New analysis from Suntory Beverage & Food GB&I (SBF GB&I) has revealed the increased importance of soft drinks to stores post-pandemic.
Study of the last ten years of soft drinks category data has also uncovered, for the first time, the true effect of Covid-19 on sales, and how this feeds into the category for the future.
The data shows that not only are soft drinks more important to retailers than ever before, but that there is also an opportunity to unlock an extra £1.2 billion in soft drink sales.
Between 2012and 2018, soft drink sales value grew from£13.4bn to just over £16bn – a total market growth in six years of 19.9 per cent.
As the pandemic took hold in 2020, there was a predictable initial sales dip which led to an overall annual sales drop to just under £15bn. Since that drop, however, sales have grown consistently to hit a high of almost £19bn in 2022. This represents sales growth in that period of an astonishing 27 per cent – demonstrating faster growth than pre-pandemic.
This growth is being driven by an overall rise in purchase frequency. Total soft drinks penetration – the number of households that buy a soft drink over a year – now stands at 95.2 per cent. This represents a rise from 90 per cent in 2012 and continued growth from 94.8 per cent in the summer immediately prior to the pandemic.
While soft drink prices have risen and inflation has played a part in value growth, there is a measurably increased appetite from shoppers to buy into the soft drinks category.
Changing habits and demographic drivers
Habits have changed since the pandemic. More people are buying into the category, and this is driven largely by growth across three key demographics – Pre-Families, Empty Nesters and Retirees. Men, in particular, are purchasing soft drinks more often than before – with a 3.7 per cent share change in consumption.
Not only are men purchasing more but, for the first time ever, they are purchasing more than women. An analysis of the frequency of purchase of soft drinks over the last 10 years shows that females consistently tracked above males by around 0.2 per cent. This continued until the middle of 2020, and since then the gap has widened. Overall frequency of purchases have grown across the piece, but now males purchase more frequently than females by 0.2 per cent.
More consistent sales
Sales have also seen less pronounced ‘ups and downs’ since the pandemic. While summer remains the biggest selling period, more people are buying into the category as part of their regular routines during the winter.
The gap between sales at the summer peak and the end of January (traditionally the point at which category sales are lowest) is narrowing. A comparison of the summer sales highs of 2013 and 2014, and the corresponding dips in January 2014 and 2015, reveals an average gap between the two of 5.6 percentage points.The gap between sales in August 2021 and the following winter, however, was only 3.7 percentage points.
Pre-pandemic, the lowest overall penetration point was 88.6 per cent. Since the pandemic, the lowest point has been 91.2 per cent, a 1.6 percentage point increase in households buying into the category at its lowest point. More people are buying into the category, more of the time.
Sales stimulated post-pandemic
Within the broader category trends, there are clear success stories. The performance of stimulation drinks post-pandemic, for example, is insightful.
In April 2020, as the pandemic was starting, penetration of stimulation drinks in the UK was at 5.8 per cent. This puts it almost exactly the same level as it was ten years prior. Since then, however, the category has spiked significantly, and continued to grow. In summer 2021, it reached 7.1 per cent, then a new high of 9 per cent in summer 2022.
The continued impact of the pandemic on the positive growth of stimulation sales can be seen through an analysis of the highest and lowest penetration points. In the three years leading into the pandemic, the midpoint of the penetration of the category was 3.4 per cent. The three years since the pandemic, this has risen to 3.7 per cent. More people are buying stimulation drinks, more of the time.
Alongside Stimulation sales, sport drinks have performed well since the pandemic. This tallies with a broader increase in focus on health following the impact of Covid-19. Penetration of sport drink sales grew by 66 per cent from February 2020 to February 2022. While a lower base than stimulation, the trend within Sports matches the upward swing in the broader Sports & Energy segment.
The amount of money spent per trip has seen similar growth across Colas, Bottled Water, Flavoured Carbs and Mixers as has been seen in the Stimulation segment.
Drinks sales are getting healthier!
Alongside this, another thing remains clear – health is here to stay. Key health aspects (lower in sugar; added vitamins; more natural drinks) of soft drink consumption have grown when compared with 2014. The number of occasions where soft drink shoppers cite health as the major reason for their purchase has grown to 8.3 per cent from 1.8 per cent in 2014.
The double-whammy of Covid-19 and the cost-of-living crisis has helped keep take-home drinks very firmly on the agenda. An analysis of volume sales (in litres bought) per household between 2013, and 2015 shows that the amount bought per household at the lowest sales point of the year was 17.4 litres. The average of the highest amounts bought at the busiest sales point across those three years was 20.5 litres. In 2020, ‘21 and ‘22, those numbers sat at 18.7 litres (lowest point of the year, in terms of litres bought per week) and 22.9 litres (highest point of the year, in terms of litres bought per week). The overall volume of drinks bought has gone up, as they look for a value offering to take home.This is true across all key segments of the soft drink category.
Claire Woolridge,Category Controller at Suntory Beverage & Food GB&I, says: “The pandemic saw many different purchasing habits creeping into everyday lives as routines changed. People have now settled into different routines, and with them different purchasing habits and patterns. These are impacting retail sales in interesting ways.
“Thanks to these changes, the soft drinks category is more valuable than ever before for convenience retailers, more people are buying into the category, and people are physically buying more drinks. Soft drinks have consistently delivered ahead of other categories and remained stable during tough economictimes.
“There are clear things that, if they’re not already doing them, retailers should ensure they focus on to tap into these embedded behavioural changes in store. Health has been a growing factor and the pandemic accelerated this – so ensure you have a strong range of branded low- and no-sugar soft drinks in your range. Large-format and multipack drinks to take-home have seen sales increases, so they are essential to focus on.”
What the past means for the future
These findings have helped inform SBF GB&I’s renewed and reformulated category vision. There is a real opportunity to unlock an extra £1.2bn in soft drink sales if retailers can take advantage of the above knowledge and tap into the emerging and growing trends.
SBF GB&I’s category vision is underpinned by five key areas of opportunity – the five key drivers – that show the sub-categories and brands retailers should look at to unlock that £1.2BN opportunity over the next five years.
Choose wellness: A £289m opportunity that can be unlocked by ensuring the 7/10 consumers who say they are interested in purchasing functional drinks can find what they need, at a price they can afford; and the 54 per cent of the population who say they are focusing on their mental health can find drinks that positively impact their mood and emotions.
Recharge the moment: This driver can deliver up to£238m, if the 75 per cent of society who say they are concerned about tiredness buy into buying drinks that energise and refuel them.
Elevate the experience: This £186m opportunity can be unlocked by getting the 30 per cent of people who claim to be teetotal to buy into soft drinks for special moments and occasions.
Enjoy hydration: A £203m opportunity for retailers if they can encourage more shoppers to buy into tastier hydration options than water, get shoppers to understand the functionality of sports drinks such as Lucozade Sport, and by growing sales of categories like this to cater for the 66 per cent of adults who identify themselves as physically active.
Enhance food moments: While 25 per cent of soft drink occasions are with food, for 20 per cent of these, tap water is chosen. To open up £263m over the next five years, retailers need to make soft drinks easier to buy into for the 9 per cent of people who buy into the category with their evening meal.
Claire Woolridge concludes: “Soft drink sales have delivered great value in recent years, and we know from our research that by focusing on five key simple areas of opportunity, we can unlock even more value across the category.
“By tackling these five growth drivers head on, there is a tremendous opportunity for retailers to delight customers, bring more shoppers through their doors, and deliver soft drink ranges that are truly fit for the future”.