The year was the eighth warmest since 1901 and higher than average temperatures were recorded in no less than 10 of the 12 months, according to the report. However, the introduction of the scheme on 1 January placed large deposits on non-refillable plastic and metal containers. As a result, huge variations were seen in the performances of the different categories when compared with 2002.
The impact of the scheme, which the European Commission ruled was illegal as it imposed unfair barriers to trade on drinks imported from elsewhere, was all the more devastating because of the size and nature of the German market.
Germany is the largest soft drinks market in Europe, according to market analysts Canadean, and is dominated by a myriad of regional brands that are not distributed nationally, and the deposit system prompted many consumers to change their drinking habits in an attempt to avoid the new charges.
The leading category, packaged water, was unaffected - because of the widespread use of recyclable packaging in this sector - and consumption reached record levels thanks to a 12 per cent increase in sales, boosted by the hot weather. Packaged water is also perceived as a natural product, a factor which has also contributed to the category's growth in the extremely health conscious German market.
Conversely, carbonate sales declined by almost 8 per cent, Canadean said, reversing the growth seen in each of the previous four years. Many retailers delisted carbonated drinks sold in non-refillable packs, causing off-premise volumes to decline sharply. The traditionally strong segments of cola, orange and clear lemonade were particularly badly hit, although cola-mix and flavoured colas did fare a little better than their classic counterparts.
The third largest category, juice, is exempt from the deposit system and as such benefited greatly from the new legislation. Consumption rose by around 7 per cent, with much of the incremental volume coming from own brand products. Juice was widely used as a substitute for the delisted carbonates and took full advantage of its new found shelf space. Apple remains the most important flavour but is slowly losing market share to mixed juices as consumers become more sophisticated and adventurous.
But Canadean stressed that the German authorities are planning to introduce a similar deposit system for juice and nectars in the next couple of years, and that this could therefore put a brake on sales growth in this category.
Given the devastating impact of the most recent scheme - and the fact that it was ruled unfair by the Commission - any future deposit system is likely to be rather more clearly thought through before it is implemented. The principal problem with the one-way system was that none of the necessary recycling points were in place before it was introduced - placing a burden on retailers which they clearly were not prepared to shoulder.
But the success of earlier deposit schemes on recyclable packaging material in Germany shows that the system can work when the infrastructure is in place, so the introduction of such a system for juices need not necessarily be a major cause for concern.
Another product exempt from the system, still iced and ready-to-drink tea, also benefited, seeing a 40 per cent rise in sales over the year, helped by the hot weather.
But energy drinks were among the hardest hit, with sales dropping by a staggering 85 per cent, Canadean said, mainly due to the fact that these drinks are sold almost entirely in 25cl cans, the principal packaging medium targeted by the deposit scheme. As such, energy drinks were virtually banished from retail outlets, with convenience stores providing the only significant outlet.
Not surprisingly, glass bottles and aluminium cans saw their usage fall significantly as a result of the deposit scheme, and most of the major soft drinks brands now use refillable PET as their main material, although cartons are still the commonly adopted format among own brand products, Canadean said.
For details of how to order your copy of the German Soft Drinks Report 2004 from Canadean, click here.