positive hydration. Goal: 60% by
2025.

• In recent years KDP’s Dr Pepper Zero Sugar, Bai Boost (a drink with 10 calories that
contains as much caffeine as a cup of coffee, made with plant-based energy from
tea) and its Mott's Mighty products include no-sugar-added applesauce containing a
good source of fiber and juice drinks fortified with vitamins A, C & E, formulated to
contain 50% less sugar than 100% apple juice. Other better-for-you offerings
include Limitless Relax, a sparkling water to support relaxation, and Limitless
Refresh, a lightly caffeinated beverage with caffeine sourced from green coffee
beans.

• Balanced calorie initiative: KDP seeks to reduce beverage calories consumed by US

consumed by 20% by 2025 under the beverage industry’s Balanced Calories
Initiative.

• Its Allied (partner) brands complement KDP’s portfolio and includes many H&W
brands such as Evian, Vita Coco, Polar Beverages, A Shoc energy drinks, Peet’s RTD
coffees, and Runa energy drinks, among others

CCEP
Coca-Cola Europacific Partners (CCEP) has been working with The Coca-Cola Company
over the last several years to offer a broader variety of drinks, including those with low
and no calories. This has been accomplished by reformulation of its recipes to reduce
sugar content across brands along with expanding its portfolio to include other types of
drinks such as juices, RTD coffees and teas.

The company supports the current recommendation by several leading health

authorities, including the World Health Organization (WHO) that people should
limit their intake of sugar to no more than 10% of their total calorie consumption.

As of its 2022 integrated report, CCEP remained committed to its goal that 50% of its
European sales came from low and no calorie drinks by 2025. In 2022, it reached 48.8%
(+48.6% in 2021). CCEP is a long time member of the Union of European Soft Drinks
Association (UNESDA) and supports the industry’s pledge to reduced average added
sugars in soft drinks by another 10% by 2025 vs. 2019 levels.

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CCEP is committed to make it easier for consumers to cut back on sugar with
straightforward product information and smaller pack sizes. In 2022, ~5% of its drinks
were sold in 250ml or smaller (Europe 4%, API 7%). This is a one point increase YoY.

Packaging collection rate: 71.8% of CCEPS’s packaging it put on the market

was collected for recycling in 2022.

rPET target: 48.5% of its plastic volume that is in rPET, with a 50% target by 2023 in
Europe and 2025 in API. CCEP we achieved our 50% rPET target in Europe 4 years early
and have set an ambition to use 50% recycled plastic in API by 2025. It also has a target
to stop using oil-based virgin plastic in our bottles by 2030.

Refillable or reusable: In 2022, 15% of its packaging units in Europe were

returnable/refillable. In Europe refillable PET bottles represented ~12% of the PET
bottles CCEP put on the market, and ~84% of our glass bottles were refillable.

~9% of CCEP’s 2022 volumes in 2022 were via dispensed solutions (Europe ~8%; API
~11%). A New compact Freesytle machine is being tested in 5 markets (Belgium,
France, GB, the Netherlands and Spain). These smart dispensers offer some 40 beverage
choices.

Water replenishment target: replenish 100% of water it uses in its beverages: As of

2022, 105.5% water replenished as a % of its total sales volume

It also is committed to make sure it doesn’t advertise to children under 12 years.

Between 2015 and 2021, CCEP reduced its EU sugar content by 17.9%. Since 2019, it
has targeted an additional 10% reduction, reaching 5.6% of its goal (2021) slipping to
5.2% (2022).

In Australia, sugar reduction reached 16.8% in 2022 (14.9% in 2021, 11.2% in 2020). In
Australia CCEP is committed to reducing average sugar per 100ml by 25% by 2025
(versus 2015)

In Indonesia, sugar reduction was 30.6% in 2022 (20.9% in 2021, 17.2% in 2019).
CCEP is committed to reducing average sugar per 100ml by 35% by 2025 (versus 2015);
and

In New Zealand, sugar reduction since 2015 reached 15.9% in 2022 (13.4% in 202,
9.3% in 2019)16. CCEP has pledged to reduce sugar levels by 20% by 2025 (vs. 2015
levels) in New Zealand.

CCEP has 21 organic products in Europe (0.1% of sales volume). Some 1.9% of CCEP’s
2022 sales include Fairtrade certified or Rainforest certified ingredients.

Energy drinks have come under scrutiny

While the category is still one of the fastest growing in the world, some observers and
health groups have suggested a linkage of some teen deaths linked to energy drinks.
This caused many nations to investigate the beverage. In Mexico, the sale of the energy
drinks combined with alcohol was outlawed in 2011, while in 2012 a law passed making
it unlawful for anyone under the age of 18 to purchase the drink. Similarly, studies done
in Canada following the death of three male teenagers led to the country capping
caffeine content at 180 mg per 8-ounce serving in early 2013. The late 2012 death of a
14-year-old girl in the US, who suffered a heart attack after drinking two energy drinks,
caused some Congressmen to call on the FDA to examine potential health risks. Such

16Total CCEP sales. Does not include coffee, alcohol, beer or freestyle. Low-calorie beverages ≤ 20kcal/100ml. Zero
calorie beverages

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concerns are echoed across the globe with governments from the United Kingdom to
India all taking a closer look at the drink’s impact on health.

While the efficacy of these laws is still in question, there is little doubt that
high sugar and high-caffeine drinks are within the crosshairs of officials. But
consumer demand of energy drinks still remains high. And carbonates, while declining,
still represent the backbone of the soft drinks. Moving forward, manufacturers of these
beverages must continue to address their market strategy and formulations. While
energy drinks have flourished as the “bad boys” of the soft drink industry, regulations
would require a change in image if manufacturers want to maintain growth. Red Bull’s
dissociation from alcoholic drinks, despite historic success with the pairing, has been an
initiative for years now. Monster and Rockstar have incorporated new low calorie or
natural ingredient formulations. And Starbucks introduced a natural energy drink using
green coffee bean extract. Carbonates are continuing to experiment with different
blends of sweeteners and offering 100 calorie serving sizes. But if these drinks are to
weather this wave of governmental inquiry, changes must continue.

All these trends: 1) increased interest in local flavors and customs for emerging nations;
2) increased emphasis on functionality and identity for developed nations; and 3)
increased scrutiny as to the health and wellness of beverages on behalf of consumers
and governments, underscore the perils of navigating a fragmented market. As such,
manufacturers must pay even closer attention to the regions and customs of the nations
where their product is sold. This in turn would lead to an even more fragmented market
moving forward, although global parents would still dominate based on the ability to
offer many sub-brands.

Eco-responsibility
Sustainability and environmental impact concerns
Increasingly consumers are concerned about environmental sustainability or impact of
the products they buy. The ethnical nature of growing coffee, tea and cocoa in many
third world countries have gained attention and forced companies to prove their
practices and become more eco-friendly (including packaging), ethnical (including the
working /living conditions of people in these areas) or address the environmental impact
(recycling).

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New nutrition facts labels
The Nutrition Facts label on packaged foods was updated in 2016 to reflect updated
scientific information, including information about the link between diet and chronic
diseases, such as obesity and heart disease.

Per the FDA website, “The updated label makes it easier for consumers to make better
informed food choices. The updated label appears on the majority of food packages.
Manufacturers with $10 million or more in annual sales were required to update their
labels by January 1, 2020; manufacturers with less than $10 million in annual food sales
were required to update their labels by January 1, 2021. Manufacturers of most single-
ingredient sugars, such as honey and maple syrup, and certain cranberry products have
until July 1, 2021 to make the changes.”

Exhibit 247: Side by side comparison of required nutrition facts label in the US
New: added sugars line which may lead consumers to rethink their beverage choices.

Source: FDA.gov
BofA GLOBAL RESEARCH

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US package mix by type
Beverage companies are under pressure by investors, consumers and governments to
find more sustainable packaging for on-the-go and take-home consumption. However,
PET/rigid plastic remains the most popular packaging type, but one that is controversial
due to the lack of demand/opportunities for recycling. Many PET bottles unfortunately
are found in landfills and/or bodies of water.

Includes on/off trade

Exhibit 248: US LRB package by package type (2022) Exhibit 249: US packaging type by beverage sub-segment (2022)
Rigid plastic/PET is the most popular package type PET is most popular in sports drinks, bottled water, teas and juices; metal
cans are most popular in energy and carbonated drinks.

Rigid plastic (PET) Metal cans/bottles

Glass Bottles Flexible Packaging
Metal Liquid Cartons Paper-based Containers
cans/bottles
33% 90%

60%
Glass Bottles
3%
Rigid plastic Flexible 30%
(PET) Packaging
60% 3%
Liquid 0%
Cartons
Paper-based 1%
Containers
0%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 250: US Beverage packing growth by type over the 1-year and 5-year period
Over the 5-year period, PET gained 120bps of share from metal cans/bottles (-90bps), flexible packaging (-
40bps), and liquid cartons (-20bps). Glass bottles gained 20bps of share over the 5Y period
12.0%
YoY % 5Yr CAGR
9.5%

8.0%

4.4% 4.2%
4.0%
2.6%
1.6%
0.8%

0.0%
-0.3% -0.1%
-0.7% -0.5%
-1.4%
-2.3%
-4.0%
Glass Bottles Rigid Plastic (PET) Metal Cans/Bottles Paper-based Liquid Cartons Flexible Packaging
Containers

Source: Euromonitor
BofA GLOBAL RESEARCH

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The global liquid refreshment beverage (LRB) category is ~754.2bn liters in size (take
home + on-premise) and has enjoyed a five-year volume growth CAGR of +2.0%. Bottled
water, energy drinks and sports drinks are among the fastest growing. In 2022, total LRB
volumes expanded at a 3.9% rate. Bottled water overtook CSDs to become the largest
category in 2007.

In value terms, the total LRB category grew 5.1% in value over the 5-year period. In
2022, value growth was strong, +15.2% YoY to reach value of $968.1bn.

Exhibit 251: Global take home volume by type (2022) Exhibit 252: Global foodservice volume by type (2021)
between water & CSDs shrink when one shifts to foodservice
volume

Concentrates
Carbonates RTD Coffee
0%
29% 0%
Concentrates Carbonates
1% Juice RTD Tea
41%
7% 5%
Juice Energy Drinks
9% RTD Coffee 1%
1% Sports Drinks
0%
Bottled Water RTD Tea
50% 6% Asian
Bottled Water
Energy Drinks Speciality
46%
Sports Drinks 2% Drinks
2% 0%
Asian Speciality
Drinks
0%

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

On vs. off-trade volume

Exhibit 253: On vs. off trade volume (bns of liters), 2022 Exhibit 254: Share of on- vs. off-trade volume by region (2022)
Foodservice volume globally is 16%, with Australia, Eastern Europe and Asia
Pacific underweight the global average
800
Off-trade Volume On-trade Volume
700 Off-trade Volume On-trade Volume

600 100% 7%
12% 9% 16% 17% 16%
90% 20% 19%
500 80%
70%
400 60%
50%
300
40%
200 30%
20%
100 10%
0%
-
Asia Pac Australasia E Europe LatAm Mid East, No W Europe
Africa America

Source: Euromonitor
BofA GLOBAL RESEARCH Source: Euromonitor
BofA GLOBAL RESEARCH

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On vs. off-trade value
Exhibit 255: On vs. off trade value (US$bns), 2022 Exhibit 256: Share of on- vs. off-trade value by region (2022)
Western Europe gets nearly half of its retail beverage dollars from on-trade
beverage sales vs. 35% in North America and 32% globally
$900
Off-trade Value On-trade Value Off-trade Value On-trade Value
$800 100%
90% 20% 22% 25%
$700 33% 29% 35% 32%
80%
48%
$600 70%
60%
$500
50%
$400 40%
30%
$300
20%
$200 10%
0%
$100
$-
Asia Pac Australasia E Europe LatAm Mid East, No W Europe
Africa America

Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

% of regional take home volume by beverage segment

Exhibit 257: Take home volume as a % of total regional volume (2022)
CSDs has the largest share of throat with 56% in Latin American vs. the global average of 29%

Mid East,
World Asia Pac Australasia E Europe Lat America Africa No America W Europe
LRBs 100% 100% 100% 100% 100% 100% 100% 100%
Bottled Water 50% 51% 21% 51% 30% 69% 40% 53%
Carbonated Bottled Water 5% 1% 5% 20% 6% 1% 1% 14%
Flavored Bottled Water 2% 0% 3% 4% 3% 0% 3% 3%
Functional Bottled Water 1% 1% 0% 1% 0% 0% 2% 0%
Still Bottled Water 42% 48% 12% 26% 21% 68% 34% 36%
Carbonates (CSDs) 29% 18% 41% 30% 56% 24% 33% 28%
Regular Carbonates 24% 17% 24% 27% 51% 22% 24% 18%
Reduced Sugar Carbonates 5% 2% 17% 3% 5% 2% 9% 10%
Cola Carbonates 15% 9% 23% 16% 33% 11% 15% 17%
Non-Cola Carbonates 14% 10% 19% 14% 22% 13% 18% 11%
Concentrates 0% 0% 2% 0% 1% 1% 0% 1%
Juice 9% 9% 18% 12% 10% 6% 12% 11%
100% Juice 3% 1% 12% 3% 1% 1% 6% 5%
Juice Drinks (up to 24% Juice) 5% 6% 2% 4% 5% 3% 5% 3%
Nectars (25-99% Juice) 2% 2% 3% 4% 3% 1% 1% 2%
Coconut and Other Plant Waters 0% 0% 0% 0% 0% 0% 0% 0%
RTD Coffee 1% 2% 5% 0% 0% 0% 1% 0%
RTD Tea 6% 13% 3% 2% 1% 0% 4% 4%
Carbonated RTD Tea and Kombucha 0% 0% 1% 0% 0% 0% 0% 0%
Still RTD Tea 6% 13% 1% 2% 1% 0% 4% 4%
Energy Drinks 2% 3% 6% 4% 1% 1% 3% 3%
Regular Energy Drinks 2% 3% 5% 4% 1% 1% 2% 2%
Reduced Sugar Energy Drinks 0% 0% 1% 0% 0% 0% 1% 0%
Sports Drinks 2% 2% 4% 0% 2% 0% 7% 1%
Regular Sports Drinks 2% 2% 3% 0% 2% 0% 6% 1%
Reduced Sugar Sports Drinks 0% 0% 0% 0% 0% 1% 0%
Asian Specialty Drinks 0% 1% 0% 0%
Source: Euromonitor
BofA GLOBAL RESEARCH

104 Beverages - Soft Drinks | 23 June 2023

CR
% of global take home volume by region
Exhibit 258: % of global take home volume by region and segment (2022)
Asia Pacific is by far the largest region for LRBs at a 30% volume share, but under skews in carbonates, concentrates, and juice
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 100% 30% 1% 6% 14% 18% 17% 15%
Bottled Water 100% 31% 0% 7% 8% 25% 13% 16%
Carbonated Bottled Water 100% 7% 1% 27% 17% 2% 4% 42%
Flavored Bottled Water 100% 7% 1% 13% 25% 4% 26% 24%
Functional Bottled Water 100% 45% 0% 6% 2% 1% 39% 6%
Still Bottled Water 100% 34% 0% 4% 7% 29% 13% 13%
Carbonates (CSDs) 100% 19% 1% 7% 26% 15% 19% 14%
Regular Carbonates 100% 20% 1% 7% 29% 16% 16% 11%
Reduced Sugar Carbonates 100% 11% 2% 4% 14% 7% 31% 31%
Cola Carbonates 100% 17% 1% 7% 30% 13% 16% 17%
Non-Cola Carbonates 100% 21% 1% 7% 22% 16% 22% 11%
Concentrates 100% 11% 3% 6% 16% 32% 1% 31%
Juice 100% 28% 1% 8% 14% 11% 21% 16%
100% Juice 100% 13% 3% 8% 5% 8% 35% 28%
Juice Drinks (up to 24% Juice) 100% 39% 0% 6% 16% 11% 18% 10%
Nectars (25-99% Juice) 100% 24% 1% 13% 22% 14% 9% 17%
Coconut and Other Plant Waters 100% 17% 2% 1% 34% 1% 35% 10%
RTD Coffee 100% 76% 4% 1% 0% 0% 14% 5%
RTD Tea 100% 72% 0% 3% 2% 1% 12% 10%
Carbonated RTD Tea and Kombucha 100% 4% 16% 0% 7% 0% 29% 44%
Still RTD Tea 100% 73% 0% 3% 2% 1% 12% 10%
Energy Drinks 100% 36% 2% 11% 8% 6% 22% 16%
Regular Energy Drinks 100% 40% 2% 11% 8% 7% 16% 16%
Reduced Sugar Energy Drinks 100% 5% 3% 5% 4% 2% 62% 20%
Sports Drinks 100% 30% 1% 1% 10% 1% 51% 6%
Regular Sports Drinks 100% 33% 1% 1% 11% 1% 48% 6%
Reduced Sugar Sports Drinks 100% 8% 1% 0% 2% 86% 3%
Asian Specialty Drinks 100% 98% 1% 1%
Source: Euromonitor
BofA GLOBAL RESEARCH

Year-over-year take home volume growth by region

Exhibit 259: Year-over-year take home volume growth by region (2022)
Take home volume growth was strongest in Asia Pacific (+5.5%) and weakest in Eastern Europe (-

World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 2.8% 5.5% 1.6% -3.1% 4.7% 4.3% -0.8% 0.6%
Bottled Water 3.3% 6.0% 3.4% -3.2% 3.9% 5.1% -0.6% 1.1%
Carbonated Bottled Water -0.9% 4.6% 2.3% -4.3% 3.2% 3.5% 0.5% -1.6%
Flavored Bottled Water 3.2% 9.1% 3.4% -1.6% 2.8% 15.2% 0.6% 5.9%
Functional Bottled Water 2.3% 1.0% 5.2% 2.5% 3.1% 2.2% 3.3% 5.8%
Still Bottled Water 3.8% 6.2% 3.9% -2.8% 4.3% 5.1% -1.0% 1.7%
Carbonates (CSDs) 2.3% 9.6% 0.5% -4.1% 4.1% 2.5% -2.6% -0.4%
Regular Carbonates 2.2% 7.8% -0.9% -4.7% 4.1% 2.6% -2.5% -1.4%
Reduced Sugar Carbonates 2.8% 29.6% 2.5% 1.1% 3.9% 1.0% -3.0% 1.5%
Cola Carbonates 2.2% 8.3% -0.6% -3.2% 4.6% 2.4% -2.7% -0.5%
Non-Cola Carbonates 2.3% 10.8% 1.8% -5.1% 3.3% 2.6% -2.5% -0.2%
Concentrates 0.9% 1.8% -3.4% 0.3% -0.2% 5.4% 0.5% -2.6%
Juice 0.5% 1.2% 0.7% -5.5% 8.0% 1.5% -1.3% -1.8%
100% Juice -0.9% 0.3% 0.7% -6.9% 8.0% 2.4% -0.8% -2.0%
Juice Drinks (up to 24% Juice) 1.4% 1.2% 0.2% -1.8% 7.6% 1.8% -2.1% 0.5%
Nectars (25-99% Juice) 0.4% 1.8% 1.0% -8.3% 9.0% 0.2% 0.5% -4.1%
Coconut and Other Plant Waters 1.5% 6.6% 1.3% 7.3% 5.5% 0.0% -3.9% -0.6%
RTD Coffee -1.0% -1.7% 2.6% 10.8% 3.4% 7.4% -1.8% 8.1%
RTD Tea 1.5% 1.7% 3.7% -3.8% 7.7% 4.1% -0.8% 2.8%
Carbonated RTD Tea and Kombucha 2.0% 8.0% 6.9% 0.0% 4.0% 0.0% -2.0% 2.2%
Still RTD Tea 1.5% 1.7% 0.5% -3.8% 7.9% 4.1% -0.8% 2.8%
Energy Drinks 9.3% 9.7% 4.9% 15.3% 18.8% 9.0% 4.7% 7.5%
Regular Energy Drinks 9.0% 9.8% 3.5% 14.5% 18.4% 8.6% 2.6% 6.3%
Reduced Sugar Energy Drinks 11.3% 6.7% 9.5% 27.1% 26.8% 20.5% 8.7% 14.2%

Beverages - Soft Drinks | 23 June 2023 105

CR
 Exhibit 259: Year-over-year take home volume growth by region (2022)
Take home volume growth was strongest in Asia Pacific (+5.5%) and weakest in Eastern Europe (-

World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
Sports Drinks 6.3% 7.7% 2.7% 4.3% 10.5% 7.3% 5.0% 4.1%
Regular Sports Drinks 7.1% 7.6% 1.9% 4.0% 10.5% 7.3% 6.6% 3.6%
Reduced Sugar Sports Drinks -1.0% 9.1% 9.4% 11.8% 10.0% -2.6% 15.1%
Asian Specialty Drinks 1.1% 1.2% 1.4% -2.1%
Source: Euromonitor
BofA GLOBAL RESEARCH

Take home volume growth by region over the 5-Yr period

Exhibit 260: Take home volume growth by region (5-year CAGRs)
The Middle East and Africa grew at 4.5% annually, +200bps above the global average
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
5-year growth Africa
LRBs 2.5% 3.2% 1.3% 1.8% 1.4% 4.5% 1.8% 0.9%
Bottled Water 3.7% 4.9% -0.4% 2.3% 1.2% 6.0% 3.4% 0.6%
Carbonated Bottled Water 0.2% 4.2% 5.1% 1.4% 3.1% 3.8% 4.1% -2.5%
Flavored Bottled Water 2.7% 2.8% 2.1% -0.3% -1.2% 10.2% 7.0% 3.9%
Functional Bottled Water 2.6% -2.0% -12.8% 9.0% 1.4% 19.3% 7.8% 8.3%
Still Bottled Water 4.2% 5.2% -2.2% 3.4% 1.1% 6.0% 2.9% 1.6%
Carbonates (CSDs) 1.5% 4.6% 1.0% 0.9% 1.1% 1.8% -0.7% 1.6%
Regular Carbonates 1.0% 3.4% -0.1% 0.2% 1.0% 1.6% -1.2% -0.3%
Reduced Sugar Carbonates 4.4% 23.2% 2.6% 8.5% 1.6% 3.8% 0.7% 5.5%
Cola Carbonates 1.7% 3.9% -0.6% 2.4% 1.6% 2.2% -1.2% 2.4%
Non-Cola Carbonates 1.3% 5.3% 3.1% -0.7% 0.4% 1.4% -0.3% 0.5%
Concentrates 0.7% 1.8% -1.9% 0.5% -3.2% 2.8% 3.0% 0.7%
Juice -0.4% -1.2% 0.4% -1.2% 2.4% 0.3% -0.1% -1.6%
100% Juice 0.0% -1.6% 0.8% 1.5% 5.4% 0.5% 0.3% -1.1%
Juice Drinks (up to 24% Juice) -0.3% -1.5% 0.0% 1.2% 3.0% 0.5% -0.5% -1.2%
Nectars (25-99% Juice) -1.3% 0.4% -0.7% -5.6% 0.4% -0.2% 0.0% -3.5%
Coconut and Other Plant Waters 1.9% 1.8% -1.5% 25.4% 4.7% 0.0% -0.6% 3.4%
RTD Coffee 1.5% 0.0% 5.7% 10.0% -1.3% 12.6% 6.9% 9.7%
RTD Tea -0.2% -1.0% 10.1% 0.2% 0.1% 1.4% 1.2% 3.4%
Carbonated RTD Tea and Kombucha 8.5% 1.9% 29.9% 30.6% -7.8% 9.3% 3.0%
Still RTD Tea -0.3% -1.0% 0.1% 0.2% -0.4% 1.4% 1.1% 3.5%
Energy Drinks 8.6% 7.8% 9.7% 17.2% 16.0% 1.3% 6.8% 8.7%
Regular Energy Drinks 7.6% 7.7% 7.6% 16.7% 15.8% 0.9% 3.1% 7.4%
Reduced Sugar Energy Drinks 16.8% 15.0% 20.3% 25.7% 19.7% 17.4% 16.0% 17.1%
Sports Drinks 4.8% 1.3% 1.9% 4.6% 6.9% 1.8% 7.2% 2.9%
Regular Sports Drinks 4.2% 1.6% 0.8% 4.4% 7.2% 1.8% 5.9% 2.6%
Reduced Sugar Sports Drinks 11.9% -8.3% 13.2% 11.6% -6.8% 16.5% 9.5%
Asian Specialty Drinks -1.4% -1.4% 3.0% 0.4%
Source: Euromonitor
BofA GLOBAL RESEARCH

106 Beverages - Soft Drinks | 23 June 2023

CR
% of regional take home value by beverage segment
Exhibit 261: % of regional take home value by beverage segment (2022)
Bottled water has the highest value share in the Mid East and Africa (46%), the lowest in Australasia (12%)
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 100% 100% 100% 100% 100% 100% 100% 100%
Bottled Water 27% 28% 12% 31% 19% 46% 20% 25%
Carbonated Bottled Water 3% 1% 4% 12% 4% 1% 1% 7%
Flavored Bottled Water 2% 1% 2% 3% 3% 1% 3% 3%
Functional Bottled Water 1% 2% 1% 1% 0% 0% 3% 1%
Still Bottled Water 21% 25% 5% 14% 11% 44% 14% 14%
Carbonates (CSDs) 31% 18% 34% 31% 53% 32% 32% 33%
Regular Carbonates 25% 16% 20% 28% 48% 29% 24% 20%
Reduced Sugar Carbonates 6% 2% 14% 3% 5% 3% 9% 13%
Cola Carbonates 16% 8% 20% 17% 33% 15% 14% 21%
Non-Cola Carbonates 15% 10% 14% 14% 19% 17% 18% 12%
Concentrates 2% 1% 4% 2% 6% 3% 1% 3%
Juice 15% 13% 15% 18% 14% 12% 16% 19%
100% Juice 6% 4% 11% 6% 3% 4% 9% 11%
Juice Drinks (up to 24% Juice) 6% 7% 1% 5% 6% 5% 5% 4%
Nectars (25-99% Juice) 3% 3% 2% 6% 5% 4% 2% 3%
Coconut and Other Plant Waters 0% 0% 1% 0% 1% 0% 1% 0%
RTD Coffee 3% 7% 7% 1% 0% 0% 3% 2%
RTD Tea 8% 18% 6% 4% 2% 1% 6% 5%
Carbonated RTD Tea and Kombucha 0% 0% 4% 0% 0% 0% 1% 0%
Still RTD Tea 8% 18% 1% 4% 1% 1% 5% 4%
Energy Drinks 9% 8% 14% 13% 4% 5% 12% 11%
Regular Energy Drinks 7% 8% 12% 12% 4% 5% 8% 8%
Reduced Sugar Energy Drinks 2% 0% 3% 1% 0% 0% 4% 2%
Sports Drinks 4% 3% 6% 0% 3% 0% 8% 2%
Regular Sports Drinks 3% 3% 6% 0% 3% 0% 7% 2%
Reduced Sugar Sports Drinks 0% 0% 1% 0% 0% 1% 0%
Asian Specialty Drinks 0% 1% 0% 0%
Source: Euromonitor
BofA GLOBAL RESEARCH

% of global take home value by region

Exhibit 262: % of global take-home value by region (2022%)
The Asia Pacific region accounts for nearly 2/3rds of global RTD Coffee and RTD value
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 100% 28% 1% 5% 13% 15% 24% 14%
Bottled Water 100% 29% 1% 6% 9% 25% 18% 13%
Carbonated Bottled Water 100% 10% 2% 22% 19% 5% 10% 33%
Flavored Bottled Water 100% 9% 2% 8% 21% 6% 31% 23%
Functional Bottled Water 100% 34% 1% 5% 3% 1% 48% 8%
Still Bottled Water 100% 33% 0% 4% 7% 31% 16% 9%
Carbonates (CSDs) 100% 17% 2% 5% 22% 15% 24% 15%
Regular Carbonates 100% 18% 1% 6% 25% 17% 22% 11%
Reduced Sugar Carbonates 100% 12% 3% 3% 10% 7% 34% 30%
Cola Carbonates 100% 14% 2% 6% 27% 14% 20% 17%
Non-Cola Carbonates 100% 19% 1% 5% 17% 16% 29% 12%
Concentrates 100% 14% 2% 5% 30% 16% 13% 19%
Juice 100% 25% 1% 6% 12% 12% 25% 18%
100% Juice 100% 17% 3% 6% 6% 9% 35% 26%
Juice Drinks (up to 24% Juice) 100% 36% 0% 5% 14% 13% 22% 11%
Nectars (25-99% Juice) 100% 23% 1% 10% 21% 18% 11% 15%
Coconut and Other Plant Waters 100% 13% 2% 1% 34% 2% 36% 12%
RTD Coffee 100% 63% 3% 1% 0% 0% 24% 8%
RTD Tea 100% 66% 1% 2% 3% 1% 18% 8%
Carbonated RTD Tea and Kombucha 100% 2% 19% 0% 18% 0% 42% 19%
Still RTD Tea 100% 69% 0% 3% 2% 2% 17% 8%
Energy Drinks 100% 27% 2% 8% 6% 8% 32% 16%
Regular Energy Drinks 100% 31% 2% 9% 7% 10% 25% 16%
Reduced Sugar Energy Drinks 100% 5% 2% 4% 3% 1% 65% 19%
Sports Drinks 100% 25% 2% 1% 10% 1% 53% 7%

Beverages - Soft Drinks | 23 June 2023 107

CR
 Exhibit 262: % of global take-home value by region (2022%)
The Asia Pacific region accounts for nearly 2/3rds of global RTD Coffee and RTD value
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
Regular Sports Drinks 100% 27% 2% 1% 11% 1% 49% 8%
Reduced Sugar Sports Drinks 100% 7% 2% 0% 2% 86% 3%
Asian Specialty Drinks 100% 95% 1% 3%
Source: Euromonitor
BofA GLOBAL RESEARCH

Year-over-year take home value growth by region

Exhibit 263: % growth in take home value by region (2022%)
LRB $ grew 12% globally in 2022, led by gains in energy, sports, and bottled water.
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 11.6% 7.7% 7.7% 14.8% 17.3% 25.5% 6.8% 9.2%
Bottled Water 14.6% 7.3% 8.5% 11.6% 18.3% 36.2% 6.3% 8.7%
Carbonated Bottled Water 11.6% 10.9% 7.9% 10.3% 26.1% 18.1% 6.0% 6.4%
Flavored Bottled Water 14.9% 9.1% 9.5% 14.0% 18.2% 52.5% 8.0% 18.0%
Functional Bottled Water 7.4% 2.0% 12.2% 21.4% 8.1% 8.7% 9.2% 12.8%
Still Bottled Water 15.5% 7.5% 7.8% 11.5% 15.7% 36.5% 5.4% 7.7%
Carbonates (CSDs) 11.3% 12.9% 5.2% 14.5% 15.9% 18.0% 4.5% 8.2%
Regular Carbonates 11.3% 11.1% 3.8% 14.3% 15.0% 18.0% 4.5% 8.0%
Reduced Sugar Carbonates 11.2% 26.5% 7.4% 16.4% 26.4% 18.2% 4.2% 8.4%
Cola Carbonates 11.9% 12.8% 3.7% 14.6% 16.1% 19.1% 4.8% 8.5%
Non-Cola Carbonates 10.7% 13.1% 7.4% 14.4% 15.5% 17.0% 4.2% 7.6%
Concentrates 9.8% 3.5% 9.3% 14.1% 13.9% 16.4% 5.3% 5.5%
Juice 8.3% 4.4% 1.6% 10.5% 17.8% 15.7% 6.3% 5.8%
100% Juice 7.0% 6.0% -0.1% 9.7% 22.2% 12.8% 5.6% 5.1%
Juice Drinks (up to 24% Juice) 7.6% 2.9% 5.0% 12.8% 15.0% 16.4% 5.9% 7.5%
Nectars (25-99% Juice) 11.3% 5.9% 7.4% 9.4% 19.1% 18.0% 8.8% 6.1%
Coconut and Other Plant Waters 13.6% 11.1% 3.0% 17.1% 16.5% 5.4% 16.3% 4.9%
RTD Coffee 5.3% 2.4% 13.2% 27.9% 12.0% 13.1% 7.2% 19.6%
RTD Tea 7.9% 6.8% 11.9% 13.4% 19.0% 28.2% 5.0% 15.0%
Carbonated RTD Tea and Kombucha 11.5% 21.8% 13.6% 11.1% 21.1% 0.0% 5.8% 13.0%
Still RTD Tea 7.8% 6.8% 7.6% 13.4% 18.4% 28.2% 4.9% 15.2%
Energy Drinks 15.4% 10.5% 8.5% 31.9% 30.8% 17.4% 12.3% 17.6%
Regular Energy Drinks 14.7% 10.7% 6.8% 31.1% 29.2% 17.3% 10.2% 16.9%
Reduced Sugar Energy Drinks 18.4% 5.9% 16.4% 42.4% 47.7% 21.5% 16.5% 20.6%
Sports Drinks 13.3% 10.6% 26.2% 9.1% 22.8% 16.9% 12.6% 12.0%
Regular Sports Drinks 14.1% 10.6% 27.3% 9.0% 22.8% 16.9% 14.1% 11.4%
Reduced Sugar Sports Drinks 7.4% 11.3% 16.8% 15.9% 21.9% 6.0% 25.5%
Asian Specialty Drinks 2.6% 2.4% 6.7% 5.1%
Source: Euromonitor
BofA GLOBAL RESEARCH

Take home value growth by region over the 5-Yr period

Exhibit 264: Take home value growth by region (5-year CAGR)
Energy drink value grew at a 7% CAGR, fueled by double-digit value gains in Latin America and North America
5-year growth World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 6.4% 3.8% 3.9% 8.5% 9.3% 13.8% 5.2% 4.9%
Bottled Water 8.9% 6.5% -0.5% 8.6% 10.8% 19.9% 6.0% 3.5%
Carbonated Bottled Water 6.7% 9.1% 7.0% 7.5% 18.0% 10.7% 7.4% 0.8%
Flavored Bottled Water 8.7% 0.9% 3.5% 6.6% 9.4% 26.8% 10.5% 7.7%
Functional Bottled Water 5.5% -0.3% -10.9% 18.0% 5.9% 12.9% 9.5% 11.2%
Still Bottled Water 9.6% 7.2% -2.9% 9.4% 9.1% 20.1% 4.5% 3.7%
Carbonates (CSDs) 6.4% 7.2% 1.8% 7.9% 8.4% 10.1% 3.3% 5.1%
Regular Carbonates 5.9% 5.8% 0.7% 7.0% 7.9% 9.8% 2.9% 3.0%
Reduced Sugar Carbonates 9.0% 20.3% 3.6% 16.8% 14.4% 13.5% 4.5% 8.8%
Cola Carbonates 6.8% 6.9% -0.1% 9.7% 9.1% 10.7% 3.0% 5.4%
Non-Cola Carbonates 6.0% 7.4% 4.9% 5.9% 7.2% 9.6% 3.6% 4.5%
Concentrates 5.1% 0.8% 5.9% 5.6% 7.6% 11.6% 1.7% 2.8%
Juice 3.7% 0.6% 1.7% 4.2% 9.2% 10.4% 3.0% 2.2%
100% Juice 3.9% 1.0% 2.4% 7.3% 14.5% 9.1% 3.5% 2.9%

108 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 264: Take home value growth by region (5-year CAGR)
Energy drink value grew at a 7% CAGR, fueled by double-digit value gains in Latin America and North America
5-year growth World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
Juice Drinks (up to 24% Juice) 2.8% -0.3% 0.6% 6.5% 7.7% 10.6% 2.4% 1.3%
Nectars (25-99% Juice) 4.4% 2.6% 1.6% -0.3% 8.1% 11.7% 2.6% 1.1%
Coconut and Other Plant Waters 6.0% 3.4% -6.4% 29.1% 11.7% 9.2% 3.3% 5.5%
RTD Coffee 3.1% -0.5% 9.7% 21.2% 2.6% 27.5% 10.9% 13.5%
RTD Tea 2.5% 0.8% 16.0% 6.1% 8.1% 15.5% 4.4% 9.3%
Carbonated RTD Tea and Kombucha 18.0% 21.4% 27.4% 38.0% 45.2% -13.5% 12.9% 10.5%
Still RTD Tea 2.1% 0.8% 0.6% 6.1% 3.7% 15.6% 3.7% 9.2%
Energy Drinks 10.0% 9.0% 9.7% 20.4% 16.8% 4.4% 8.6% 12.3%
Regular Energy Drinks 8.6% 8.9% 7.9% 19.9% 16.2% 4.1% 5.0% 10.7%
Reduced Sugar Energy Drinks 18.6% 12.6% 19.9% 28.1% 24.1% 24.6% 17.8% 20.8%
Sports Drinks 7.4% 2.0% 5.4% 6.0% 11.9% 7.3% 10.3% 5.0%
Regular Sports Drinks 6.7% 2.4% 4.5% 5.9% 12.3% 7.3% 8.8% 4.7%
Reduced Sugar Sports Drinks 15.4% -8.1% 14.8% 11.2% -1.2% 20.8% 13.2%
Asian Specialty Drinks -0.8% -0.9% 5.8% 3.1%
Source: Euromonitor
BofA GLOBAL RESEARCH

Implied price/mix growth in 2022

Exhibit 265: Implied price/mix growth for take home (2022)
Overall price/mix was +8.8%, 110bps ahead of North America and 20bps ahead of Europe. Price/mix growth in Eastern Europe, Latin America
and the Middle East/Africa period expanded at double digit rates.
World Asia Pac Australasia E Europe Lat America Mid East, No America W Europe
Africa
LRBs 8.8% 2.1% 6.2% 17.9% 12.6% 21.1% 7.7% 8.6%
Bottled Water 11.3% 1.3% 5.1% 14.8% 14.4% 31.0% 6.9% 7.6%
Carbonated Bottled Water 12.5% 6.3% 5.6% 14.6% 22.9% 14.6% 5.5% 8.0%
Flavored Bottled Water 11.7% 0.0% 6.1% 15.6% 15.3% 37.4% 7.4% 12.0%
Functional Bottled Water 5.1% 1.0% 7.0% 18.8% 5.0% 6.4% 5.9% 7.0%
Still Bottled Water 11.7% 1.3% 3.9% 14.2% 11.5% 31.3% 6.4% 6.0%
Carbonates (CSDs) 9.1% 3.3% 4.8% 18.6% 11.8% 15.5% 7.1% 8.5%
Regular Carbonates 9.2% 3.3% 4.7% 18.9% 10.9% 15.4% 7.0% 9.4%
Reduced Sugar Carbonates 8.5% -3.1% 4.9% 15.4% 22.5% 17.1% 7.3% 6.9%
Cola Carbonates 9.7% 4.5% 4.3% 17.8% 11.6% 16.7% 7.6% 8.9%
Non-Cola Carbonates 8.3% 2.2% 5.6% 19.6% 12.2% 14.4% 6.7% 7.9%
Concentrates 8.9% 1.7% 12.8% 13.8% 14.1% 11.0% 4.9% 8.1%
Juice 7.7% 3.1% 0.8% 16.0% 9.8% 14.2% 7.6% 7.5%
100% Juice 7.8% 5.7% -0.8% 16.6% 14.2% 10.4% 6.4% 7.1%
Juice Drinks (up to 24% Juice) 6.3% 1.7% 4.8% 14.6% 7.4% 14.5% 7.9% 7.0%
Nectars (25-99% Juice) 10.9% 4.1% 6.4% 17.7% 10.1% 17.7% 8.3% 10.3%
Coconut and Other Plant Waters 12.2% 4.4% 1.8% 9.8% 11.1% 5.4% 20.1% 5.5%
RTD Coffee 6.3% 4.1% 10.7% 17.1% 8.6% 5.7% 9.1% 11.5%
RTD Tea 6.4% 5.0% 8.2% 17.2% 11.3% 24.1% 5.9% 12.2%
Carbonated RTD Tea and Kombucha 9.5% 13.8% 6.7% 11.1% 17.2% 0.0% 7.8% 10.8%
Still RTD Tea 6.2% 5.0% 7.1% 17.2% 10.5% 24.2% 5.7% 12.4%
Energy Drinks 6.1% 0.8% 3.6% 16.6% 11.9% 8.4% 7.6% 10.2%
Regular Energy Drinks 5.8% 0.9% 3.2% 16.5% 10.8% 8.7% 7.6% 10.6%
Reduced Sugar Energy Drinks 7.0% -0.8% 6.8% 15.3% 20.9% 1.0% 7.8% 6.4%
Sports Drinks 7.0% 2.9% 23.4% 4.8% 12.2% 9.6% 7.6% 7.9%
Regular Sports Drinks 6.9% 3.0% 25.4% 5.0% 12.2% 9.6% 7.4% 7.8%
Reduced Sugar Sports Drinks 8.4% 2.2% 7.4% 4.1% 11.9% 0.0% 8.6% 10.4%
Asian Specialty Drinks 1.4% 1.2% 5.3% 7.1%
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 109

CR
% of global segment volume by region (2022)
*all channel volume
Exhibit 266: All soft drinks/ LRBs Exhibit 267: Bottled water Exhibit 268: Carbonates (CSDs)
Over the last 5 years, the Middle East & Africa Over the last 5 years, Asia Pacific and the ME, Over the last 5 years, NoAm lost 220bps of
has won 190ps of share largely from North Africa region have gained 120bps and 290bps share to Asia Pac (+190bps)
America and Western Europe of vol share, largely from W Europe & LatAm

E Europe E E Europe
6% Europe 6% Asia Pac
6% W 18%
Europe
Lat Am Lat Asia Pac
Asia Pac 14%
14% Am No 30% Australasia
29%
8% America 1%
Mid
W 14%
East,
Europe Africa
15% W Lat Am
Mid 15%
Europe Mid 25%
No East, 16% East,
America Africa No
Africa
17% 19% America
26%
21%

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 269: Concentrates Exhibit 270: Juice Exhibit 271: RTD tea
Over the last 5 years, concentrate share gains Over the last 5 years, Latin Am won 170bps of Asia Pacific clearly likes RTD teas although it
of +290bps in ME, Africa came from Lat Am (- share from Asia Pac (-1pt) and W Eur (-1pt) has shed 260bps over the last 5 yrs, largely to
310bps) W Europe (+150bps) and No Am (+80bps)
E No America
Europe 1%
Asia E Europe W
6% Mid 8%
Pac No Europe
Lat Am 11% East, Asia Pac America 10%
15% Australasia Africa 26% 16%
3% 12%
E
Lat Am Australasia Euro
W
16% 1%
Mid Europe Asia Pac Lat Am
No
East, 33% 68% 2%
W America
Africa
Europe 21%
31% Mid
16% East,
Afric

Source: Euromonitor, Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 272: RTD coffee Exhibit 273: Energy drinks Exhibit 274: Sports drinks
RTD coffee is most popular in Asia Pacific; Over the last five years, energy drink share in E Over the last 5 years, the No Amer region has
however it has lost 580bps of share largely to Europe +310bps and LatAm +2pts, gaining shr captured 560bps of share from Asia Pacific
No Am (+320bps), W Eur (+170bps) & at the expense of the ME, Africa (-210bps), (-560bps)
Australasia (+70bps) Asia Pac (-170bps), No Am (-160bps)
W Mid
Europe East,
Australasia 6% Africa
4% W Mid
1%
Europe Lat Am East,
No
5% 8% Africa Lat Am
America 7% 10% Asia Pac
E Asia Pac
14% 30%
E Europe 35%
Europe 10%
1%
W
Europe Australasia No E
No 2%
Asia Pac 17% America Europe
Americ
76% 51% 1%
a Australasia
21% 1%

Source: Euromonitor Source: Euromonitor

Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

110 Beverages - Soft Drinks | 23 June 2023

CR
Global LRBs 5-year trends (both on/off-premise)
Exhibit 275: 5-year trends for global value, volume and price/mix % (both on and off-premise)
Value growth accelerated in 2022 vs. 2021, led by price/mxi
Value % Volume % Implied price/mix
Category Geography 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
LRBs World 4.8% 4.6% -9.1% 11.9% 15.2% 3.4% 2.9% -4.9% 4.9% 3.9% 1.4% 1.7% -4.2% 7.0% 11.3%
Asia Pacific 5.1% 4.8% -8.2% 5.1% 9.0% 5.1% 5.0% -7.3% 4.3% 6.0% 0.1% -0.2% -0.9% 0.7% 3.0%
Australasia 3.4% 3.2% -2.0% 1.9% 8.0% 0.7% 0.0% 0.0% 1.4% 1.9% 2.7% 3.1% -2.1% 0.5% 6.1%
Eastern Europe 8.2% 6.8% -6.2% 12.8% 16.3% 6.5% 3.1% -2.5% 3.0% -2.5% 1.7% 3.8% -3.7% 9.8% 18.8%
Latin America 7.3% 6.9% -7.1% 17.0% 19.5% 0.3% 0.8% -7.4% 6.7% 5.6% 7.1% 6.1% 0.3% 10.3% 14.0%
Middle East and Africa 8.1% 9.9% 2.6% 19.6% 25.9% 5.2% 5.3% 0.3% 5.9% 4.5% 2.9% 4.6% 2.3% 13.7% 21.4%
North America 2.6% 2.7% -11.5% 15.2% 10.5% 1.4% 1.1% -4.6% 6.4% 1.0% 1.2% 1.6% -6.9% 8.8% 9.5%
Western Europe 3.6% 2.3% -15.9% 9.1% 20.5% 2.4% 0.2% -5.1% 2.2% 3.9% 1.3% 2.1% -10.7% 6.9% 16.6%
Bottled Water World 7.3% 6.9% -9.9% 14.1% 18.1% 6.1% 4.6% -3.5% 5.2% 4.3% 1.2% 2.3% -6.4% 8.9% 13.8%
Asia Pacific 9.7% 8.0% -4.6% 6.7% 8.4% 8.6% 7.4% -6.3% 5.1% 6.5% 1.1% 0.6% 1.7% 1.6% 1.9%
Australasia 1.7% 0.8% -9.5% -2.1% 10.7% 0.9% -1.7% -5.7% -0.5% 4.2% 0.8% 2.5% -3.7% -1.6% 6.5%
Eastern Europe 11.2% 8.1% -5.0% 10.8% 12.9% 8.7% 4.0% -2.4% 3.4% -2.8% 2.5% 4.1% -2.6% 7.4% 15.8%
Latin America 9.7% 9.6% -10.1% 17.7% 19.9% 2.5% 2.4% -9.0% 5.0% 4.9% 7.2% 7.2% -1.1% 12.7% 15.0%
Middle East and Africa 10.2% 15.2% 4.7% 24.7% 35.0% 7.2% 6.8% 2.8% 7.0% 5.2% 3.1% 8.4% 1.9% 17.7% 29.8%
North America 4.3% 4.8% -18.1% 20.0% 12.2% 3.7% 3.7% -2.4% 7.4% 1.1% 0.6% 1.1% -15.7% 12.7% 11.1%
Western Europe 4.3% 1.6% -19.3% 7.9% 21.5% 3.6% -0.5% -5.9% 1.6% 4.0% 0.8% 2.1% -13.4% 6.3% 17.6%
Carbonates World 4.5% 3.5% -10.5% 12.2% 15.9% 0.8% 1.2% -6.3% 5.0% 4.0% 3.7% 2.3% -4.2% 7.2% 12.0%
Asia Pacific 6.3% 4.9% -11.5% 7.0% 14.9% 2.9% 4.8% -8.0% 6.6% 10.0% 3.4% 0.1% -3.5% 0.4% 4.9%
Australasia 0.5% 0.6% -3.8% -0.2% 6.1% -0.8% -0.5% 0.8% 0.8% 0.9% 1.3% 1.1% -4.6% -1.0% 5.2%
Eastern Europe 7.0% 5.1% -9.0% 15.4% 16.6% 4.6% 1.7% -2.2% 1.6% -3.2% 2.4% 3.5% -6.8% 13.8% 19.8%
Latin America 6.2% 5.6% -6.5% 16.2% 19.4% -1.2% -0.1% -6.2% 6.5% 5.1% 7.5% 5.7% -0.2% 9.7% 14.3%
Middle East and Africa 8.8% 7.0% -0.1% 16.4% 19.6% 2.2% 2.6% -3.7% 3.9% 3.1% 6.6% 4.3% 3.6% 12.5% 16.5%
North America 1.8% 1.1% -11.8% 12.3% 8.6% -0.5% -1.3% -9.0% 5.4% 0.4% 2.3% 2.3% -2.8% 6.9% 8.2%
Western Europe 3.0% 2.1% -18.0% 10.4% 21.8% 1.3% 1.4% -5.0% 3.1% 4.4% 1.7% 0.7% -13.0% 7.4% 17.4%
Concentrates World 2.0% 2.4% 2.9% 5.5% 10.8% -0.1% 0.1% 1.1% 0.2% 1.4% 2.1% 2.3% 1.8% 5.3% 9.4%
Asia Pacific -0.7% -4.2% 0.7% 4.1% 3.6% 2.3% 3.1% 0.3% 1.4% 1.9% -3.1% -7.3% 0.4% 2.7% 1.8%
Australasia 1.4% 3.4% 5.0% 10.9% 9.3% -2.1% -1.3% 0.1% -2.7% -3.4% 3.5% 4.7% 4.9% 13.6% 12.8%
Eastern Europe 2.2% 2.4% 2.7% 6.7% 14.5% 0.3% -0.6% 1.3% 1.0% 0.3% 1.9% 3.0% 1.4% 5.7% 14.2%
Latin America 3.6% 5.2% 8.5% 6.9% 14.0% -2.1% -9.7% -1.6% -2.0% -0.2% 5.6% 14.9% 10.1% 8.9% 14.1%
Middle East and Africa 4.9% 9.3% 14.2% 12.0% 16.8% -0.2% 4.0% -0.4% 4.1% 5.4% 5.1% 5.2% 14.6% 7.9% 11.5%
North America -0.8% -0.7% 2.1% 2.5% 5.3% 3.1% 1.0% 8.5% 1.9% 0.5% -3.9% -1.7% -6.4% 0.6% 4.9%
Western Europe 2.4% 2.1% -5.9% 2.3% 10.2% 0.4% 1.3% 3.9% -2.2% -0.8% 2.0% 0.7% -9.7% 4.5% 11.0%
Energy Drinks World 7.7% 10.9% -3.3% 14.2% 18.4% 7.0% 10.4% 1.8% 11.1% 10.1% 0.7% 0.4% -5.1% 3.2% 8.3%
Asia Pacific 10.3% 12.3% -0.4% 7.9% 11.3% 7.3% 10.3% 0.1% 7.6% 10.0% 3.0% 2.1% -0.5% 0.2% 1.3%
Australasia 11.6% 8.5% 5.2% 7.8% 8.2% 9.3% 6.8% 11.9% 11.2% 4.6% 2.2% 1.7% -6.7% -3.4% 3.6%
Eastern Europe 18.7% 17.8% 3.7% 19.2% 31.4% 18.8% 18.1% 11.2% 17.4% 14.9% -0.1% -0.3% -7.5% 1.7% 16.5%
Latin America 12.2% 14.9% -6.2% 31.9% 36.6% 11.2% 12.4% 3.2% 27.4% 19.1% 1.0% 2.4% -9.4% 4.5% 17.5%
Middle East and Africa -5.5% 3.8% -0.9% 15.6% 20.1% -9.0% 4.2% -1.2% 8.1% 9.6% 3.5% -0.4% 0.2% 7.5% 10.5%
North America 6.6% 10.2% -6.3% 13.7% 13.1% 7.2% 11.2% 0.0% 9.5% 4.9% -0.6% -1.0% -6.2% 4.2% 8.3%
Western Europe 8.1% 10.3% -5.3% 17.5% 27.1% 7.5% 8.4% 3.1% 11.8% 11.3% 0.6% 1.8% -8.4% 5.7% 15.9%
Juice World 1.8% 1.5% -9.4% 9.7% 11.8% -0.4% -0.5% -6.1% 2.3% 1.5% 2.2% 2.0% -3.3% 7.4% 10.3%
Asia Pacific 1.2% 1.8% -9.4% 1.9% 5.4% -0.7% 0.6% -8.7% 0.4% 1.5% 1.9% 1.2% -0.7% 1.4% 4.0%
Australasia 1.8% 1.1% 0.2% 1.6% 1.7% -0.9% -1.5% 2.2% 0.3% 0.8% 2.7% 2.5% -2.0% 1.2% 1.0%
Eastern Europe 2.4% 4.4% -7.0% 8.1% 13.0% 0.8% 0.6% -4.5% 0.9% -4.6% 1.6% 3.8% -2.5% 7.2% 17.6%
Latin America 8.6% 6.7% -9.5% 18.1% 16.2% 1.5% 0.5% -9.9% 9.3% 7.6% 7.1% 6.2% 0.4% 8.8% 8.5%
Middle East and Africa 7.3% 6.0% 3.7% 14.7% 17.0% 2.4% 1.8% -7.8% 2.3% 2.0% 4.9% 4.1% 11.5% 12.4% 15.0%
North America -1.1% -1.5% -12.4% 14.6% 11.2% -1.4% -2.5% -1.4% 2.5% 0.0% 0.3% 1.0% -11.0% 12.1% 11.2%
Western Europe 1.0% -0.1% -12.3% 5.3% 14.3% -2.4% -3.0% -4.3% -0.1% 0.6% 3.4% 2.9% -8.0% 5.5% 13.7%
RTD Coffee World 1.8% 1.7% -1.2% 7.7% 5.7% 5.0% 2.3% -2.7% 3.9% -0.9% -3.3% -0.5% 1.5% 3.9% 6.5%
Asia Pacific -1.4% -0.6% -7.0% 4.0% 2.5% 4.1% 1.2% -5.8% 2.3% -1.6% -5.4% -1.8% -1.2% 1.6% 4.2%
Australasia 6.2% 5.9% 11.5% 11.7% 13.2% 4.1% 4.0% 6.2% 11.8% 2.6% 2.1% 1.9% 5.3% -0.1% 10.7%
Eastern Europe 21.5% 17.1% 15.1% 22.8% 28.0% 7.7% 9.2% 7.7% 13.9% 11.0% 13.8% 7.9% 7.5% 8.9% 17.0%
Latin America 10.9% 3.7% -21.2% 5.7% 13.3% 4.7% 1.5% -19.6% 1.8% 5.4% 6.3% 2.2% -1.6% 3.9% 8.0%
Middle East and Africa 22.8% 23.9% 37.6% 42.5% 13.2% 17.2% 16.0% 2.3% 22.5% 7.3% 5.6% 7.9% 35.3% 20.1% 5.9%
North America 8.9% 5.4% 15.0% 16.2% 7.9% 7.9% 4.8% 13.3% 9.4% -1.4% 1.1% 0.6% 1.7% 6.9% 9.3%
Western Europe 17.2% 13.9% 5.3% 10.2% 19.9% 17.8% 12.7% 4.1% 5.8% 8.2% -0.6% 1.2% 1.2% 4.4% 11.7%
RTD Tea World 3.5% 3.6% -11.5% 8.3% 10.0% 1.6% 1.1% -9.9% 3.6% 2.4% 1.9% 2.5% -1.6% 4.8% 7.6%
Asia Pacific 2.1% 3.2% -11.5% 3.2% 7.2% 0.8% 1.1% -10.4% 1.4% 2.1% 1.3% 2.1% -1.1% 1.8% 5.1%
Australasia 27.5% 23.6% 2.0% 4.4% 10.9% 14.8% 16.3% 2.3% 4.3% 2.9% 12.7% 7.3% -0.4% 0.1% 8.0%
Eastern Europe 9.4% 3.6% -11.6% 13.1% 15.6% 8.9% 1.3% -10.8% 4.6% -2.8% 0.4% 2.3% -0.8% 8.5% 18.4%
Latin America 6.8% 8.9% -8.6% 9.9% 19.4% -0.5% -2.8% -11.4% 7.2% 8.4% 7.3% 11.6% 2.7% 2.7% 11.1%
Middle East and Africa 5.1% 10.6% 2.7% 32.2% 29.8% 1.0% 2.0% -6.5% 6.0% 6.0% 4.1% 8.6% 9.1% 26.2% 23.8%
North America 3.7% 2.1% -12.5% 20.4% 9.1% 1.7% -0.1% -11.0% 12.4% 1.7% 1.9% 2.2% -1.6% 7.9% 7.4%
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 111

CR
Top 10 global volume markets by beverage type
All channel volume share (2022)
Exhibit 276: Global LRBs Exhibit 277: Bottled water Exhibit 278: Carbonated bottled water
The US is the top volume share market with a China, Nigeria and the US run neck and neck in 10pts higher
16%, 4pts ahead of China terms of volume share than #2 Italy
20% 16% 20%
16% 12% 15%
12% 10%
8%
8%
4% 5%
4%
0% 0% 0%

USA
France
Poland
Germany

Russia
Italy

Ukraine
Brazil
Mexico
Argentina
USA

USA

France
Japan
Nigeria

Nigeria

Indonesia
Indonesia
Germany

Germany
Italy

Italy
India

India
Brazil

Brazil
Ghana
Mexico

China
China

Source: Euromonitor
Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 279: Flavored bottled water Exhibit 280: Functional bottled water Exhibit 281: Still bottled water
Flavors in bottled water are popular in the US F markets are the US
as the US holds a 23% share and China, accounting for 39% & 32% share and 15%, vs +13% for the USA
30% 50% 20%
40% 16%
20% 30% 12%
20% 8%
10%
10% 4%
0% 0% 0%
USA

Japan

Czech Rep
UK

Taiwan

Slovakia
Thailand

Philippines
China

Mexico
USA

Japan

Czech Rep
Poland
UK
Germany

Brazil
Mexico

Turkey
Argentina

USA

France
Nigeria

Indonesia
Italy
India

Brazil
China

Spain

Turkey
Source: Euromonitor Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 282: Carbonates (CSDs) Exhibit 283: Colas Exhibit 284: Non colas
The US holds a 20% volume share in CSDs, The US and Mexico are again the top markets The US has by far ranks #1 at 23% volume
with Mexico ranking #2 with 9% share with share of 17%/12% respectively share vs. 8% for China

20% 20% 25%

16% 20%
10% 12% 15%
8% 10%
4% 5%
0%
0% 0%
USA

UK
Germany

So Africa

India
Brazil
China

Turkey
Mexico

Argentina

USA

UK

Russia
Germany

So Africa
Brazil

Turkey
China
Mexico

Argentina

USA

So Africa

Russia
Egypt
Germany
India
Brazil
China

Mexico

Argentina

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

112 Beverages - Soft Drinks | 23 June 2023

CR
Top 10 global volume markets by beverage type
All channel volume share (2022)
Exhibit 285: Concentrate Exhibit 286: All juice Exhibit 287: 100% juice
The UK and South Africa are the top The US holds the #1 juice share at 19%, In 100% juice, developed markets hold top
concentrate markets with 15%/13% share followed by China at 12% shares with the USA at 30%, Germany at &
and Canada at 7%
16%
20% 40%
12%
16% 30%
8% 12%
20%
4% 8%
4% 10%
0% Japan 0% 0%
France

Australia
Ethiopia
UK

Indonesia
So Africa

Brazil

Tanzania
Argentina

USA

France
Japan

Russia

USA

Australia
India

Japan

France
Germany
Brazil

Canada

Poland
China
Mexico

Russia
Germany
Canada

China
UK
Source: Euromonitor Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 288: Juice Drinks Exhibit 289: Nectars Exhibit 290: Coconut & other plant based
China and US run neck & neck with shares of China and USA are the top markets with 11% waters
18% & 17% respectively and 7% share; Russia holds 6% The US and Brazil together represent nearly
2/3rds of coconut & plant-based water share
20% 12%
16% 40%
12% 8% 30%
8% 20%
4% 10%
4% 0%
0% 0%

USA

Vietnam
Australia
UK

Taiwan
Indonesia

Thailand
Brazil

Canada
China
USA

France
Colombia

Poland
Egypt
Indonesia
India
Brazil
China

Mexico

USA
Russia

Chile
Germany

Italy
India
Brazil
China

Turkey
Mexico

Source: Euromonitor
Source: Euromonitor Source: Euromonitor BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 291: RTD coffee Exhibit 292: RTD Tea Exhibit 293: Energy drinks
Japan holds a leading 53% share in RTD coffee, The top 3 markets represent >60% of RTD Combined US and China accounted for 40% of
USA trails at #2 with a 14% share volumes industry volumes
60% 40% 30%
40% 30%
20%
20%
20% 10% 10%
0% 0% 0%
USA

USA

Vietnam

France
Japan

Japan
Australia

UK
So Korea

Taiwan

Taiwan
Indonesia

Indonesia
Thailand
Germany

Germany
Canada
China

China

Turkey

USA

Vietnam
Japan
UK
Russia

Germany

Thailand
So Africa
Brazil
China

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 294: Sports drinks

The US market represented 51% share in
2022
60%
40%
20%
0%
USA

Vietnam
Japan

Thailand
Germany
Spain
Malaysia
China

Mexico

Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 113

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Top 10 fastest growing volume markets (5-year CAGR)
Exhibit 295: LRBs Exhibit 296: Bottled water Exhibit 297: Carbonated bottled water
Worldwide LRBs expanded at a 2.0% 5Y CAGR Bottled water grew at a 3.3% CAGR globally Carbonated bottled water -0.1% on a 5Y CAGR
16% 20% 12%
12% 16% 10%
12% 8%
8% 6%
8% 4%
4% 4% 2%
0% 0% 0%

Cameroon

Jordan

Pakistan
Jordan
Cameroon

Pakistan

Finland
Tunisia

Côte d'Ivoire
Laos

So Korea
Nigeria

Japan
Uganda
Azerbaijan

Poland
South Korea

Uzbekistan

Chile
Uzbekistan
Tunisia

Kazakhstan

Taiwan
Kenya

So Korea

Finland

Turkey

New Zealand
Israel
Mexico
Source: Euromonitor Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 298: Flavored bottled water Exhibit 299: Functional bottled water Exhibit 300: Still bottled water
Flavored bottled water grew at a 3.0% CAGR Worldwide functional bottled water rose at a Globally still bottled water expanded at a 4%
+2.5% CAGR CAGR
40% 180% 16%
30% 12%
120%
20%
60% 8%
10%
0% 4%
0%
USA
Romania

Finland
So Korea

Canada
Spain
New Zealand
Greece
Turkey
China

Denmark
Czech Rep
Belgium
UAE

Thailand

Italy
Switzerland
Romania

Turkey

0%
Argentina

Japan
Austria
Nigeria

Chile
Norway
Finland
So Korea

So Africa

India
Romania
Source: Euromonitor Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 301: Carbonates/CSDs Exhibit 302: Cola carbonates Exhibit 303: Non-cola carbonates
Globally CSDs grew at a 0.9% CAGR Colas expanded at a +1% CAGR Non-colas rose at a +0.8% CAGR
20% 20% 16%
16% 16% 12%
12% 12%
8%
8% 8%
4% 4% 4%
0% 0% 0%
Pakistan

Pakistan

Pakistan
Colombia
Nigeria

Nigeria
Georgia

Chile
Laos

Finland
Azerbaijan

Azerbaijan

So Korea
So Korea

So Korea

Norway
Turkey

Kenya

Turkey

Kenya

Kenya
Kazakhstan

Kazakhstan

Kazakhstan
China
China
Uzbekistan

Uzbekistan

Uzbekistan

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 304: Concentrates Exhibit 305: All juice Exhibit 306: 100% juice
Worldwide concentrates grew +0.5% CAGR Juice globally fell at a 5Y CAGR of -0.7% Worldwide 100% juice declined at a -0.5%
CAGR
16% 12%
12% 16%
9%
12%
8% 6% 8%
4%
3% 4%
0% 0%
0%
Vietnam
Japan
Ethiopia

Angola
Nigeria
Germany

Qatar
Uganda

Tanzania

Vietnam

Czech Rep
Nigeria

Poland
Chile

Portugal
India
Brazil

Peru
Romania
Vietnam

Uruguay

Pakistan
Angola

Chile
Georgia
India

Bolivia
Qatar
Uganda

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

114 Beverages - Soft Drinks | 23 June 2023

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Exhibit 307: Juice drinks Exhibit 308: Nectars Exhibit 309: Coconut & other plant waters
Juice drinks worldwide fell at a 0.5% CAGR Nectar volume worldwide contracted at a 1.5% Coconut and other plant waters posted +1.8%
CAGR CAGR growth
16% 16% 40%
12% 12% 30%
8% 8% 20%
4% 4% 10%
0% 0%
Vietnam

Colombia
Chile

Nigeria

Bulgaria
Russia
Switzerland

India

Turkey

Brazil
0%

Colombia
Czech Rep
Vietnam

Denmark
Nigeria
Chile

Portugal
India

Romania
Mexico

Vietnam

France
Hungary
Poland
Slovakia

Chile

Sweden
Italy
India
Israel
Source: Euromonitor Source: Euromonitor Source: Euromonitor
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 310: RTD coffee Exhibit 311: RTD tea Exhibit 312: Energy drinks
RTD coffee grew at a 5Y CAGR of +1.5% Worldwide RTD tea fell at a 5Y CAGR of -0.4% Energy drinks expanded at an +8% CAGR
globally worldwide
80% 30% 60%
60%
20% 40%
40%
20% 10% 20%
0%
0% 0%
Latvia
Saudi Arabia

Jordan
Poland

Bosnia + Herz
UK

Portugal

Indonesia
Netherlands

Turkey

Pakistan

Australia
Ireland
Sweden

Georgia
Finland
Kazakhstan

Uruguay
Spain
Uzbekistan

Chile
Russia
Norway

Azerbaijan
Uzbekistan

Brazil
Kazakhstan
Turkey

Argentina
UK

Source: Euromonitor Source: Euromonitor Source: Euromonitor

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 313: Sports drinks

Sports drinks worldwide posted CAGR growth
of +4.6%
30%

20%

10%

0%
Colombia
Uruguay
Chile
Georgia

Peru
Israel
Paraguay
Bolivia
Lithuania

Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 115

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Regional take home volume share, 2022
The Coca-Cola Company
Exhibit 314: The Coca-Cola Company
>18% in 2022
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 18.4 6.0 44.1 0.5 13.2 15.0 9.8 0.6 26.0
Asia Pacific 14.1 4.6 47.4 13.2 18.9 7.6 0.8 16.5
Australasia 24.5 18.8 43.4 0.3 2.8 7.2 50.4
Eastern Europe 14.4 4.3 34.0 11.8 0.2 22.9 0.2 6.3
Latin America 37.9 13.9 55.0 1.3 24.0 28.2 - 32.6
Middle East and Africa 12.4 6.3 31.2 0.4 9.4 9.0 3.8 32.7
North America 20.0 9.2 36.3 1.0 14.6 4.0 16.0 28.6
Western Europe 15.7 2.0 47.5 0.4 5.9 1.7 11.0 0.3 38.1
Source: Euromonitor
BofA GLOBAL RESEARCH

PepsiCo
Exhibit 315: PepsiCo

LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 8.2 2.6 18.4 4.1 3.0 6.8 44.1
Asia Pacific 6.2 2.0 23.8 4.7 4.9 12.3
Australasia 8.1 15.8 4.5 6.4 29.6
Eastern Europe 9.5 2.3 19.3 1.8 13.9 0.2 0.1 21.9 1.8
Latin America 8.3 3.7 11.3 1.2 3.6 42.3
Middle East and Africa 6.0 1.7 19.3 8.9 2.5 0.8 5.1
North America 16.9 8.4 25.3 25.4 0.1 7.1 69.2
Western Europe 4.1 0.1 13.9 2.9 0.4 4.4 4.1
Source: Euromonitor
BofA GLOBAL RESEARCH

Nestlé
Exhibit 316: Nestlé
Nestlé
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 1.9 3.5 0.1 0.4 10.4 0.7
Asia Pacific 1.3 1.6 0.1 0.7 1.4 13.1 0.5
Australasia 0.8 3.4 0.5 -
Eastern Europe 1.5 2.4 7.1 8.6
Latin America 1.0 3.4 0.1 1.3 -
Middle East and Africa 1.9 2.8 0.8 8.8 1.0
North America 0.7 1.8 7.3 0.1 0.1
Western Europe 5.5 10.0 0.5 0.4 6.5 1.0
Source: Euromonitor
BofA GLOBAL RESEARCH

Danone
Exhibit 317: Danone Group
In LRBs, Danone is focused on bottled water
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 2.2 4.4 0.2 1.5 1.2
Asia Pacific 2.9 5.4 3.9
Australasia 0.1 0.7
Eastern Europe 2.2 4.3
Latin America 2.8 9.4
Middle East and Africa 0.3 0.4 0.3 0.2
North America 0.3 0.4 10.8
Western Europe 5.1 9.5 0.7 0.1 0.7
Source: Euromonitor
BofA GLOBAL RESEARCH

116 Beverages - Soft Drinks | 23 June 2023

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Keurig Dr Pepper
Exhibit 318: Keurig Dr Pepper
KDP Mexico
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 1.4 0.1 3.8 1.6 0.9
Asia Pacific
Australasia 0.1
Eastern Europe
Latin America 1.1 0.8 1.6 1.1
Middle East and Africa 0.1
North America 7.1 0.3 17.8 7.4 7.3
Western Europe -
Source: Euromonitor
BofA GLOBAL RESEARCH

Zevia
Exhibit 319: Zevia
Zevia is largely sold in the USA
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 0.1
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America 0.2 0.6
Western Europe
Source: Euromonitor
BofA GLOBAL RESEARCH

National Beverage
Exhibit 320: FIZZ
FIZZ enjoys a 15.5% North America share in flavored bottled water, but its overall bottled water share is just 1.1% in North America
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 0.1 0.2 0.2
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America 0.7 1.1 0.8
Western Europe
Source: Euromonitor
BofA GLOBAL RESEARCH

Monster Beverage
Exhibit 321: Monster Beverage
MNST energy drinks globally is 19.5%, ranging from a low of 3% in Asia Pac to a high of 48% in North America
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 0.5 1.5 19.5
Asia Pacific 0.1 3.2
Australasia 1.7 27.2 2.6
Eastern Europe 0.5 0.1 13.7
Latin America 0.3 24.7
Middle East and Africa 0.1 9.3
North America 1.6 10.5 47.9
Western Europe 0.6 0.3 21.2
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 117

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Red Bull
Exhibit 322: Red Bull
r energy drinks
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 0.4 14.9
Asia Pacific 0.1 2.0
Australasia 1.1 18.3
Eastern Europe 0.4 10.1
Latin America 0.2 17.3
Middle East and Africa 0.1 11.0
North America 0.8 26.5
Western Europe 0.8 0.2 30.6
Source: Euromonitor
BofA GLOBAL RESEARCH

Celsius Holdings
Exhibit 323: Celsius Holdings
including a 17% in reduced sugar energy drinks
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 1.5
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America 0.2 6.2
Western Europe 0.7
Source: Euromonitor
BofA GLOBAL RESEARCH

Blue Triton Brands

Exhibit 324: Blue Triton
water share is 2.2% globally, including a 16% in North America
LRBs Bottled water Carbonates Concentrates Juice RTD coffee RTD tea Energy drinks Sports drinks
World 1.1 2.2
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America 6.5 16.1
Western Europe
Source: Euromonitor
BofA GLOBAL RESEARCH

118 Beverages - Soft Drinks | 23 June 2023

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Per capita trends
Per capita consumption in take home
Exhibit 325: Take home per capita consumption by region (liters), 2022
Developed regions have higher per capitas than developing regions
Off-premise World Asia Pacific Australasia E Europe LatAm Mid East, Africa No America W Europe
LRBs 79.9 43.8 138.2 125.7 131.4 67.2 281.5 181.6
Bottled Water 39.7 22.4 29.5 64.1 39.6 46.1 113.2 96.2
Carbonates 23.2 8.0 56.9 38.0 73.1 15.9 91.6 50.5
Concentrates 0.4 0.1 3.0 0.6 0.7 0.5 0.1 1.8
Juice 7.6 3.9 24.4 14.7 12.8 3.8 34.2 19.1
RTD Coffee 0.7 1.0 6.9 0.1 - - 2.1 0.6
RTD Tea 4.4 5.9 3.8 3.0 1.2 0.2 11.2 7.0
Energy Drinks 1.9 1.2 8.3 5.0 1.8 0.5 8.8 4.7
Sports Drinks 1.9 1.0 5.2 0.3 2.3 0.1 20.5 1.6
Asian Drinks 0.1 0.2 0.2 - - - - -
Source: Euromonitor
BofA GLOBAL RESEARCH

Per capitas in foodservice

Exhibit 326: Foodservice per capita consumption by region (liters), 2022
On-premise per capitas are just a fraction of take home per caps
On-premise World Asia Pacific Australasia E Europe LatAm Mid East, Africa No America W Europe
LRBs 15.6 6.6 16.4 10.7 26.5 16.4 71.4 37.6
Bottled Water 7.1 3.6 5.4 3.9 7.3 10.5 19.6 18.6
Carbonates 6.4 2.1 8.3 4.8 14.8 4.8 39.6 14.2
Concentrates 0.0 0.0 - 0.0 0.0 0.0 - 0.2
Juice 1.1 0.3 1.1 1.4 4.0 0.9 5.1 2.5
RTD Coffee 0.0 0.0 - 0.0 0.0 0.0 0.1 0.0
RTD Tea 0.7 0.6 0.8 0.2 0.1 0.0 6.3 1.0
Energy Drinks 0.2 0.1 0.7 0.3 0.2 0.1 0.4 0.8
Sports Drinks 0.0 0.0 0.1 0.0 0.0 0.0 0.3 0.1
Source: Euromonitor
BofA GLOBAL RESEARCH

Take home and foodservice per capita $ for 2022

Exhibit 327: Take home per capita $ by region (US$)
North American per cap $ are highest for North America, Australia and Western Europe
Take home per capitas ($/person) World Asia Pac Australasia E Europe LatAm MidEast, Africa No America W Europe
LRBs $82.10 $42.30 $294.90 $107.60 $129.70 $55.80 $411.60 $174.90
Bottled Water $22.30 $11.90 $35.60 $33.50 $24.20 $25.90 $84.00 $43.70
Carbonates $25.50 $7.80 $101.50 $33.80 $68.10 $17.90 $132.50 $57.70
Concentrates $2.00 $0.50 $12.40 $2.30 $7.20 $1.50 $5.50 $5.80
Juice $12.40 $5.70 $45.20 $19.00 $18.40 $6.90 $66.40 $34.00
RTD Coffee $2.70 $3.20 $22.00 $0.60 $0.10 $0.10 $14.20 $3.40
RTD Tea $6.50 $7.80 $16.60 $3.90 $2.30 $0.40 $24.20 $8.30
Energy Drinks $7.30 $3.60 $42.10 $14.00 $5.60 $2.90 $50.30 $18.40
Sports Drinks $3.10 $1.40 $18.70 $0.50 $3.70 $0.20 $34.60 $3.40
Source: Euromonitor
BofA GLOBAL RESEARCH

Exhibit 328: Foodservice per capita $ by region (US$)

North American per cap $ are highest for North America, Australia and Western Europe
Take home per capitas ($/person) World Asia Pac Australasia E Europe LatAm MidEast, Africa No America W Europe
LRBs $82.10 $42.30 $294.90 $107.60 $129.70 $55.80 $411.60 $174.90
Bottled Water $22.30 $11.90 $35.60 $33.50 $24.20 $25.90 $84.00 $43.70
Carbonates $25.50 $7.80 $101.50 $33.80 $68.10 $17.90 $132.50 $57.70
Concentrates $2.00 $0.50 $12.40 $2.30 $7.20 $1.50 $5.50 $5.80
Juice $12.40 $5.70 $45.20 $19.00 $18.40 $6.90 $66.40 $34.00
RTD Coffee $2.70 $3.20 $22.00 $0.60 $0.10 $0.10 $14.20 $3.40
RTD Tea $6.50 $7.80 $16.60 $3.90 $2.30 $0.40 $24.20 $8.30
Energy Drinks $7.30 $3.60 $42.10 $14.00 $5.60 $2.90 $50.30 $18.40
Sports Drinks $3.10 $1.40 $18.70 $0.50 $3.70 $0.20 $34.60 $3.40
Source: Euromonitor
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 119

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LRB ingredients
Soda ingredients
While flavors may vary by soda, most sodas contain five common ingredients including
carbonated water, sweetener, caramel coloring, phosphoric acid, and caffeine.

Carbonated Water – is water in which carbon dioxide has been dissolved. Roughly
~85% of carbonated drink consists of water.

Nutritive sweetener 17 – provide calories and nutrients. In the United States, the
principle nutritive sweetener is high fructose corn syrup (HFCS). The HFCS found in soft
drinks is typically 55% glucose and 45% fructose. The principal nutritive sweetener used
outside of the United States is sucrose, another form of sugar.

Nonnutritive “artificial” sweetener – artificial sweeteners which do not provide

calories and nutrients. Principal nonnutritive sweeteners used in soda are aspartame,
acesulfame potassium, saccharin, cyclamate, and sucralose. Another non-nutritive
sweetener used is derived from the stevia plant.

Phosphoric acid – This serves the function of keeping soda from going flat. This has
several negative side effects including neutralizing the hydrochloric acid in the stomach
(which is needed to digest food) and leaches calcium from teeth.

17Sweeteners include High-fructose corn syrup, fructose, fruit juice concentrate, honey, sugar, syrup, corn syrup, sucrose,
dextrose and artificial sugars.

120 Beverages - Soft Drinks | 23 June 2023

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US-based beverage (non-alc) companies
The Coca-Cola Company
The Coca-Cola system has a global reach, with a network of ~200 bottling partners,
including company-owned, controlled and independent bottling partners operating 950
plants worldwide. KO serves approximately 30mn retail accounts and sells ~2.2bn
servings per day.

• KO holds the #1 position globally in NARTD (non-alcohol ready-to-drink

beverages)

• It holds 26 billion dollar brands

• Value share +2pts in 2022 vs. 2017 levels.

Exhibit 329: Exhibit 330: YoY % change in unit case volume

The Coke system sold 32.7bn cases in 2022 Worldwide unit case volume grew 4% in 2022, cycling a strong +8%, which
was driven by the gradual recovery of the away-from-home channel in many
markets throughout 2021 and cycling the impact of shelter-in place and
35,000
social distancing requirements in 2020
30,000 12%

25,000
8%
20,000
4%
15,000

10,000 0%

5,000
-4%

-
2004

2006

2008

2010

2012

2019

2021
2003

2005

2007

2009

2011

2013
2014
2015
2016
2017
2018

2020

2022

-8%
2004

2007

2010
2011

2014

2017

2020
2021
2003

2005
2006

2008
2009

2012
2013

2015
2016

2018
2019

2022
Source: Company reports
Cases = 192oz or 24 8-oz servings Source: Company reports
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 331: Exhibit 332:

Net sales +11% YoY and +6% over the 3-year pandemic period Recent margin contractions driven by freight, packaging, and input costs
$60,000 65.0% 64.5%
64.0%
63.0%
62.1%
61.7%
62.0% 61.2%
$40,000 60.9% 61.1% 60.7%
61.0% 60.4% 60.6%
60.3% 60.1%
60.0%
59.1%
59.0% 58.6%
$20,000 58.0%
57.0%
56.0%

$0 55.0%
2010

2011

2014

2015

2018

2019

2022
2012

2013

2016

2017

2020

2021
2009

2012

2016

2019

2022
2008

2010
2011

2013
2014
2015

2017
2018

2020
2021

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

After the US, Mexico and Brazil are KO’s biggest markets for carbonated beverages.

Beverages - Soft Drinks | 23 June 2023 121

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 Exhibit 333: Net revenue split (2022 %) Exhibit 334: Unit case volume (bns)
Total revenues rose to $43bn in 2022, +11%. Organic sales +16%, led by In 2022, unit case volume reached 32.7bn units.
+11% price mix and +5% concentrate sales

Global
Ventures, 4%
Eur, ME,
Bottling Eur, ME, Asia Pacific, Africa, 28%
Investments, Africa, 17% 24%
Global 18%
Latin
Ventures, 7% America,
11% North Latin
Asia Pacific, America, America,
12% 17% 27%
North
America,
35%

Source: Company reports

Source: Company reports BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Unit case growth by type

Exhibit 335: Unit case growth by type (2022) Sparkling soft drink case volumes +4% in 2022, benefiting
Overall case growth by product type increased 5% from strong growth in Latin America and Asia Pacific, partly
offset by the suspension of business in Russia. Trademark
8%
Coca-Cola grew +4% for the year; including a 11% increase
6% from Coca-Cola Zero Sugar. Sparkling flavors expanded +5%
6% 5% for the year, with strong growth in India/US partially offset by
4% Russia.
4% 3%
Juice, value added dairy & plant-based beverages
increased volume at 3% in 2022, with strong growth in
2%
developed markets dampened by Russia.

0% Water, sports, coffee & tea unit cases grew 6% in 2022. Water
Overall Sparkling Juices, value- Water, sports, cases +5% for the year, with strength in Latin America partially
added diary & coffee, tea offset by pandemic-related mobility restrictions in China.
plant based Sports drinks +8% in 2002, led by LatAm and EMEA. Coffee
beverages unit cases +13%, aided by the lapping of pandemic-mandated
store closures in the US in 1021 and expansion of Costa into
Source: Company reports new markets. Tea unit cases +1% in 2022, with strong growth
BofA GLOBAL RESEARCH of Fuze tea in Latin America, partly offset by weakness of
doğadan in Türkiye.

Exhibit 336: KO revenue growth drivers

Organic sales +16% following a pandemic depressed 9% drop in 2020
Revenue growth summary 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Unit case volume-worldwide 5.0% 4.0% 2.0% 1.8% 2.3% 0.5% 0.0% 2.0% 2.0% -6.0% 8.0% 5%
Concentrate sales 5.0% 4.0% 2.0% 1.6% 1.7% 0.9% 0.0% 3.0% 1.0% -7.0% 9.0% 5%
Price/mix 2.0% 1.0% 1.0% 1.3% 1.8% 2.8% 3.0% 2.0% 5.0% -2.0% 6.0% 11%
Organic sales % 7.0% 5.0% 3.0% 2.8% 3.5% 3.6% 3.0% 5.0% 6.0% -9.0% 16.0% 16.0%
Foreign exchange 3.0% -3.0% -2.7% -4.0% -7.0% -2.6% -1.0% -1.0% -4.0% -2.0% 1.0% -7%
Other (structural) 22.7% 1.0% -2.7% -0.6% -0.2% -6.5% -17.0% -9.3% 7.0% 0.0% 0.0% 2%
Total Revenue Growth- reported 38.1% -1.0% -2.4% -1.8% -3.7% -5.5% -13.4% -5.3% 8.7% -11.5% 17.1% 11.0%
Source: Company reports
BofA GLOBAL RESEARCH

122 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 337: KO: unit case % growth
After strong growth in 2021, unit case growth eased by 1% in 2022
Unit Case growth 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Europe, Middle East & Africa 5% 11% 7% 1% 3% 0% 1% 2% 2% -6% 9% 3%
Latin America 6% 5% 1% 1% 2% -1% -3% 0% 1% -2% 6% 6%
North America 4% 2% 0% 0% 2% 1% -1% 1% 0% -7% 5% 2%
Asia Pacific 6% 7% 3% 5% 4% 2% 1% 4% 5% -9% 10% -6%
Global Ventures na 17% 8% 7% -13% 17% 13%
Bottling Investment 0% 10% -17% -2% 0% -16% -41% -14% 24% -15% 11% 12%
Total Volume Growth 5% 4% 2% 2% 2% 1% 0% 2% 2% -6% 8% 5%
Source: Company reports
BofA GLOBAL RESEARCH

Exhibit 338: KO: concentrate sales volume

Social distancing and stay-at-home orders hurt volume in 2020 and recovered in 2021/22
Concentrate Sales (volume) 2011 2012 2013 2014 2015 2016 2017R 2018R 2019 2020 2021 2022
Europe, Middle East & Africa 5% 10% 7% 1% 2% 0% 1% 4% 1% -8% 12% 2%
Latin America 5% 5% 1% 0% 1% -1% -3% 1% 1% -2% 6% 7%
North America 4% 2% 0% 0% 1% 1% 0% 1% 0% -7% 7% 1%
Asia Pacific 6% 3% 4% 5% 2% 3% 1% 5% 5% -10% 11% 8%
Global Ventures na 18% 7% 8% -13% 20% 13%
Bottling Investment 4% 6% 5% 2% 2% 0% -3% 11% 6% -13% 11% 12%
Total Concentrate Sales 5% 5% 3% 2% 2% 1% 0% 3% 1% -7% 9% 5%
Source: Company reports
BofA GLOBAL RESEARCH

Exhibit 339: KO: price/mix growth by region

Overall price/mix rose 11% in 2022
Price/Mix 2011 2012 2013 2014 2015 2016 2017R 2018R 2019 2020 2021 2022
Europe, Middle East & Africa 7% 4% 2% 3% 1% 3% 3% 3% 4% -5% 6% 16%
Latin America 7% 7% 10% 8% 9% 13% 8% 10% 13% 2% 12% 17%
North America 1% 2% 1% 1% 5% 3% 3% 0% 3% 2% 7% 12%
Asia Pacific -2% 0% -4% -3% -3% -2% 0% 0% 0% -2% -2% 3%
Global Ventures na -2% -1% -1% -9% 13% 0%
Bottling Investment 3% 1% 0% 0% 0% 1% 4% 0% 3% 2% 2% 7%
Total price/mix 2% 1% 1% 1% 2% 3% 3% 2% 5% -2% 6% 11%
Source: Company reports
BofA GLOBAL RESEARCH

Exhibit 340: Op income mgn by segment (2022) Exhibit 341:

The consolidated non-GAAP op mgn was 28.7% in 2022, in line with the Op income reached $12.3bn in 2022 vs. a pandemic depressed $9.8bn in
prior year. Reported op margin was 25.4%. 2020. Reported operating income +6% in 2022 or +19% on a comparable FX
neutral op income basis.
70%

60% $14,000
50% $12,000

40% $10,000

30% $8,000

20% $6,000

$4,000
10%
$2,000
0%
EMEA Lat America No America Asia Pacific Global Bottling $0
Ventures Investments 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Growing margins while diversifying revenues

A decades old question for KO is how do they grow outside the core sparkling business
without diluting margins since most other categories are not as profitable. KO is now
looking at the more profitable elements of other beverage categories (e.g. single serve).

Beverages - Soft Drinks | 23 June 2023 123

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 Exhibit 342:
Overall operating margins held steady YoY, unfavorably impacted by the BodyArmor acquisition, higher
operating costs, an increase in marketing investments YoY & FX headwinds

28.8% 27.9% 29.6% 28.7% 28.7%

30% 27.5% 27.8% 27.3%
26.5%
23.8% 23.4% 24.0% 23.8% 23.4% 23.5%

20%

10%

0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company reports

BofA GLOBAL RESEARCH

KO strategic shifts evident

In its purest form, the carbonated soft drink franchise business model is one of the most
lucrative in the food and beverage industry with high gross margins (more than 80% in
some instances) and high returns. Its biggest limitation is product breadth as it is
maximized producing products that are cold filled (e.g. not pasteurized). In the past this
led the company to adapt too slowly to the changes in consumer preference toward still
beverages because the financial incentives skew to cold fill sparkling beverages. This
was particularly true in mature markets like the U.S. where consumer preference shifted
to still beverages.

In 2014 KO announced strategy changes informed by the view that it needed to adapt
its business model to align better with changing consumer preferences and shopping
habits. With global category value growth at a healthy +4% the company needed to
reposition the Coke system to gain value share profitably by pursuing a broader set of
product categories, re-shaping its core sparkling business and strike a better balance
between volume/mix and price. In our view, the 2014-2017 timeframe laid a solid
foundation for the company to grow (sales and earnings) over the next several years. Key
enablers include:

• Shedding a majority of company owned bottlers with franchise agreements aligned

with the needed business model changes

• $3.8bn of annualized savings by 2019, which supported margin expansion and

investments in marketing and product formulation

• A more dynamic revenue model that taps price/volume/mix and a broader range of
product types and

• Investment in systems, digitize the enterprise and unlock the power of its people

• KO eliminated ~200 brands to ~200 master brands. (Eliminated and transitioned

brands represented 2% of volume and 1% of revenue.)

• Innovation. In 2022, there were >1500 planned initiatives, across 80 markets and
contributed to +low double-digit to gross profit in 2022. Some 60% of innovation
was outside of sparkling.

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• Raising the bar in marketing. In 2022, >50% of its total media spend was in
digital; total digital spend +$1bn in 2022.

• “World without waste”. Sustainability is a key pillar of KO’s strategy, with the
company innovating and investing in eco-friendly packaging types. KO used 23%
recycled material in its packaging globally (2021), with a target of 50% by 2030.
KO’s goals include 100% of its packaging to be recyclable by 2025 and to
collect/recycle a bottle/can for everyone it sells by 2030.

• Freestyle machines allow for increased personalization. KO’s Freestyle 7100

is a smaller, countertop version of its Freestyle dispensing machine to allow smaller
foodservice players to use this technology. This machine, operating via a
smartphone app, can also provide KO with consumer flavor preferences.

• Delving deeper into alcoholic drinks. KO has entered into a strategic partnership
with Molson Coors to produce and distribute its Topo Chico Hard Seltzer and Simply
Spiked Lemonade products in the US. We would look for additional products to
follow as the ready-to-drink alcoholic category develops.

• Targeting younger consumers digitally. KO has introduced short-term niche

products i.e. Starlight, Byte, Dreamworld and Marshmello in waves in 2022. This
expressions are introduced in the digital world in order to attract the younger
population to its products.

Drive revenue growth

Going forward revenue growth would be a function volume, price and mix. The KO model
is far less volume dependent than it was in the past and more in sync with its bottlers
around the world. In developed markets in particular, the system’s focus has shifted to
increasing incidence, transactions, and growing value share. This plan would be different
for developed markets (less volume oriented) and EM (driven by more volume). As
consumer preferences continue to shift, KO understands the need to be in all categories
and participate in beverages for life (functional and emotional) and do so with leading a
healthier life. In order to get this done KO has and continues to strengthen its system,
digitize the enterprise and unlock the power of its people.

Exhibit 343: Net operating revenue drivers in 2022 (vs. 2021)

Organic sales worldwide grew 16%, with concentrate sales +5% and price/mix +11%. EMEA, Latin America and Bottling Investments outpaced consolidated sales growth
while North America, Asia Pac and Global Ventures underperformed.
Concentrate sales Px/product & geo mix Organic FX fluxuation Acq/Div Total
Worldwide 5% 11% 16% -7% 2% 17%
Europe, Mid East, Africa 12% 16% 18% -14% 0% 19%
Latin America 7% 17% 24% -5% 0% 18%
North America 1% 12% 13% 0% 6% 15%
Asia Pacific 8% 3% 11% -9% 0% 12%
Global Ventures 13% 0% 13% -11% 0% 41%
Bottling Investments 12% 7% 19% -9% 0% 15%
Source: Company reports
BofA GLOBAL RESEARCH

In what would have been thought of as unimaginable just a few years ago, KO
announced plans on March 8, 2018 to launch an alcoholic drink in Japan. It's trying to get
in on the growing market for “chu-hi” -- canned, flavored drinks typically made with
sparkling water and shochu, a Japanese spirit distilled from grains.

In September 2020, KO partnered with Molson Coors to expand its Topo Chico brand
into the hard seltzer category, with Topo Chico Hard Seltzer. Since entering the ready-
to-drink alcohol category with Lemon-Dou in Japan, KO has added Fresca Mixed, Simply
Spiked Lemonade and Jack Daniel’s & Coca-Cola products.

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In September 2022 TAP and KO expanded their exclusive agreement to develop and
commercialize Top Chico Spirited, a line of RTD cocktails inspired by tequila and vodka
based beverages. It is expected to be sold in 20 markets in 2023. Topo Chico Spirited
would come to select states in 2023, including TX, CO, OK, KS, MO, CA, AZ, NM, NV, WA,
FL, AR, MS, TN, GA, LA, IL, WI, OH, MN, MI, VA (Includes DC).

Market landscape (2022)

Exhibit 344: 2022 landscape by key region
Take-home consumption is more popular in Latin America than other regions
% of Away
% of op from
Consumers sales inc Category home Key bottlers
Latin America 525mn 11% 21% $100bn 35% Coca-Cola Femsa, Arca Continental, Coca-Cola Andina, Solar Coca-Cola
North America 320mn 35% 28% $350bn 45% Coca-Cola United, Swire, Coca-Cola Consolidated, Coca-Cola Southwest Bevs, Reyes Coca-Cola, Coca-Cola Canada
Asia Pacific 3.3bn 12% 17% $475bn 50% Coca-Cola Europacific Partners, COFCO, Bottling Investments Group, ThaNamthip, Swire, Coca-Cola Japan
Europe, Middle East, Africa 2.1bn 17% 29% $350bn 55% Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola Beverages Africa, CCI
Source: Company reports
BofA GLOBAL RESEARCH

Exhibit 345:
regions
Latin America North America North America EMEA
2023-26 2023-26 2023-26 2023-26
industry industry industry industry
CAGRs KO share* CAGRs KO share CAGRs KO share CAGRs KO share
Sparkling soft drinks 6-7% >50%, +1% 2-3% ~50%, +1% 5-6% >50%, +3% 5-6% >50%, +2%
Juice, value added dairy & plant-based 6-7% ~25%, +3% 2-3% ~20%, +1% 3-4% ~5%, flat 4-5% ~10%, +3%
Water, sports, coffee & tea 7-8% ~30%, +3% 4-5% ~20%, flat 3-4% ~10%, -1% 6-7% ~10%. Flat
Energy >10% ~35%, +23% 7-9% ~40%, +3% >10% ~40%, +3% 8-10% ~20%, +7%
Hot beverages >10% <5% 4-5% ~5%, flat 4-5% <50% 6-7% ~2%, +2%
Emerging >10% <5% 8-9% ~5%, +3% 6-7% <5% 8-10% <50%
Source: Company reports

BofA GLOBAL RESEARCH

Global Ventures
Exhibit 346: Global Ventures economic treatment
Costa coffee and innocent represent ~90% of total Global Ventures revenue
Business model Economics
Costa Coffee retail, food service & RTD Full P&L
Monster Energy Distribution coordination agreements Fees
Innocent Finished goods, juices & smoothies Full P&L
Dogadan NRTD Tea Full P&L
Source: Company reports
BofA GLOBAL RESEARCH

Bottling Investments
Over the last several years, refranchising has been completed in Canada, USA,
Guatemala, Uruguay, China, Vietnam and Cambodia. Current market for KO’s bottling
Investment segment include: Africa, Bangladesh, India, Malaysia, Myanmar, Nepal, Oman,
Philippines, Singapore and Sri Lanka. In 2022 Bottling Investments were 18% of
net sales vs. 52% in 2015.

Sustainability
In August 2022, KO’s bottlers announced plans to explore and scale methods to capture
carbon and convert it key materials for its products, including CO2 (carbonation), and
ingredients like sugar and packaging materials like plastics.

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 Exhibit 347: Sustainability goals and progress
KO also partners with groups, governments, industry/peer companies to make the greatest impact
Water Packaging Reducing added sugar Climate People & communities
KO goal Replenish at least 100% collection & 50% Offering more choices and 25% absolute GHG 50% led by women globally
100% annually recycled content by 2030 reducing added sugar emissions reduction against by 2030
2015 baseline by 2030
Progress to date Water neutral since 2015 61% collection rate in 2021, 29% of its global 2022 unit Using its leverage with its 39% women leadership in
Over 40 markets in 100% case volume in low or no- supply chain, 150+ suppliers 2021
rPet (8 for full local portfolio) sugar set or committed to set
targets
Committed to driving industry leadership Driving nature-based water Industry leading goal to have Growth of low/non-calorie Increasing cooler efficiency Linking goals to executive
solutions as part of 2030 25% of volume beverages, smaller package to progress on science- compensation
Water security strategy refillable/reusable by 2030 sizes based targets
Source: CAGNY presentation, 2023
rPet= recycled PET
BofA GLOBAL RESEARCH

PepsiCo
PEP is a leading global food and beverage company with a portfolio of brands including
Frito-Lay, Gatorade, Pepsi-Cola, and Quaker. Its products are available in >200
countries. In 2022, sales were 55% food/snacks and 45% beverages. In 2021, sales of
$86.4bil were spilt 58% food/snacks (+3pts vs. 2021) and 42% beverages (-3pts vs.
2021), with contributions from ~22 billion-dollar brands.

• In 1Q22, PEP completed the divestiture of Tropicana, Naked and other select juice
brands to PAI Partners for pre-tax proceeds of ~$3.5bn. PEP and PAI formed a new
formed JV (PEP 39%) that would operate across North America and Europe.

• PEP entered into a new business ventures with Beyond Meat to develop, produce
and market plant-based proteins products (i.e. Beyond Meat Jerky)

• PEP partnered with The Boston Beer Company (SAM) to target the low-alcohol
occasion with PEP’s Mountain Dew brand. IN 2022 PBNA began to distribute Hard
MTN Dew, an alcoholic beverage manufactured and owned by SAM. (PEP licensed
the use of the Hard MTN Dew trademark to SAM.)

• Other recent M&A include Pioneer Foods ($1.23bn in March 2020), Rockstar ($4.7bn
in April 2020) and Be & Cherry ($698mn in June 2020)

• PEP signed a distribution partnership with CELH in August 2022 and made a
$550mil convertible preferred investment amounting to an 8.5% ownership stake of
CELH on an as-converted basis

• 57% of its sales are based in the US; 43% internationally. The US is its main
beverage market, accounting for ~40% of its soft drink sales.

• Of the $599bn global convenient foods18 opportunity, PEP has an 8% share (2022).
It forecasts 5-Yr CAGR of +5%

• Of the $626bn global beverages category, PEP held a 9% in 2022. This category is
forecast to rise at a 5-Yr CAGR of +5%

• Distributing Celsius energy drinks. PEP ended its distribution of Bang energy in
2022 and soon followed with an investment of $550mn for an 8.5% stake in Celsius
Holdings to become its long-term preferred distribution partner globally for Celsius
energy brands.

18Convenient foods are defined by PEP as savory, sweet, grains and dairy food categories. Liquid refreshments include
refreshment beverages and dairy. Market sizes were as of 2021.

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• Attribute engine. PEP has taken a scientific approach to innovation by using an
internal AI (artificial intelligence) system called the “Attribute Engine” which seeks
out trending attributing such as flavors, colors, need states or feelings. Nitro Pepsi
was introduced in 2022, a nitrogen-infused version of its regular Pepsi-Cola.

PEP is organized in 6 reportable segments

• Frito-Lay North America (FLNA) which includes its branded food/snack business
in the US and Canada. Key brands include Lay’s, Doritos, Cheetos, Tostitos, Fritos,
Ruffles, Santitas and branded dips. In addition it has a JV with Strauss Group to
make, market and distribute/sell Sabra refrigerated dips and spreads.

• Quaker Foods North American (QFNA) which includes its cereal, rice, past and
other branded food business in the US/Canada. Key brands include Quaker oatmeal,
Pearl Milling Company mixes/syrups, Quaker Chewy granola bars, Cap’n Crunch
cereal, Rice-A-Roni side dishes and other products.

• North American Beverages (NAB) which includes its beverage business in the
US/Canada. Key beverages owned by PEP include Pepsi, Gatorade, Mountain Dew,
Aquafina (bottled water), Diet Pepsi, Diet Mountain Dew, among other brands. NAB
also has JVs with Unilever (Lipton), Starbucks and PAI Partners (Tropicana). NAB
owns its bottling plants and manufactures/distributes certain brands licensed by Dr
Pepper Snapple, Dole Food Company and Ocean Spray Cranberries.

• Latin America, which holds its food, beverage and snack ops in Latin America.
This division makes, markets and distributions such brands as Cheetos, Doritos,
Emperador, Lays, Mabel, Marias Gamesa, Ruffles, Sabritas, Saladitas and Tostitos as
well as many Quaker convenient food brands. Latin America also includes sales
from beverage concentrate, fountain and finished goods under various brand names
including Pepsi, 7UP, Gatorade, Sol, Mirinda, Pepsi Black, San Carlos and Toddy. It
also sells RTD tea products through an international JV with Unilever/Lipton.

• Europe which includes PEP’s food, beverage & snack business in this region. Key
brands include Cheetos, Chipita, Doritos, Lay’s, Ruffles, and Walkers as well as many
Quaker convenient foods. It sells concentrate, fountain syrups and finished goods
under numerous beverage brands including 7UP, Diet Pepsi, Lubimy Sad, Mirinda,
Pepsi and PepsiMax. In addition, it makes markets and distributes Soda Stream
sparkling water makers, has a JV with Unilever/Lipton and sells a number of dairy
products including Agusha, Chudo and Domik and Devevne. In 1Q22 its Tropicana
unit was sold to PAI Partners, while retaining a 39% interest in a JV to operate in
Europe.

• Asia Pacific, Australia/New Zealand and China which includes PEP’s food,
beverage and snack operations in this region. PEP sells a number of convenient
food brands including BaiCaoWei, Cheetos, Doritos, Lay’s, and Smith’s and select
Quaker products. It also sells concentrate, fountain syrup and finished goods under
the 7UP, Aquafina, Mirinda, Mountain Dew, Pepsi and Sting brands. It also sells RTD
tea with a JV with Unilever, licenses the Tropicana brand for use in China on co-
branded products in a strategic alliance with Tingyi Holdings Corp.

• Distribution network — PEP’s products are brought to market through direct

store delivery (DSD), customer warehouse and distributor networks. Products are
also sold directly though e-commerce platforms and retailers. The distribution
system used depends on consumer needs, product characteristics and local trade
practices. DSD is well suited for products that are restocked often and respond to
in-store promotion and merchandising.

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 Exhibit 348:

PepsiCo 45% 55%

Beverage Food
APAC 20% 80%

AMESA 30% 70%

Europe 55% 45%

LatAm 10% 90%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: Company reports

BofA GLOBAL RESEARCH

• Key ingredients include — apple, orange and pineapple juice and other juice
concentrates, aspartame, corn, corn sweeteners, flavorings/ seasonings, flour,
grapefruit, oranges and other fruits, oats, potatoes, raw milk, rice, seasonings,
sucralose, sugar, vegetable/essential oils and wheat. During 2021 and into 2022,
PEP experienced higher than anticipated commodity, packaging and other input
costs and, in some instances, limited shortages due to global inflation, supply chain
disruptions, labor shortages, increased demand and other regulatory and
macroeconomic factors associated with the COVID-19 pandemic.

PEP top line drivers

Exhibit 349: Consolidated top line drivers
Price/mix accelerated in FY22
Total PepsiCo FY17 FY18 FY19 FY20 FY21 FY22
Volume Growth (in Kilos) 0.0% 1.0% 0.5% 2.0% 4.0% 0.0%
Price/Mix Growth 3.0% 3.0% 4.0% 2.0% 5.0% 14.3%
Organic 2.0% 4.0% 4.5% 4.0% 10.0% 14.3%
FX 0.0% -1.0% -2.0% -2.0% 1.0% -2.8%
Acq/Div -1.0% -1.0% 1.0% 3.0% 2.0% -2.8%
Total sales growth 1.0% 2.0% 3.9% 4.8% 12.9% 8.7%
Source: Company reports
BofA GLOBAL RESEARCH

Exhibit 350: PEP- sales drivers in 2022 Exhibit 351: PEP - average organic revenue growth %
Pricing (+16%) was a clear drivers of sales growth in 2022 vs. organic vol -2% Average growth accelerated over the 2019-22 period vs. 2016-18

Volume % Pricing % Organic sales % 21% 2016-18 avg 2019-22 avg

9.5% 9.4%
25% 12% 10%
18% 19%
20% 10% 15% 9%
10% 12% 8% 7.3%
15% 6.6%
7% 6.2%
10%
6% 4.7%
5% 5%
0% 4%
-5% 3% 1.6%
1.5%
-10% 2%
1%
-15% 0%
Frito-Lay Quaker PepsiCo Latin Europe Africa, ME Asia Pac, Total PEP North America PEP Int'l (developing Global convenient Global beverages
NA Foods NA Beverages America and So AU/NZ and & emerging) foods (industry) (industry)
NA Asia China
Source: Company reports Source: Company reports
NA= North America, ME = Middle East NA= North America, ME = Middle East
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

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 Exhibit 352: Global brand net revenue growth (2020-22 CAGR)
Global snack brands posted strong sales growth over the last 2 years
16%
13%

12% 11% 11%

9%
8%
8% 7%

4%

0%
Gatorade Doritos Cheetos Lay's Mtn Dew Pepsi-Cola

Source: PEP 2023 CAGNY presentation

BofA GLOBAL RESEARCH

Exhibit 353: et sales ($mns) and key drivers by division

Europe was the only division to report a decrease in YoY sales
FY17 FY18 FY19 FY20 FY21 FY22
Frito Lay North America
Net Revenues 15,798 16,346 17,078 18,189 19,608 23,291
Volume Growth (in Kilos) 1.0% 1.0% 2.0% 3.0% 2.0% 0.4%
Price/Mix Growth 2.5% 2.0% 3.0% 3.0% 5.0% 16.2%
FX 0.0% 0.0% 0.0% 0.0% 0.5% -0.3%
Acq/Div/other -2.0% 0.0% 0.0% 1.0% 0.0% 2.2%
Total Growth 2.0% 3.5% 4.5% 7.0% 8.0% 18.8%
Organic Growth 3.0% 3.0% 4.5% 6.0% 7.0% 16.7%

Quaker Foods North America

Net Revenues 2,503 2,465 2,482 2,742 2,751 3,160
Volume Growth 0.0% -0.5% 0.0% 10.0% -7.0% -3.2%
Price/Mix Growth -1.0% -1.0% 1.0% 0.0% 7.0% 16.0%
FX 0.0% 0.0% 0.0% 0.0% 1.0% -0.3%
Acq/Div/other -2.0% 0.0% 0.0% 0.0% 0.0% 2.3%
Total Growth (Net Rev Only) -2.0% -1.5% 1.0% 10.0% 0.0% 14.9%
Organic Growth -1.0% -2.0% 1.0% 11.0% 0.0% 12.8%

Latin America
Net Revenues 7,208 7,354 7,573 6,942 8,108 9,779
Volume Growth (Kilo volume) -2.0% 1.0% 0.0% 0.0% 4.0% 4.6%
Price/Mix Growth 7.0% 7.0% 7.0% 3.0% 10.0% 16.4%
FX 1.0% -6.0% -4.0% -11.0% 2.0% 0.2%
Acq/Div/other -0.5% 0.0% 0.0% 0.0% 0.0% -1.0%
Total Growth 6.0% 2.0% 3.0% -8.0% 17.0% 20.6%
Organic Growth 5.0% 8.0% 7.0% 3.0% 15.0% 21.0%

Pepsi Beverages North America (PBNA)

Net Revenues 20,936 21,072 21,730 22,559 25,276 26,213
Volume Growth (CSE) -2.5% -1.0% -1.0% -1.0% 5.0% 0.8%
Price/Mix Growth 1.0% 2.0% 4.0% 3.0% 5.0% 10.5%
FX -2.0% 0.0% 0.0% 0.0% 0.5% -0.2%
Acq/Div/other 0.0% 0.0% 1.0% 2.0% 1.0% -7.1%
Total Growth -2.0% 1.0% 3.0% 4.0% 12.0% 3.7%
Organic Growth 0.0% 0.5% 3.0% 2.0% 10.0% 10.9%

Europe
Net Revenues 11,050 10,973 11,728 11,922 13,038 12,724
Volume Growth (Kilo volume) 3.0% 5.0% -1.0% 6.0% 4.5% -7.8%
Price/Mix Growth 2.0% 3.0% 6.0% 0.0% 4.0% 19.1%
FX 3.0% -2.0% -5.0% -4.0% 0.5% -9.0%
Acq/Div/other 0.0% -0.5% 6.0% 0.0% 0.0% -5.1%
Total Growth 8.0% 4.0% 7.0% 2.0% 9.0% -2.4%
Organic Growth 6.0% 7.0% 5.5% 6.0% 9.0% 11.7%

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 Exhibit 353: et sales ($mns) and key drivers by division
Europe was the only division to report a decrease in YoY sales
FY17 FY18 FY19 FY20 FY21 FY22
Africa, Middle East and South Asia
Net Revenues 6,030 3,657 3,651 4,573 6,078 6,438
Volume Growth (Kilo volume) 0.0% 1.5% 4.0% 1.0% 7.0% 4.7%
Price/Mix Growth 5.0% 4.0% 2.5% 0.0% 4.0% 15.9%
FX -10.0% -2.0% -2.0% -1.0% 4.5% -11.7%
Acq/Div/other 0.0% -4.0% -4.0% 25.0% 17.0% -2.6%
Total Growth -5.0% -0.5% 0.0% 25.0% 33.0% 5.9%
Organic Growth 5.0% 5.0% 6.0% 1.0% 12.0% 20.2%

Asia Pac, AU/NZ & China

Net Revenues n/a 2,794 2,919 3,445 4,615 4,787
Volume Growth (Kilo volume) n/a 6.0% 7.0% 5.0% 12.0% 4.5%
Price/Mix Growth n/a 2.0% 2.0% 3.0% 1.0% 6.2%
FX n/a 1.0% -3.0% 0.0% 6.0% -5.1%
Acq/Div/other n/a -11.0% -2.0% 10.0% 15.0% -0.8%
Total Growth n/a -3.0% 4.5% 18.0% 34.0% 3.6%
Organic Growth n/a 8.0% 9.0% 8.0% 12.0% 10.6%
Source: Company reports
BofA GLOBAL RESEARCH

Operating income
Exhibit 354: PEP segment profit mix (2022)* Exhibit 355: Op margin by segment
Total segment profits reached $14.3bn in 2022 FLNA is its highest margin segment at 27%, 13pts above its 14% OI margin*

Africa, ME, Asia Pac, 35%

FY21 FY22
South Asia AU/NZ & China 30% 26.9%
6% 5%
25%
Europe 19.3%
20% 17.7%
10% 15.2%
FLNA 13.5%
15% 10.9%
44% 10.2%
No Am 10%
Beverages 5%
19%
0%
FLNA Quaker FLNA No Am Europe Africa, ME, Asia Pac,
Foods NA Beverages South Asia AU/NZ &
Quaker Foods
China
Latin America NA
12% 4%

Source: Company reports, *pre corporate expense Source: Company reports *includes corporate expenses
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Global leader in snacks

For additional information on snacks, please see our US snacking primer 2023 edition
(click here)..

In 1932, Lay’s potato chip business started in Nashville. By 1961 the company merged
with the Frito Company to form Frito-Lay Inc. In 1965, it merged with Pepsi Cola to
form PepsiCo. Quaker Oats was established in 1901 and became part of the PEP family
in 2001. PepsiCo (PEP) is a global leader in convenient foods and beverages with net
sales of $86.4bn in 2022.

PEP participates in what it calls the “Global Convenient Foods” category, which is
defined as savory, sweet, grains and dairy food categories. Excluding foodservice, it
estimates this categories market size (as of 2022) at $600bn+, with PEP holding an 8%
share.

PEP’s salty snack portfolio, known as Frito-Lay, includes such well-known brands as
Lay’s, Doritos, Cheetos, Tostitos, Ruffles, Fritos, Sun Chips, Smartfood and many others.
It also sells food under the Quaker label and beverage products which include Gatorade,
Pepsi-Cola, Mountain Dew, Soda Stream and many others. PEP sells over 500 brands.

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North America snack strategy
Overarching global strategy in snacks is to increase household penetration, build scale
and expand beyond core salty snack categories.

In North America, PepsiCo has a best in-class snacking franchise. It is supported

by a sophisticated direct store distribution system which is differentiated from
competitors because it has the scale to service large and small format channels
profitably. This network is supported by a modernized manufacturing complex able to
produce a large variety of product forms (extruded, fried, baked, popped) and sub
straights (Potato, corn, wheat, rice,) and packaging forms (from single serve to multi-
packs). The product portfolio continues to diversify with large brands like Doritos,
Cheetos, Lay’s, Ruffles, Tostito’s and Frito’s complimented by a growing cadre of
smaller more nutritious brands such as PopCorners, Smartfood, and SunChips. There is
also a focus on innovation around flavors, textures and packaging, examples include:
Frito-Lay Minis - bite-size versions Doritos, Cheetos and Sun Chips snacks packed in
canisters. Crossovers such as Lay’s Kettle Cooked Fritos Chili Cheese, Lay’s Cheetos,
Lay’s Doritos Cool Ranch, and Lay’s Wavy Funyuns. Extended flavors to its healthy line
up include SunChips Black Bean Spicy Jalapeno and Southwestern Queso and PopCorners
Cinnamon Crunch.

In developing and emerging markets, Pepsi has steadily gained scale, focused on
large brands such as Doritos, Cheetos, and Lay’s. The company believes it has a
competitive advantage in agriculture with proprietary seed for Potato and Corn. The
company has been investing in brands and go to market capabilities. Over the past 5
years, Pepsi has seen a meaningful number of countries increase sales from $100m to
$300m. Other countries outside of the US where Pepsi snacks have a meaningful market
share and contribution to overall revenue are Mexico (Sabritas/Gamesa) and the United
Kingdom (Walker’s).

Regional snack share

While PEP’s overall retail share in snacks globally is 8.2%, it enjoys a double-digit share
in both Latin America and North America. In savory snacks, its global share jumps to
22%, ranging from a low of 5.5% in the Asia Pacific region to a high of 40% in the USA.
Strongest sub-segments are tortilla chips, potato chips and puffed snacks. PEP’s
worldwide share in snacks grew from 7.4% in 2017 to 8.2% in 2022.

Exhibit 356: hare by region (2022 %)

Worldwide PEP holds an 8% share in snacks, with particular strength in salty snacks (39% share)
Nuts,
Seeds
Savory & Trail Salty Potato Tortilla Puffed Rice Veggie Meat Other Savory
Snacks snacks Mixes Snacks Chips Chips Snacks Snacks snacks Snacks Crackers Popcorn Pretzels Snacks
World 8.2 22.0 4.5 38.6 39.6 64.2 32.7 5.4 16.8 1.9 1.8 16.5 6.4 17.2
Asia Pacific 2.6 5.5 4.0 9.7 20.9 38.4 3.4 1.9 - 10.3 0.5
Australasia 7.7 25.8 22.5 37.1 44.5 63.3 34.1 18.4 - 2.1 2.9 81.8 6.0
Eastern Europe 4.4 20.2 - 32.7 42.2 4.2 19.6 18.2 0.5 6.3 3.5
Latin America 14.3 38.0 22.8 55.2 49.8 55.0 64.3 3.5 13.5 7.0 3.5 34.8 49.3
Mid East, Africa 6.4 26.1 5.5 32.0 35.6 47.1 19.6 33.6 0.1 0.3
North America 17.1 39.8 3.0 66.5 60.6 72.7 75.3 72.4 27.9 2.5 1.3 22.0 7.8 76.5
USA 17.3 40.0 3.2 66.9 60.2 73.2 76.0 74.9 27.2 2.6 1.2 20.5 6.4 77.7
Western Europe 4.0 15.1 3.2 28.6 28.1 41.1 29.5 9.9 3.0 0.5 2.3 -
Source: Euromonitor
BofA GLOBAL RESEARCH

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Regional salty snack value share trends
Exhibit 357: -2022 (%)
Over the 2017-22 period, PEP gained 50bps of value share, with gains in Asia Pac, ME/Africa, and North
America offset by declines in Australasia, E Europe, Latin America and Western Europe
5Y chg
2017 2018 2019 2020 2021 2022 (bps)
World 38.1 37.8 37.8 37.8 38.0 38.6 0.5
Asia Pacific 9.2 9.7 9.7 9.8 10.0 9.7 0.5
Australia 37.5 37.5 37.5 37.4 37.3 37.1 -0.4
E Europe 34.7 34.6 35.1 34.8 35.5 32.7 -2.0
Latin America 56.6 55.6 55.5 53.8 54.7 55.2 -1.4
ME, Africa 29.3 29.3 28.6 28.9 29.7 32.0 2.7
No America 66.2 66.0 66.0 66.3 66.6 66.5 0.3
USA 66.7 66.3 66.3 66.7 67.0 66.9 0.2
W Europe 29.9 29.3 28.8 28.6 28.4 28.6 -1.3
Source: Euromonitor
BofA GLOBAL RESEARCH

Keurig Dr Pepper
Keurig Dr Pepper. is a leading (#3 player) integrated brand owner, manufacturer and
distributor of non-alcoholic beverages in the United States, Mexico and Canada with a
diverse portfolio of flavored (non-cola) carbonated soft drinks ("CSDs") and non-
carbonated beverages ("NCBs"), including ready-to-drink teas, juices, juice drinks, water
and mixers. It is the #1 flavored US CSD company with ~83% of its bottler case sales
(BCS) volumes from brands that are either #1 or #2 in their category. In January 2017, it
acquired Bai Brands for $1.7bn.

• KDP’s key brands include Keurig, Dr Pepper, Canada Dry, Snapple, Bai, Mott’s Core,
Green Mountain and The Original Coffee Shop. KDP offers >125 owned, licensed
and partner brands.

• In the US it holds the #1 share in single-serve brewers, flavored CSDs, and mixers
and #2 position in premium water, shelf-stable premium RTD tea, and fruit
juices/drinks

• In Canada it holds the #1 position in single-serve brewers, flavored CSDs and

tomato/seafood juice and the #4 position in RTD alcohol

• In Mexico, KDP has the #1 mineral water, #1 tomato/seafood juice and the #2 spot
in flavored CSDs

• In 2022, partner brands include evian water, Polar Beverages Seltzer Water, Vita
Coco coconut water, A Shoc energy drinks and Peet’s RTD Coffee. It also licenses
trademarks for Sunkist soda, Stewart’s Rose’s and Margaritaville from third parties.

• New strategic partnerships: Since the merger, KDP has invested $1.5bn to build
the #2 share in premium water. In October 2022, its announced a strategic
partnership with Red Bull (energy) to sell and distribute Red Bull energy drinks in
Mexico (started 4Q22). In December 2022 it invested in Nutrabolt, including a
distribution partnership for C4 energy. KDP spent $863mn in late 2022 for ~30%
ownership in Nutrabolt. It began distributing C4 in early 2023. It also acquired
global rights to Atypique (non-alcoholic ready-to-drink cocktails), Tractor (offering
certified organic non GMO beverage solutions to fountain foodservice) and made an
investment in Athletic Brewing Company ($51mn, non-alcoholic beer).

• During 2022, KDP launched K-Café SMART single-serve coffee, latte and cappuccino
maker, which combines our BrewID technology platform with a built-in milk frother
to create a full range of hot, iced, and specialty coffee drinks. The K-Café SMART
also connects to its mobile app, which provides more than 80 easy-to-follow

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 coffeehouse drink recipes. It also launched Keurig iQ, a proprietary database
providing insights on K-Cup pod consumption and shopping behaviors that
management believes would enhance the consumer experience. Finally KDP entered
into new partnerships with BLK & Bold Specialty Beverages and Intelligensia Coffee
to provide these premium brands in K-cup pod format.

• In 2022, it launched Snapple Elements, a line of teas and juice drinks in 3 flavors:
Rain, Fire and Air.

• KDP’s long-term organic growth algorithm: Net sales of +mid-single digits,

adjusted EPS of +high single digits and total shareholder return of +high-single/low-
double-digits.

• KDP’s principal raw materials represent ~55% of its cost of sales and include green
coffee, PET bottles and caps, including both virgin and rPET, aluminum cans and
ends, sweeteners, paper products, K-Cup pod packaging materials, fruit, glass
bottles and enclosures, juices, teas, water, CO2, and other ingredients. KDP also
uses use post-consumer recycled materials in the manufacturing of single serve
brewers.

Exhibit 358: (2022)

KDP holds a top 2 position in many sub-segments
Brand No America market position
CSDS Dr Pepper # 1 in its flavor category and #2 overall flavored CSD in the US
Canada Dry #1 ginger ale in US/Canada
A&W #1 root beer in the US
Squirt #1 grapefruit CSD and leading grapefruit CSD in Mexico
Penafiel #1 carbonated mineral water in Mexico
Sunkist soda #1 orange flavor CSD in the US
Schweppes #2 ginger ale in the US/Canada
7UP #2 lemon-line CSD in the US
Crush #3 orange flavored CSD in the US
NCBS Snapple #2 premium shelf stable RTD tea in the US
Hawaiian Punch A leading branded shelf stable juice in the US
Mott's #1 branded multi-serve apple juice, sauce in the US
Clamato A leading spicy tomato juice int eh US, Canada, & Mexico
Bai #3 enhanced water in the US
Core A rapidly growing water brand in the US
Single serve coffee (pods) Green Mountain #2 k-cup in the US
The Original Donut Shop #5 k-cup in the US
McCafé #6 k-cup in the US
Van Houtte #2 k-cup in Canada
Single Serve brewers Keurig #1 single serve brewer in the US/Canada
Source: Company reports
BofA GLOBAL RESEARCH
• KDP’s principal markets are the US, Canada and Mexico. Mexico accounts for ~90%
of its Latin American sales. Latin America focuses mans in the carbonated mineral
water, flavored CSD, bottled water and vegetable juice categories. The largest
brands include Peñafiel, Clamato, Squirt, Mott's, Dr Pepper, Crush and Aguafiel.

• Its coffee systems segment manufactures >80% of the pods in single-serve

format in the US ($ basis). KDP manufactures and sell 100% of the k-cup brands:
Green Mountain Coffee Roasters, The Original Coffee Shop, McCafé, Laughing Man,
REVV and Van Houtte. It manufactures and sells partner k-cup brands: Starbucks,
Dunkin, Folgers, Peets, Newman’s Own Organics, Caribou Coffee, Eight O’Clock,
Maxwell House and Tim Horton’s as well as private label brands. It also
manufactures tea partner brands for Celestial Seasonings, Lipton and Tazo along
with its Snapple brand. In Cocoa, it has a licensing agreement for the Swiss Miss
brand.

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• Its packaged beverage business includes sales from its own brands plus contract
manufacturing of certain private label and emerging market brands. It also
distributes partner brands such as evian, Vita Coco, Polar Beverages seltzer, A Shoc
energy drinks, Peet’s RTD coffee and Runa energy drinks. It sells packaged
beverages through DSD and WH (warehouse) delivery.

• KDP expanded the Keurig brewing system to 38mn US households as of 2022,

+10mn household increase since 2018.

• DSD coverage – as of 2021, 100% of the US population was covered with DSD –
77% company owned and 23% through strategic partnerships. Since the merger,
KDP has enhanced its DSD effectiveness, with 22 acquisitions that enhanced
breadth and depth of its DSD system.

• Raw materials — Key ingredient and packaging costs are aluminum cans and ends,
glass bottles, PET bottles, caps, paper products, sweeteners, juice, fruit, water and
other ingredients. Under many of its supply arrangements, the price DPS would pay
for raw materials fluctuates along with certain changes in underlying commodities
costs, such as aluminum in the case of cans, natural gas in the case of glass bottles,
resin in the case of PET bottles and caps, corn in the case of sweeteners and pulp in
the case of paperboard packaging. These costs represent 59% of DPS’s COGS.

• In 2020, KDP achieved its goal of making all of its K-Cup pods sold in the U.S. and
Canada from recyclable materials. The K-Cup pods are made of polypropylene #5
plastic, and the company continues to engage with municipalities and recycling
facilities to advance the quantity and quality of recycled polypropylene. It also
achieve its goal of responsibly sourcing 100% percent of its coffee by 2020.

Numerous owners of the years

Dr Pepper Snapple brands have had many owners over the years, including Cadbury
Schweppes, the Trian Group, and Thomas Lee Investments, among others. These brands
have also been part of the publicly traded companies of Dr Pepper Seven-Up, Snapple
Beverage Corp and A&W Brands.

On January 29, 2018, Dr Pepper Snapple and Keurig Green Mountain announced intentions to
merge. Keurig Dr Pepper would have approximately $11bn in combined pro forma sales. Dr
Pepper Snapple shareholders received $103.75/share in a special cash dividend and retained
13% of the combined company. The transaction closed July 9, 2018.

1969 — Cadbury Schweppes was formed with the merger of Cadbury and Schweppes

1982 – Cadbury Schweppes acquired the Duffy-Mott Company (now known as Mott's),
one of the largest apple juice processors in the world. Through the rest of the decade,
the company added Canada Dry, Sunkist Soda, Crush and Sun Drop.

1993 — Cadbury acquired A&W Brands, which included the signature root beer and
cream soda, as well as Squirt and Vernors.

1995 — Cadbury Schweppes purchased the publicly traded Dr Pepper/Seven Up, Inc. The
acquisition brought Dr Pepper and 7UP, along with IBC Root Beer and the Welch's soft
drink line.

2000 —Cadbury Schweppes acquired Snapple Beverage Group, which included the
namesake brand as well as RC Cola, Diet Rite and Stewart's, among others.

2003 — the four North American beverage companies under Cadbury Schweppes -Dr
Pepper/Seven Up, Inc., Snapple Beverage Corp., Mott's, and Bebidas Mexico - were

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unified under a common vision, business strategy and management structure to become
Cadbury Schweppes Americas Beverages.

2006 — The company established its own bottling and distribution network when it
acquired full ownership of Dr Pepper/Seven Up Bottling Group, the largest independent
bottler in the US. Subsequently, it acquired several other major independent bottling and
distributing businesses, including All-American Bottling Co., 7UP Bottling Co. of San
Francisco, and Southeast-Atlantic Beverage Corp., among others.

In May 2008 Dr Pepper Snapple Group was formed when Cadbury Schweppes plc spun
off its North American beverage business. The confection business of Cadbury
Schweppes was later sold to Kraft/Mondelez.

In July 2018, the company changed its name to Keurig Dr Pepper (ticker KDP) following
the merger of Keurig Green Mountain and Dr Pepper Snapple Group.

2022 highlights
In 2022, net sales grew 10.8% (or 11.1% on a constant currency basis) to $14.06bn.
Pricing drove net sales in 2022 (+10.6%) and to a lesser extent volume (+0.5%).
Operating profits climbed by 3.7% to $3.54bn. Its adjusted consolidated OI margin was
25.2%. EPS advanced 5% to $1.68.

By division, 2022 net sales constant currency growth was strongest in Latin America
(+23%), followed by beverage concentrates (+16%), packaged beverages (+12%) and
coffee systems (+6%).

Returned $1.5bn to shareholders through dividends and opportunistic share buybacks of

10.6mn KDP shares.

KDP ended the year with a leverage target ratio of 2.8x, down from 6.0x at the time of
the merger, with a goal of 2.0-2.5x over time.

Exhibit 359: KDP Organic sales growth % Exhibit 360: Keurig brewer households Exhibit 361: Organic sales % by segment
Volume/mix was +0.5%, net price realization 10 mn new users were added since 2018 (2022)
+10.6%. 45 Coffee underperformed cold beverages
38 30%
12% 36
11% 23%
33
30
28 20% 16%
30
8%
12%
8% 11%
10% 6%
5%
15
4% 0%

1%

0
0%
2018 2019 2020 2021 2022
2019 2020 2021 2022
Source: Company reports Source: Company reports
Source: Company reports
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

In 2022, coffee system brewer growth fell 5.2% (cycling +10% brewer growth in 2020),
while k-cup pod volumes increased +1.4%, following a strong +5.6% increase during the
pandemic. Beverage concentrate shipments and bottler case volumes were +1.6% and
flat in 2022.

Overall volume/mix was +0.5%, net price realization +10.6%.

136 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 362: KDP sales mix (2022) Exhibit 363: KDP gross margins
Soft drinks accounted for 65% of sales in 2022 Broad-based inflation was only partly offset by net price realization and
productivity.
59%
Beverage
concentrate 56.9%
12% 57%
Coffee 56.2%
55.9%
systems 55.5%
36% 56% 55.1%

Packaged 53.8%
beverages 54%
47%
Latin America 53%
beverages
5%
51%
Source: Company reports 2017 2018 2019 2020 2021 2022
BofA GLOBAL RESEARCH
Source: Company reports
BofA GLOBAL RESEARCH

KDP revenue drivers

Exhibit 364: Revenue drivers by division
Pricing was the main driver of sales growth in 2022
Dec-17 Dec-18 Dec-19 Dec-20 Mar-21 Jun-21 Dec-21 Dec-22
Coffee system metrics
Brewer growth na -1.5% 8.2% 21.0% 61.0% 29.0% 10.0% -5.2%
Pods - shipment growth na 7.4% 9.0% 6.3% 13.7% 0.2% 5.6% 1.4%
Pods - retail consumption growth na na 5.0% 10.0% na na 2.7% 4.9%
Beverage concentrate metrics
Shipment volume na na 0.1% -5.1% 1.0% 7.0% 1.1% 1.6%
Bottler case volume na 0.6% -0.3% -2.4% -3.1% 8.1% 2.0% 0.0%
Foodservice volume na 1.7% na na na na na na
Volume/mix growth
Beverage concentrate 2.0% 0.6% 1.1% -5.8% -0.7% 10.3% 2.0% 0.6%
Packaged beverages 0.0% 5.4% 0.5% 8.2% 6.8% 6.2% 6.0% -1.2%
Latin America beverages 3.0% 0.7% 0.0% -2.0% -2.6% 16.6% 7.3% 4.1%
Coffee systems na 3.2% 6.1% 7.2% 19.5% 3.5% 6.5% -0.8%
Total KDP volume % na 3.7% 2.7% 5.6% 10.3% 6.1% 5.7% 0.5%
Net price realization %
Beverage concentrate 1.8% 3.2% 5.3% -0.4% 7.2% 10.4% 9.7% 12.9%
Packaged beverages 2.4% 0.1% 1.8% 0.3% 0.4% 1.1% 3.5% 6.4%
Latin America beverages 7.6% 5.5% 4.5% 5.8% 10.3% 4.2% 6.8% 11.4%
Coffee systems na -3.7% -2.9% -2.4% -2.6% 0.4% -0.9% 7.0%
Total KDP price % na -0.8% 0.6% -0.6% 0.5% 2.0% 2.7% 10.6%
Organic revenue growth
Beverage concentrate 3.8% 3.8% 6.4% -6.2% 6.5% 20.7% 11.7% 13.5%
Packaged beverages 2.4% 5.5% 2.3% 8.5% 7.2% 7.3% 9.5% 5.2%
Latin America beverages 10.6% 6.2% 4.5% 3.8% 7.7% 20.8% 14.1% 15.5%
Coffee systems na -0.5% 3.2% 4.8% 16.9% 3.9% 5.6%
Total KDP revenue na 2.9% 3.3% 5.0% 10.8% 8.1% 8.4% 11.1%
FX impact
Beverage concentrate 0.0% 0.0% -0.2% -0.1% 0.7% 0.7% 0.5% 0.0%
Packaged beverages 0.0% 0.0% 0.0% 0.0% 0.2% 0.3% 0.2% 0.0%
Latin America beverages -4.8% -2.3% -0.2% -9.7% -0.9% 17.5% 6.4% -2.1%
Coffee systems na -0.1% -0.4% -0.1% 0.5% 1.7% 0.8% 0.0%
Total FX impact na -0.1% -0.2% -0.5% 0.3% 1.5% 0.8% -0.3%
Change in revenue
Beverage concentrate 3.8% 3.8% 6.2% -6.3% 7.2% 21.4% 12.2% 13.5%
Packaged beverages 3.7% 4.3% -2.4% 8.5% 7.4% 7.6% 9.7% 5.2%
Latin America beverages 5.8% 3.9% 4.3% -5.9% 6.8% 38.3% 20.5% 13.4%
Coffee systems na -0.6% 2.8% 4.7% 17.4% 5.6% 6.4% 5.6%
Total reported revenue na 2.3% 0.9% 4.5% 11.1% 9.6% 9.2% 10.8%
Source: Company reports
BofA GLOBAL RESEARCH

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 Exhibit 365: KDP: Op profit split (pre corporate), 2022 Exhibit 366: KDP: Operating margin* by division
Op income +3% to $14.06bn in 2022 Beverage concentrate op. margins reached 71.5% in 2022
90.0%

71.5%
71.0%
68.3%
2020 2021 2022

Beverage 60.0%
concentrate

33.7%
32.8%
Coffee systems 31%

30.3%

27.0%
26.7%

25.2%
37%

22.5%
22.3%

21.7%
19.1%
18.9%
17.2%
30.0%
Packaged
beverages
28%
Latin America 0.0%
beverages Beverage Packaged Latin America Coffee systems Total KDP
4% concentrate beverages beverages

Source: Company reports Source: Company reports *includes corporate costs in total KDP
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Coca-Cola Europacific Partners (CCEP)

In May 2021 Coca-Cola European Partners (CCEP) completed the acquisition of Coca-
Cola Amatil and changed its name to Coca-Cola Europacific Partners (CCEP). The
company produces and distributes beverages across Europe and Asia Pacific and is
recognized as the world's largest Coca-Cola bottler based on net sales. Coca-Cola
Europacific Partners (CCEP) is the largest Coca-Cola bottler in revenue terms. It serves a
population of >600mn people across 29 markets. In 2022, It served ~2.0mn customers
and owns ~1.3mn coolers.

• In 2022 net sales totaled €17.3bn, operating profit totaled €2.14bn and adjusted
free cash flow reached 1.8bn. CCEP does not participate in the US market.

Key brands include Coca-Cola, Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Sprite and
Monster and targeted expansion into categories such as coffee and alcohol. Key
hydration (water) brands include smartwater, Chaudfontaine, Aquarius, Vilas del Turbon,
BonAqua and Apollinaris. In the RTD tea/coffee, juices and more segment, key brands
are Honest, Costa Coffee, fuze tea, Chaqwa, Nestea, Capri-Sun, Oasis, Minute Maid, Mer
and Tropico.

Mid-term objectives as of YE2022: Revenue growth of ~4%, operating profit growth

of ~7%, free cash flow of ~€1.7bn annually, net debt/ebitda of 2.5x to 3.0x, ROIC
+~50bps annually, capital expenditures of ~4-5% of sales and dividend payout of ~50%.
Ownership: The Coca-Cola Company holds a 19% stake in CCEP, Cobega SA holds a
36% share and free float is ~45%.

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Exhibit 367: CCEP geographic sales mix (2022) Exhibit 368: CCEP -- 2022 volume by product type
7.3bn, with 78% (84% in2021) of sales from Coca-Cola Classic/Zero/Light represented 58.5% of its volume
Europe
Energy
Indonesia & 4% RTD tea/coffee
PNG 3%
France 5% Flavors/mixers
Australia 12% 22% Juices, other
13% 3%
NZ & Pacific Waters
Islands 5%
No Europe 4% Isotonics
15% CC Zero/Light
Great Britain 23% 3%
18%
Alcohol
Germany Coca-Cola 1%
15% Classic
Iberia
35% Hot coffee
18%
1%

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 369: NARTD market mix (2022) 2022 volume performance by category
While hydration is nearly 60% of volume it is just 27% of value Coca-Cola trademark = +8%; including +10% for Coca-Cola Zero
Sugar

Volume 28% 15% 57%

Flavors, mixer and energy = +11.5%, including +18.5% in energy

Hydration = +16%, including +23% for sports drinks

Sparkling Stills Hydration
RTD tea, RTD coffee, juices and other - +7%, including +28%
growth for FUZE tea
Value 46% 27% 27%

0% 20% 40% 60% 80% 100%

Source: Company reports

NARTD= Non-alcoholic ready-to-drink
BofA GLOBAL RESEARCH

Exhibit 370: Product mix by geo region/country (2022)

This compares to the industry volume average of 28% sparkling, 15% stills and 57% hydration

Coca-Cola family Flavors, mixers, energy RTD, juices, other Hydration Alcohol & hot coffee

90%

60%

30%

0%
Germany GB France & Iberia No Europe Australia Indonesia & NZ & Pac
Monaco PNG Islands

Source: Company reports

GB= Great Britain
BofA GLOBAL RESEARCH

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 Exhibit 371: CCEP packaging mix (2022, individual units) Exhibit 372: Away from Home (AFH) volume by region
PET share increased 3pts, while can shared dropped 4pts Overall, AFH represents 44% of volume and 47% of value in 2022
120% 90%
PET Can Glass Postmix & other AFH. 2019 AFH, 2021 AFH 2022
75%

12% 66%
90% 13%
10% 10% 60%
51%
46% 45%
60%
47% 43% 35%
28% 30%
30%

30%
31% 34%
0%
0% Germany GB France & Iberia No Europe Australia Indonesia NZ & Pac
2021 2022 Monaco & PNG Islands

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 373: 2) Exhibit 374:

Its overall share was ~27% *
80%

61%
60%

40%
27% 27%

20%
8% 6%
5%
<1%
0%
Sparkling Energy RTD tea & Hydration Other LRBs Hot coffee Sparkling Energy RTD tea & Hydration Other Hot coffee
coffee coffee

Source: Company reports Source: Company reports *ex. hot coffee

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Revenue drivers
Exhibit 375: CCEP: revenue drivers
Organic net sales rose 15.5%, including volume % of +9.5% and pricing/case of +6%
2019 2020 2021 2022
TOTAL CCEP
Volume % 4.5% 9.5%
Net pricing/case (FX Neutral) 3.0% 6.0%
Other organic (Post mix, non-trade) 0.0% 0.0%
TOTAL CCEP - Organic consolidated revenue growth 7.5% 15.5%
FX 2.0% 1.5%
Other (selling day shift, sugar tax) 0.0% -0.1%
TOTAL CCEP - Total sales growth % 9.5% 16.9%

EUROPE
Volume % 1.0% -10.0% 5.0% 11.0%
Net pricing/case (FX Neutral) 2.0% -1.5% 3.5% 5.5%
Other organic (Post mix, non-trade) 0.0% 0.0% 0.0% 0.0%
EUROPE - Organic consolidated revenue growth 3.5% -11.5% 8.5% 16.5%
FX 0.0% -0.5% 1.0% 0.5%
Other (selling day shift, sugar tax) 1.0% 0.0% 0.0% 0.0%

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 Exhibit 375: CCEP: revenue drivers
Organic net sales rose 15.5%, including volume % of +9.5% and pricing/case of +6%
2019 2020 2021 2022
EUROPE - Total sales growth % 4.3% -11.7% 9.2% 17.0%

API (Australia, Pacific and Indonesia)

Volume % 4.0% 5.0%
Net pricing/case (FX Neutral) 3.0% 7.0%
Other organic (Post mix, non-trade) 0.0% -0.2%
API - Organic consolidated revenue growth 7.0% 11.8%
FX 3.5% 5.0%
Other (selling day shift, sugar tax) 0.0% 0.1%
API - Total sales growth % -9.0% 10.4% 16.9%
Source: Company reports
BofA GLOBAL RESEARCH

Zevia
ZVIA produces zero sugar, zero calorie, natural sweetened beverages made with stevia
primarily in the U.S. 86% (FY20), 87% (FY21) 88% (FY2022) net sales from carbonated
soft drinks and since 2016 the company has started to expand into other beverage
categories like Energy (5% of FY20 net sales19) and Organic Tea (4% of FY20 net sales).
ZVIA operates a warehouse model to sell its products in different channels. Zevia’s fiscal
year end December 31.

Zevia in process of reducing its co-manufacturers from 17 to 9 different co-

manufacturers (ZVIA does not own manufacturing facilities) to simplify its supply chain.
Its products are distributed from full-service third-party warehouses and distribution
centers across the U.S. and Canada. The company manages the shipping of products
from distribution centers to final customers and retailers are responsible for product
placement.

The US represented 89%/ 86.8%/91% of FY22/21/20 sales, with Canada accounting for
the remainder. ZVIA had an initial public offering on July 26, 2021.

2022 highlights
• Net sales of $163.2 million, an 18% increase versus 2021.

• Online sales represented 11.1% of sales in 2022, as compared to 13.2% in 2021.

• Unit volume was 13.6 million equivalized cases, up 10.7% from 2021

• Gross profit margin of 42.9% vs. 44.3% (2021) and 45.0% (2020), reflecting higher
manufacturing costs as a result of inflationary pressure, partly offset by price/mix

• Net loss of $0.81 per diluted share to Zevia’s Class A Common stockholders.

• Adjusted EBITDA loss was $47.6 million in 2022 (including $26.9mn in equity-based
comp expense) and an adj. EBITDA loss of $19.6mn.

• Zevia’s household penetration grew from 4.6% (2020) to 5.4% (2021) to 6.4%
(2022).

19 Latest data available

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 Exhibit 376: ZVIA net sales by country Exhibit 377: ZVIA FY20 net sales by channel
The US is the most important market for ZVIA 60% of ZVIA sales are from the Food/Drug/Mass channel

US Canada Canada Other

100% 9% 1%
Online
9% 13%
11%
13%

90%
Food/Drug/
91% Natural Mass
89% 17% 60%
87%

80%
2020 2021 2022
Source: Company reports Source: Company repots
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

roduct overview
Soda –Flagship product released in 2008, is the better for you alternative to
conventional sodas and diet sodas with no artificial ingredients. Soda is available in 1 5
different flavors.

Energy –Energy drinks are zero sugar energy drinks that contain 120mg of organic
caffeine. ZVIA offers Energy in 6 flavors: The company first released its Energy drinks in
2016.

Organic Tea – ZVIA’s Organic Tea is a pioneer in the zero calorie, naturally sweetened
ready to drink tea segment, and was released in 2018. Zevia organic tea is USDA
Organic and brewed with Fair Trade Certified Tea. The company offers Organic Tea in a
variety of eight flavors, including two caffeine free options.

Mixers – Mixers are non-alcoholic mixers that are meant to complement any cocktail or
mocktail or can be enjoyed straight out of the can. ZVIA offers mixers in three flavors:
Ginger Beer, Tonic and Lemon Lime with Bitters. The company first released its Mixers
in 2017.

Kidz – Kidz is ZVIA’s product line for kids, packaged in smaller cans for smaller hands,
and the right size for lunch boxes and afternoon snacks. Kidz drinks are available in six
kid friendly flavors and were released in 2020.

Sparking water – ZVIA’s sparkling waters are lightly flavored and are offered in two
flavors: Blackberry and Cucumber Lemon. ZVIA released its sparkling waters in 2016.

Exhibit 378:
Volumes drove sales growth for the last four years
FY18 FY19 FY20 FY21 FY22
YoY change in volumes n/a 31.9% 14.5% 24.8% 10.7%
YoY change in price/mix n/a 4.9% 12.4% 0.6% 6.7%
Sales growth n/a 38.4% 28.6% 25.6% 18.1%
Equivalent cases sold (mms) $6.52 $8.61 $9.85 $12.29 $13.61
Net ASP/Case 9.5 9.9 11.2 11.2 12.0
YoY change in depletions 47% 33% 20%
Source: Company reports
BofA GLOBAL RESEARCH

142 Beverages - Soft Drinks | 23 June 2023

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Management focus
Improving Public Health: The U.S. Centers for Disease Control and Prevention warns
that Americans are consuming too much added sugars in their diets, which can lead to
health problems. One of the leading sources of added sugars in the U.S. diet is sugar-
sweetened beverages. ZVIA’s products help consumers reduce their sugar intake and
avoid artificial ingredients by offering a refreshing and enjoyable zero sugar, naturally
sweetened alternative to high-sugar and artificially sweetened competitors. ZVIA
estimates that by choosing Zevia, its consumers have eliminated almost 53,000 metric
tons of sugar from their diets since 2011.

Providing Access: ZVIA are committed to supporting underserved communities by

partnering with health professionals such as dietitians and nutrition educators to provide
health-focused educational materials, webinars and product samples that educate
patients and address the effects of sugary beverage consumption. ZVIA’s products are
priced at an average retail cost per ounce of $0.07, representing the 36th percentile
within all non-alcoholic, ready-to-drink beverages, excluding dairy and non-dairy protein,
therefore is less expensive than 64% of non-alcoholic beverage options, making Zevia
affordable for a broad range of income levels.

Delivering Sustainability: ZVIA actively seeks to minimize our environmental impact

and continuously re-evaluate our packaging formats and processes to limit
environmental waste. ZVIA have never sold a single plastic bottle, which ZVIA estimate
has eliminated 22.000 metric tons of plastic bottles from littering roadways, waterways,
and its communities by selling only aluminum packaging since 2011 (to 2022). In
addition, one of its main ingredients, stevia, requires less agricultural water resources
than sugar, furthering its sustainability mission. Since 2011, Zevia customers have
eliminated >66,000 metric tons of sugar in their diet (2022).
Creating An Inclusive Company Culture: ZVIA’s social impact mission extends beyond
the can and is embedded in the way ZVIA treats its people—all full-time Zevia employees
have an equity interest in the Company, are paid a fair wage and receive competitive
benefits.

Driving Positive Social Change: ZVIA is a Delaware public benefit corporation and has
been designated as a “Certified B Corporation” by B Lab, an independent nonprofit
organization, in recognition that ZVIA balance profit and purpose to meet the highest
verified standards of social and environmental performance, public transparency and
legal accountability.

Monster Beverage Corporation (MNST)

Monster started out in the 1930s as a fresh juice business under the Hansen family
name and trademark. The fresh juice business evolved to a pasteurized, shelf-stable juice
business, and shifted focus in the 90s to include sodas and energy drinks. The company
has since grown to be a market leader in energy drinks through its signature “Monster”
products and officially changed its name in 2012 to become “Monster Beverage
Corporation.”

On June 12, 2015 MNST and KO entered into a long-term strategic relationship in
the global energy category. As part of the transaction, MNST acquired KO’s
energy drink portfolio; MNST disposed of its non-energy brands to KO. Coke’s
bottlers now distribute MNST brands in many of their territories.

As of February 16, 2023, the Coca-Cola Company owned 19.5% of MNST’s

common shares.

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According to Beverage Marketing Corp, domestic US wholesale sales in 2022 for the
“alternative” beverage category was approximately $72.9bn, +10.4% YoY. (2021:
$66.1bn, 2020 $60.1bn).

Monster Energy, most of its strategic brands and True North participate in the premium
segment of the energy drink category; Predator and Fury are its affordable entry options

CANarchy acquisition
CANarchy deal closed February 17, 2022 for $330mn in cash. This acquisition provides
an entry to the beverage alcohol sector. The purchase didn’t not include CANarchy’s
standalone restaurants.

MNST has 4 reportable segments

1. Monster Energy which includes Monster Energy drinks, Reign Total Body Fuel
and True North Seltzers

2. Strategic brands which includes brands acquired from KO in 2015 and its
affordable energy drink brands

3. Other segment which includes certain products sold by American Fruits and
Flavors LLC, which serves independent and its newly created

4. CANarchy Brewing segment, which MNST began recording in 1Q22.

2022 highlights
Net sales in 2022 increased 13.9% to $6.31bn. Excluding FX, net sales was +18.2%

Gross profit was 50.3% vs. 56.1% in 2021.

Operating income declined to $1.58bn from $1.8bn in 2021.

The effective tax rate was 24.2% in 2022, compared with 23.5% in 2021

Diluted EPS contracted 13.1% to $2.23, from $2.57 in 2021.

MNST repurchased $201.6mn of its shares.

MNST implemented a 2-for-1 share split effective March 28, 2023.

In 2022, MNST’s equivalent case sales volume was 701.7mn cases as compared to
613.4mn in 2021.

Its average net sales per case was $8.82 in 2022 vs. $8.99 in 2021.

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 Exhibit 379: non-alcoholic brands Exhibit 380: MNST net sales ($mns)
Innovation is important in energy Net sales totaled $6.3bn in 2022
Brands 8,000
Energy brands Monster Energy Drinks Strategic Brands
Monster Energy NOS
Monster Energy Ultra Full Throttle American Fruits & Flavors Alcohol Brands
Monster Rehab Burn
6,000
Monster Emery Nitro Mother
Java Monster Nalu
Punch Monster Ultra Energy
Juice Monster Play and Power Play
Monster Hydro Energy Water Relentless
4,000
Monster Hydro Super Sport BPM
Monster HyrdroSport Super Fuel BU
Monster Super Fuel Gladiator
Monster Dragon Tea Samurai
Reign Total Body Fuel Live+ 2,000
Reign Inferno Thermogenic Fuel Predator
Fury
True North
Craft beers, hard seltzers and flavored malt bevs Dallas Blonde
Jai Alai IPA Deep Ellum IPA -

2008

2010

2013

2015

2020

2022
2009

2011

2012

2014

2016

2017

2018

2019

2021
Florida Man IPA Perrin Brewing Co
Black Ale
Wild Basin Hard Seltzers Hop Rising double IPA Source: Company reports
Wasatch Apricot Hefeweizen The Beast Unleashed BofA GLOBAL RESEARCH
Still and sparking waters
Monster Tour Water
Source: Company reports (S)= Strategic brand acquired from KO in 2015
BofA GLOBAL RESEARCH

Exhibit 381: Net sales mix (%, 2022) Exhibit 382: Operating income by division ($000s)
Energy
2,000 1,850

Strategic
Brands
6% American
Fruits & 1,000
Flavors
0%
198
3
Alcohol -
Brands (32)
Monster
Energy Drinks (435)
92%
(1,000)

Source: Company reports

Source: Company reports
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH

Beverages - Soft Drinks | 23 June 2023 145

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 Exhibit 383:
Over the 2019-
80.0%
Monster Energy Drinks Strategic Brands

American Fruits & Flavors MNST consolidated OI mgn

60.0%

40.0%

20.0%

0.0%
2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company reports

BofA GLOBAL RESEARCH

Customers & markets

Key customers include Coca-Cola Bottlers around the globe, Asahi Soft Drinks, Wal-
Mart/Sam’s Club, Costco and Amazon.com. Top bottles in 2022 were Coca-Cola
Consolidated (11%) Reyes Coca-Cola (9%) and Coca-Cola Europacific Partners (13%).

MNST’s alcohol customers include J.J. Taylor Distributing, Ben E. Keith, Reyes Beer
Division, Sheehan Family Companies, and Admiral Beverage.

Exhibit 384: # of markets select brands are sold in as of Dec 2021/22 Exhibit 385: Customer mix (2019-22), %
Overall, MNST sells in 157 markets globally as of 2022 Club stores and e-commerce sales are growing in importance
180
US full service bottlers/distributors Int'l full service bottlers/distributors
2021 2022
Club stores and e-commerce retailers Retail grocery, c-store, specialty & whslrs
Direct value stores, other

120
2022 48 39 9 22

2021 51 39 8 11
60

2020 56 34 8 11

0
Overall Monster brands Strategic Affordable Reign 2019 58 33 7 11
brands energy
(Predator &
Fury) 0% 20% 40% 60% 80% 100%

Source: Company reports

BofA GLOBAL RESEARCH Source: Company reports
BofA GLOBAL RESEARCH

In 2022, MNST held a 1.7% take home share in LRBs, an 11% in RTD coffee and a 48%
share in energy.

146 Beverages - Soft Drinks | 23 June 2023

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 Exhibit 386:
it is a clear leader in Energy
80
Take-home Foodservice Overall vol share

58.9
60

48.3 47.7

40
32.2
30.2

20
10.7 10.1

1.7 0.2 1.3

0
LRBs RTD coffee Energy overall Regular energy Reduced sugar energy

Source: Euromonitor
BofA GLOBAL RESEARCH

Celsius Holdings (CELH)

Celsius Holdings (CELH) was founded in April 2002. Its key performance energy brand is
Celsius. Celsius comes in sparkling and non-carbonated flavors, and in powder stick
packets which can be mixed with water. The brand contains no aspartame, no high
fructose corn syrup, and is non-GMO, with no artificial flavors or colors, and has no
added sodium. The Celsius line of products is kosher and vegan certified, soy, gluten, and
sugar free.

PEP Distributing Celsius energy drinks. PEP ended its distribution of Bang energy in
2022 and soon followed with an investment of $550mn for an 8.5% stake in Celsius
Holdings, in the US at first, with an eye towards a long-term preferred distribution
partnership globally for Celsius energy brands.

Exhibit 387: CELH net sales (US$mns) Exhibit 388: Net sales mix (2022)
Net sales reached $653.6mn in 2022, +108% YoY, with North American sales Nearly all of its revenue comes from North America
+126% and international sales -12%
$800
North America Europe Asia Other

$600 Europe
5%
Asia
1%
$400

North America
94%
$200

$0
2017 2018 2019 2020 2021 2022

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

At the time of the transition to Pepsi’s distribution system, CELH had about 75% ACV
(all-commodity volume, a dollar-weighted distribution metric) which has expanded to
over 90% distribution in scanned channels by May 2023. ACV expansion had a marked

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effect on CELH’s scanned channel dollar market share which doubled from 3.5% in
October 2022 to over 7% by May 2023.

Exhibit 389: Celsius $ share of Energy Drinks (4wk data) Exhibit 390: Celsius %ACV distribution build YoY (4wk data)
CELH market share was 7.1% as of May 20, 2023 CELH total %ACV was 90.6% as of May 20, 2023
7.5% 410 bps. 100% 30.0 pts.
YoY Chg. (bps.) CELH $ Shr. YoY Chg. (pts.) CELH %ACV
7.0% 378 bps.
27.0 pts.
6.5% 347 bps. 90%
24.0 pts.
6.0% 315 bps.
5.5% 284 bps. 21.0 pts.
80%
5.0% 252 bps. 18.0 pts.
4.5% 221 bps.
70% 15.0 pts.
4.0% 189 bps.
3.5% 158 bps. 12.0 pts.
60%
3.0% 126 bps. 9.0 pts.
2.5% 95 bps.
6.0 pts.
2.0% 63 bps. 50%
3.0 pts.
1.5% 32 bps.
1.0% - 40% -
26-Feb-2022

25-Feb-2023

26-Feb-2022

25-Feb-2023
16-Jul-2022

16-Jul-2022

3-Dec-2022
3-Dec-2022
10-Sep-2022

31-Dec-2022

31-Dec-2022
8-Oct-2022

10-Sep-2022
8-Oct-2022
23-Apr-2022

22-Apr-2023

23-Apr-2022

22-Apr-2023
13-Aug-2022
13-Aug-2022

18-Jun-2022
18-Jun-2022

5-Nov-2022
5-Nov-2022

21-May-2022

20-May-2023
26-Mar-2022

21-May-2022

20-May-2023
25-Mar-2023

26-Mar-2022

25-Mar-2023
28-Jan-2023
29-Jan-2022

29-Jan-2022

28-Jan-2023
Source: Nielsen xAOC+C, BofA Global Research Source: Nielsen xAOC+C, BofA Global Research
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Future growth opportunities

1. Gaining shelf-space and expanding average SKUs offered per store:
CELH averages 8 items per store in Convenience versus MNST at 35 items and
Red Bull at 20 items.

2. Improving and expanding in-store cooler placements: Celsius had placed

upwards of 5,000 branded coolers in-market by the end of 2022 and set a
target for placing an additional 15,000 by 2023. Incremental to branded cooler
placements, the Pepsi deal opens an additional 50,000 coolers to Celsius as
well, with the total opportunity across Celsius-branded, Pepsi-branded, and
third party coolers as high as 150,000 domestically.

3. Channel diversification: having reached 90% ACV in scanned channels (food,

drug, mass, convenience, and club stores including Sam’s and BJ’s), CELH is
fast-approaching MNST/Red Bull distribution levels in the mid-90s. Untapped
channels remain, however, principally in foodservice, which CELH has begun
tapping into through Pepsi’s distribution network. Initial expansion has been
concentrated in cafeterias on college campuses, with management eyeing
hotels, amusement parks, office pantries, hospitals, and airports for expansion.

4. International diversification: Celsius generates nearly 95% of its revenues

domestically, with small footholds in the Nordics, mainland Europe, and China.
US buildout remains a priority for management in the near-term, however their
domestic collaboration with Pepsi opens the door for the multinational to
leverage its scaled distribution internationally as well, though likely no sooner
than 2024.

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Vita Coco (COCO)
Founded in 2007 (originally as All Markets, Inc.), Vita Coco completed an initial public
offering in October 2021. Total proceeds to the company was ~$30mn, net of fees. Key
brands include Vita Coco (coconut water), Runa (plant-based energy drink), Ever & Ever
(sustainably packaged water) and PWR LIFT (protein-infused fitness drink). Vita Coca is
available in >30 countries, with its primary markets being North America, the UK and
China. It also sells private label products in North America and Europe. The company
estimates that the global coconut and plant waters category was $2.7bn in 2022.

2022 highlights
Net sales +13% to $428mn, led by +18% Vita Coco Coconut Water growth. Net sales in
the Americas advanced +15% YoY; international -3%. Over the 2019-22 period, sales
+72%. Gross profit margins fell to 24% (vs. 30% in 2021), with the decline driven by
higher transportation costs. Vita Coco is the #1 coconut water in the US with ~50%
share.

Exhibit 391: COCO: net sales mix (2022) Exhibit 392: 2022 sales by region ($mns)
Vita Coco accounts for nearly 75% of sales International is currently a small part of its business
$400
Americas International
Other
3%
$300
Private label
24%
$200

Vita Coco
Coconut $100
Water
73%

$-
Vita Coco Coconut Water Private label Other

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 393: Vita Coco brand Americas, cases and average selling Exhibit 394: International- cases and average selling price/case
price/case (ASP)
In 2022, volume +17.4%, ASP +1.4% In 2022, volumes +4%, ASP -6.4%
40.0 $9.60 9.0 $8.00
Average selling price per case Cases Cases Average selling price per case
$7.80
$7.60
30.0 $9.30
$7.40
$7.20

20.0 $9.00 7.5 $7.00

$6.80
$6.60
10.0 $8.70
$6.40
$6.20

0.0 $8.40 6.0 $6.00

2019 2020 2021 2022 2019 2020 2021 2022

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

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Oatly (OTLY)
Oatly is the largest oat milk company and is based in Sweden. Products include
alternatives to milks, ice cream, and yogurt, cooking creams, spreads and on-the-go
drinks. Oatly is available in >20 countries. The firm’s geographical segments include
EMEA, Asia and Americas. Oatly’s IPO took place on May 20, 2021. Its stock (ticker
OTLY) trades on NASDAQ. The company was founded by Björn Öste in 1994 and is
headquartered in Malmö, Sweden. Nativus Company Limited owns 45.9% of Oatly
shares as of year-end 2022. While based in Sweden, it reports results in US dollars.

Oatly reports that the total addressable market (TAM) for oat milk products is ~$628bn

2022 highlights
OTLY sales increased 12.3% YoY to $722.2mn. Growth last year was negatively
impacted by slower production capacity scale up in Asia and the Americas (partly due to
pandemic factors), a complex macro environment in EMEA and the US, as well as lower
than expected sales in Asia (largely China) resulting from foodservice closures due to the
pandemic. Oat milk represented 89% of net sales in 2022 (91% in 2021).

Exhibit 395: 2022 sales mix (%) Exhibit 396: Sales split by location of customer (2022)
Sales reached $722mn in 2022 US and China gained sales share, UK and Sweden slipped

USA

3% China
Asia 2022 31% 19% 17% 11% 7% 9%
4% UK
21%
Germany
EMEA
Sweden
48%
the
Americas 4% Netherlands
2011 28% 17% 19% 11% 9% 4% 8% Finland
31%
Other

0% 20% 40% 60% 80% 100%

Source: Company reports Source: Company reports
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 397: 2022 Sales by channel ($mns) Exhibit 398: Sales drivers (2022 %)
Take home is most popular in EMEA and the Americas; in Asia it is Volume advanced 10% in 2022, price/mix grew 4%
foodservice
30
$450 Volume Price/mix Organic sales growth %
Take-home Foodservice Other
20
15 16
14
$300 10
8

0
$150
-10

-20
$-
EMEA Americas Asia Total OTLY
EMEA Americas Asia
Source: Company reports
Source: Company reports BofA GLOBAL RESEARCH
Other is largely e-commerce, both direct to consumer and through 3rd party platforms.
BofA GLOBAL RESEARCH

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 Exhibit 399: Oatly: Adjusted EBITDA ($mns)
Adjusted EBITDA loss totaled $268mn in 2022
$-

$(20) $(10)

$(40)

$(60)
$(63)
$(80)
$(75)

$(100)

$(120)
$(120)
$(140)
EMEA Americas Asia Corporate

Source: Company reports

BofA GLOBAL RESEARCH

Other beverage companies

Nestlé SA
Nestlé US beverage business is focused on bottled water; its key brands are Perrier, San
Pellegrino, Acqua Panna, and Nestle Pure Life. In 2021 it divested several other regional
water brands to form Blue Triton. Nestle sold its key brand (Juicy Juice) to Harvest Hill,
while in tea; Nestlé owns Nestea and Pure Leaf. Its tea brands are distributed through a
joint venture with Coca-Cola. Nestlé, S.A, is based in Vevey, Switzerland.

Exhibit 400: (2022, %)

, especially carbonated bottled water
30.0
Take-home Overall

23.0

20.0

10.0 8

1.7 1.4 1.7 1.2

0.7 0.5
0.0
LRB Bottled water Carbonated bottled Flavored bottled Still bottled water Carbonates
water water

Source: Euromonitor
BofA GLOBAL RESEARCH

National Beverage (FIZZ)

National Beverage was established in 1985 as a holding company for a variety of
subsidiaries selling beverage products and became a public company in 1991. (Its
products have been around for >125 years.) Its current market focus is the US and
Canada. National Beverage Chairman and CEO Nick Caporella beneficially owns ~76% of
FIZZ’s outstanding stock.
National Beverage’s brands consist of (i) beverages geared toward the active and health-
conscious consumer (“Power+ Brands”), including sparkling waters, energy drinks and
shots, juices, and enhanced beverages, and (ii) Carbonated Soft Drinks in a variety of
flavors including regular, sugar-free and reduced-calorie options. In addition, it produces
soft drinks for certain retailers (“Allied Brands”).

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 Power+ brands include LaCroix, LaCroix Curante and LaCroix NiCola sparking
waters; Clear Fruit waters, Rip it energy and shots and Everfresh, Everfresh
premier varietals and Mr Pure 100% juice and juice-based products.

Exhibit 401:
National Beverage is best known for its LaCroix flavored water portfolio
Carbonates Juices Waters Energy & sports Teas, lemonade & more
Big shot Everfresh Asante Mega Sport Everfresh Lemonade
Faygo Everfresh Premier Varietals Cascadia Rip It Home Juice Lemonade
Ritz Home Juice Clear Fruit Rip It 2oz Shot Ohana
Shasta Mr Pure Crystal Bay Rip It Red Zone Sundance Naturals
St. Nick's LaCroix
Spree
Source: Company reports
BofA GLOBAL RESEARCH
FIZZ’s fiscal year 2022 (12M ended April, 2022), net sales increased 6.1% to $1.14bn.
This increase was driven by a +7.6% boost in prices, partly offset by a 1.4% decline in
case volume. (The volume decline was primarily in carbonated soft drinks, Power+
brands grew slightly in FY22.)
FIZZ’s gross margin was 36.7% in FY22 vs. 39.3% in FY2021. The average cost per case
increased due to inflation on packaging, ingredients and freight costs, as well as the
availability of raw materials and labor, which negatively impacted manufacturing
efficiency.

In the 9M period of FY23 (to January 31, 2023), FIZZ’s net sales grew 3.8% to
$886.2mn. Its YTD gross margin fell to 33.2% (vs. 37.5% in FY22) and its OI margin
dipped 3.5pts to 15.6% (vs. 19.0% in FY22). In its 3Q23 release, it noted easing in
certain major costs from immediately preceding quarters.

Exhibit 402: FIZZ- net sales ($mns) Exhibit 403: YoY % change in net sales
Net sales grew at a 3% CAGR over FY19-FY22 period Pricing drove net sales gains in FY22
$1,200 20% 18.0%
17.3%

9.1%
$800 10%
7.2%
6.1%
3.9%

0.7%
$400 0%

-1.4%
-3.2%

$- -10%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

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 Exhibit 404: FIZZ gross margin trends Exhibit 405: FIZZ- operating income trends
Inflationary
50% 25%

21.2%
21.1%
40.1%
39.4%

39.3%

19.7%
37.9%

37.0%

36.7%

18.3%
18.1%
34.3%
33.9%

40% 33.9% 20%

16.6%
32.8%

13.2%
30% 15%

11.6%
10.6%

9.8%
20% 10%

10% 5%

0% 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 406: 2, %)

18.0
Take-home Overall 16.3

12.0

6.0

1.2 1.6
0.8 1.1 1 0.9
0.6 0.6
0.0
LRBs Bottled water Flavored bottled Carbonates (all) Regular carbonates Non-cola carbonates
water
Source: Company reports
BofA GLOBAL RESEARCH

Primo Waters
Primo Water Corp (PRMW) is a pure-play water solutions provider in North America,
Europe and Israel and generates ~$2bn in annual revenue. Primo operates largely under
a recurring razor/razorblade model.

A series of acquisitions/divestures transformed Primo

In November 2021, it announced plans to exit the North America single-use bottled
water category, which consisted largely of 1-gallon, 2.5 gallon and case-pack water. The
plan did not include its Mountain Valley brand, which sells primarily in glass bottles. This
followed its (January 2018) divestiture of the traditional beverage manufacturing
business to Refresco for US$1.25bn; its March 2018 acquisition of Crystal Rock (a direct
to consumer home and office water, coffee, filtration and office supply business in NY
and New England), its October 2018 purchase of Mountain Valley Spring Company; the
February 2019 sale of its soft drink concentrate business to Refresco for US$50, the
February 2019 divesture of the S&D Coffee and Tea operations to Westrock Coffee for
US$405mn

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North American brands include: Primo Water, Mount Olympus, Crystal Rock, Mountain
Valley Spring Water, Deep Rock Water, Labrador Source, Hinckley Springs, Canadian
Springs, Kentwood Springs, Crystal Springs, Sierra Springs and Vermont Pure.

ROW brands include: Eden, Decantae, Clearwater, Chateaud’eau and others.

For the 12M ended January 1, 2022 (FY21)20, net sales increased by 6% to $2.07bn.

Exhibit 407: Primo Waters -2021 net sales by Exhibit 408: Primo Waters -2021 net sales by North America
segment channel • 2 countries (US/Canada)
North America represents the bulk of its sales Water direct/exchange is its largest channel
• 44 manufacturing sites

• 195 distribution sites

Other
Water 13%
dispensers • 1.83mn customers
3%
Rest of
World • 800mn gallons sold in 2021
25%
Other
Water Rest of World
water
direct/water
12% • 20 countries
exchange
62%
North • 17 manufacturing sites
America
75%
• 132 distribution sites

Water
• 813,800 customers
refill/water
filtration
10% • 197mn gallons sold in 2021

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

20 Latest data available as of May 2023

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Beverage company comparables
Net sales
Exhibit 409: Net sales (US$mns for all ex. CCEP which reports in Euros)
Strong top line growth was reported in 2022
Net sales 2017 2018 2019 2020 2021 2022 YoY % chg 3Y-CAGR
Coca-Cola Co KO $36,218 $34,291 $37,280 $32,999 $38,658 $43,046 11.4% 4.9%
PepsiCo PEP $63,525 $64,661 $67,161 $70,372 $79,474 $86,392 8.7% 8.8%
Keurig Dr Pepper KDP $10,775 $11,025 $11,120 $11,618 $12,683 $14,057 10.8% 8.1%
Coca-Cola Europacific Partners CCEP 25.8% 13.0%
Monster Beverage MNST $3,369 $3,807 $4,201 $4,614 $5,541 $6,311 13.9% 14.5%
Zevia ZVIA $62 $86 $110 $138 $163 18.1% 24.0%
Vita Coco COCO $284 $311 $380 $428 12.7% 14.6%
Oatly OTLY $204 $421 $643 $722 12.3% 52.4%
Source: Company reports
BofA GLOBAL RESEARCH

Gross margin trends

Inflationary pressures have weighed on gross margins since the start of the pandemic.

CCE’s gross margins are lower since it is a bottler.

Exhibit 410: Gross margins

Gross margins are highest for KO
2017 2018 2019 2020 2021 2022 YoY % chg 3Y-chg
Coca-Cola Co KO 62.1% 61.7% 60.7% 59.1% 60.1% 58.6% -1.5% -2.1%
PepsiCo PEP 54.7% 54.7% 55.3% 54.8% 53.4% 53.4% -0.1% -1.9%
Keurig Dr Pepper KDP 55.1% 55.9% 56.9% 56.2% 55.5% 53.8% -1.7% -3.1%
Coca-Cola Europacific Partners CCEP 39.0% 39.0% 38.2% 35.8% 37.5% 36.0% -1.5% -2.2%
Monster Beverage MNST 63.5% 60.3% 60.0% 59.6% 56.1% 50.3% -5.8% -9.7%
Zevia ZVIA 43.9% 43.1% 44.8% 44.3% 40.9% -3.9% -2.2%
Vita Coco COCO 16.2% 29.8% 24.2% -5.7% 24.2%
Oatly OTLY 32.6% 30.7% 24.1% 21.6% -2.5% -11.0%
Celsius CELH 42.7% 40.0% 41.7% 46.6% 40.8% 41.4% 0.7% -0.2%
Source: Company reports
BofA GLOBAL RESEARCH

Exhibit 411: 2022 gross margins (highest to lowest)

industry leading margins
80%

59%
60%
54% 53%
50%

41% 41%
40% 36%

24%
22%
20%

0%
KO KDP PEP MNST CELH ZVIA CCEP COCO OTLY

Source: Company reports ; Note: CELH includes outbound freight, MNST excludes outbound freight
BofA GLOBAL RESEARCH

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Operating profit
Exhibit 412: Operating profits (US$ for all ex. CCEP, which reports in Euros)
Operating profits for KO and PEP topped $12.3bn in 2022
2017 2018 2019 2020 2021 2022 YoY % chg 3Y-CAGR
Coca-Cola Co KO $9,606 $9,886 $10,409 $9,770 $11,109 $12,345 11.1% 5.9%
PepsiCo PEP $10,419 $10,620 $10,602 $10,531 $11,554 $12,325 6.7% 5.1%
Keurig Dr Pepper KDP $2,456 $2,620 $2,890 $3,191 $3,421 $3,538 3.4% 7.0%
Coca-Cola Europacific Partners CCEP 20.7% 8.5%
Monster Beverage MNST $1,199 $1,284 $1,403 $1,661 $1,797 $1,585 -11.8% 4.1%
Zevia ZVIA -$5 -$6 -$6 -$87 -$48 -45.2% 105.7%
Vita Coco COCO $14 $30 $25 $3 -87.6% -39.9%
Oatly OTLY -$31 -$47 -$214 -$396 85.3% 134.4%
Celsius CELH $3 $2 $3 $14 $33 $68 108.1% 178.8%
Source: Company reports
BofA GLOBAL RESEARCH

Operating margin trends

Exhibit 413: Operating profit margins

2017 2018 2019 2020 2021 2022 YoY % chg 2Y-CAGR

Coca-Cola Co KO 26.5% 28.8% 27.9% 29.6% 28.7% 28.7% -0.1% 0.8%
PepsiCo PEP 16.4% 16.4% 15.8% 15.0% 14.5% 14.3% -0.3% -1.5%
Keurig Dr Pepper KDP 22.8% 23.8% 26.0% 27.5% 27.0% 25.2% -1.8% -0.8%
Coca-Cola Europacific Partners CCEP 13.4% 13.7% 13.9% 11.2% 12.9% 12.3% -0.5% -1.6%
Monster Beverage MNST 35.6% 33.7% 33.4% 36.0% 32.4% 25.1% -7.3% -8.3%
Zevia ZVIA -7.8% -6.4% -5.0% -63.3% -29.3% 33.9% -22.9%
Vita Coco COCO 5.0% 9.8% 6.5% 0.7% -5.8% -4.2%
Oatly OTLY -15.1% -11.2% -33.2% -54.8% -21.6% -39.8%
Celsius CELH 7.1% 4.1% 4.2% 10.4% 10.4% 10.4% 0.0% 6.2%
Source: Company reports
BofA GLOBAL RESEARCH

Earnings per share

Exhibit 414: KO EPS Exhibit 415: PEP EPS
Over the 3- 6% CAGR Over the 3- 7% CAGR
$3.00 $8.00

$7.00

$6.00
$2.00
$5.00

$4.00

$3.00
$1.00
$2.00

$1.00

$0.00 $0.00

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

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 Exhibit 416: KDP EPS Exhibit 417: CCEP EPS
Over the 3- 1% CAGR Over the 3- expanded at a 10% CAGR

$1.80
CCEP
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
2017 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022

Source: Company reports Source: Company reports

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Exhibit 418: MNST EPS Exhibit 419: Zevia, Coco, OTLY and CELH EPS
Over the 3- 3.5% CAGR Just COCO reported positive earnings in 2022 of the 4 cos listed below
$1.40 $0.80
2020 2021 2022
$1.20 $0.40

$1.00
$0.00
-$0.40
$0.80
-$0.80
$0.60
-$1.20
$0.40 -$1.60
$0.20 -$2.00

$0.00
-$2.40
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

-$2.80
ZVIA COCO OTLY CELH
Source: Company reports Source: Company reports
BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Returns to shareholders
Over the 2018-2022 period, KO returned $39.2bn to shareholders in the form of
dividends ($35.4bn) and buybacks ($3.8bn).

PEP returned $36.2bn, including dividends ($27.7bn) and buybacks ($8.5bn).

Returns to shareholders for KDP reached $4.3bn over the same period, with dividends of
$4.0bn and buybacks of $379mn.

CCEP returned €4.0bn, including dividends of €2.9bn in dividends.

Returns to shareholders of MNST received $3.1bn in buybacks. MNST does not pay a
dividend.

Zevia does not currently pay a dividend.

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 Exhibit 420: Returns to shareholders (US$/
From 2018-2022, KO returned $39.2bn to shareholders, followed by PEP at $36.2bn
2018 2019 2020 2021 2022 5Yr Cumulative
Dividends KO $6,644 $6,845 $7,047 $7,252 $7,616 $35,404
PEP $4,930 $5,304 $5,509 $5,815 $6,172 $27,730
KDP $232 $844 $846 $955 $1,080 $3,957
CCEP
MNST - - - - - -
ZVIA - - - - - -
Buybacks KO $1,912 $1,103 $118 $111 $581 $3,825
PEP $2,000 $3,000 $2,000 $106 $1,362 $8,468
KDP $0 $0 $0 $0 $379 $379
CCEP 129
MNST $1,314 $615 $523 -$32 $707 $3,127
ZVIA -$90 $2 -$88
Rtns to shareholders KO $8,556 $7,948 $7,165 $7,363 $8,197 $39,229
PEP $6,930 $8,304 $7,509 $5,921 $7,534 $36,198
KDP $232 $844 $846 $955 $1,459 $4,336
CCEP 513
MNST $1,314 $615 $523 -$32 $707 $3,127
ZVIA $0 $0 $0 -$90 $2 -$88
Source: Company reports
BofA GLOBAL RESEARCH

Dividends per share

Exhibit 421: Dividends per share
Over the last 3 years, Dividends per share have grown at >6% CAGRs for PEP, KDP and CCEP
Dividend 2017 2018 2019 2020 2021 2022
Coca-Cola Co KO $1.48 $1.56 $1.60 $1.64 $1.68 $1.74
PepsiCo PEP $3.17 $3.59 $3.79 $4.02 $4.30 $4.53
Keurig Dr Pepper KDP $0.00 $0.17 $0.59 $0.59 $0.67 $0.76
Coca-Cola Europacific Partners CCEP
Source: Company reports
BofA GLOBAL RESEARCH

In recent years, dividend payouts have increased due to FX dampening reported EPS
more than company-planned increases to their payout ratios.

Exhibit 422: Dividend payout ratios

Div payout ratios are elevated vs. other consumer staples sectors (outside of tobacco)
Div payout 2017 2018 2019 2020 2021 2022
Coca-Cola Co KO 77% 75% 76% 84% 72% 70%
PepsiCo PEP 61% 63% 69% 73% 69% 67%
Keurig Dr Pepper KDP 16% 49% 42% 42% 45%
Coca-Cola Europacific Partners CCEP 40% 46% 49% 47% 50% 51%
Source: Company reports
BofA GLOBAL RESEARCH

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