Abstract
Levels of obesity are rising in middle-income countries around the world, concerning many public health professionals due to the role obesity can have in non-communicable disease. Simon Nicholas Williams, Research Associate at Feinberg School of Medicine in Chicago, USA, takes a look at recent trends in the soft drinks industry, and the implications these trends can have on obesity and public health.
Rising rates of overweight and obesity in middle-income countries (MICs) are a priority for public health because of their role in the growth of non-communicable diseases (NCDs). In China, 30% of the total population are either overweight or obese, 1 and nearly 10% of the total population are diabetic (with a further 15.5% being prediabetic), 2 while rates of hypertension, dyslipidaemia and inflammation are also high. 1 In India, 12% of the total population are either overweight or obese, 4 and nearly 20% of the population have type 2 diabetes, meaning that the country has more people (about 50 million) with this disease than any other country. 4
To date, insufficient research has focussed on the role of the soft drinks industry in its contribution to the growing obesity epidemic in MICs, despite there being rapid rises in soft drink consumption in these countries and them increasingly being priority markets for the industry. 5
Soft Drinks in China and India: Recent Trends
Of course, soft drinks are not solely responsible for the growth of obesity and diabetes rates in China and India, and it is important to note that the overall market category of ‘soft drinks’ does include a number of products (e.g. bottled waters) that aren’t unhealthy. However, carbonates and energy/sports drinks – the majority of which are sugar-sweetened – still make up more than a third of the total global soft drinks market (approximately 175 of 465 billion litres in 2011). 6 Moreover, while in the United States, total energy per capita and average energy density of beverages sold has decreased, in China, the opposite is true. 7 Although diet carbonates are popular in higher-income countries (HICs), for example, in the United States, where diet colas account for one-third of all cola carbonates, they are far less popular and less easily available in India, 8 where they remain a ‘niche drink’, accounting for less than 2% of cola carbonate volume sales.9,10
In China, Coca-Cola is the market leader with a total market share of 15.7% (compared to nearest rival PepsiCo’s share of 4.5%). Coca-Cola is also the market leader in India, with a 2012 off-trade volume share of 24.8% (compared to that of domestic company Parle Biserli at 23.6% and PepsiCo’s at 21.1%). 6
There have been sharp increases in per capita consumption of soft drinks in China and India since the late 1990s. In China, annual per capita soft drink consumption by 2016 is predicted to be more than 10 times (76.8 L) higher than it was in 1997 (7.4 L). In India, per capita soft drink consumption by 2016 is predicted to be 13 times (15.7 L) higher than in 1997 (1.2 L). 6
With consumption much higher in urban areas, soft drinks companies have been increasingly focussing their attentions on India’s rural population, 11 which makes up more than 70% of the total population. Obesity prevalence is considerably higher in urban areas, but rural populations have also experienced increases over the past 10 years. 12 This is particularly concerning given that rural populations are still vastly underserved by healthcare when compared to urban areas. 13
Soft drinks companies are consolidating their presence in MICs through investment in mass marketing, the establishment of professional organisations and through their participation in advocacy groups. Coca-Cola, for example, is one of the biggest spending companies in television and billboard advertising in both China and India.14,15 Also, in India, the Indian Beverage Association (IBA) has been set up and ‘tasked with lobbying government on issues of taxation, industry guidelines and regulations and to defend itself against allegations from health activists and environmental campaigners’. 16 Lastly, the US–China Business Council (USCBC) is an agency which lobbies for favourable market conditions between the two countries. 17 Until recently, Coca-Cola CEO Muktar Kent was Chair of a USCBC Board which also included PepsiCo’s CEO Indra Nooyi. 18
Some Implications for Public Health in Emerging Markets
The growth of soft drink consumption in China and India has been rapid, and is set to continue to increase. There are a number of things that could be done to mitigate further growth.
For example, soft drinks taxes are a potentially effective measure to reduce consumption, as recent research on HICs suggests. 19 As disposable income, particularly among the growing middle classes, continues to rise in China, India and many other MICs, soft drinks are becoming increasingly affordable. In its 2013/2014 budget, India’s Punjab region introduced an increase in value-added tax (VAT) on soft drinks from 13% to 20.5%. 20 A strong pro-tax public health lobby is needed to argue for and facilitate the passage of additional tax increases.
Additionally, public health advocates and policymakers should look to better regulate food marketing to children in MICs. 21 Voluntary initiatives similar to the Children’s Food and Beverage Advertising Initiative in the United States would be a starting point, 22 although more compulsory government-mandated legislative restrictions would be more effective.
In a recent industry market report, it was noted how for the company the ‘next long-term growth hotspots’ are the untapped markets of the Middle East (particularly Iran) and Africa (particularly Nigeria). 23 Some priority countries, like Iran and Vietnam, are MICs with liberalising economies. There are similarities to the ways in which the Chinese and Indian soft drinks industries grew rapidly following their economic liberalisation. For example, in India, 20 years ago Coca-Cola acquired the domestic company Parle’s brands, and within a year had a 60% share of a vastly expanding soft drinks market. Recently, the company has spent US$1 billion to acquire 50% equity in Aujan Industries, one of the biggest soft drinks companies in the Middle East. 24 By the end of 2012, Coca-Cola had already experienced a 9% growth in the Middle East due to this investment. 24
More research should be done in order to better understand the role of the industry in the rise of soft drink consumption in China and India. Learning from these cases can help other emerging market MICs to moderate the growth of soft drink consumption within their own countries.