One year on from the sugar levy, soft drinks is showing itself to be a robust category.
The soft drinks category is worth £8.4bn according to Nielsen, with growth being led by both the health and premiumisation trends.
1.37 billion litres of soft drinks were sold through convenience stores last year, up 4% by volume on the previous year and worth £2.39bn, an increase of 9% (IRI).
Within soft drinks, the three top product categories showing most growth in convenience stores in the last year by volume are energy drinks (+14.7m litres), followed by fruit carbonates (+10m litres) and non-fruit carbonates (7.62m litres).
In terms of increase in value, the key performers were cola (£63.2m), energy drinks (£61m) and fruit carbonates (£23.6m). With both colas and energy drinks the increase in value was due to the impact of the sugar tax on prices.
In spite of the sugar levy, there was sustained growth in sales of “regular” full sugar drinks across high value and volume categories during last summer. For example, regular energy drinks grew £20m, regular cola £8.5m, regular fruit carbonates £11m and regular sports drinks £6m.
The health and wellness trend has exploded in recent years and the value of the health food and drink market is estimated at £22.7bn (Kantar). Consumers have become increasingly more in tune with their wellbeing and this is affecting the way they shop.
“As more consumers look to make positive changes in their lifestyles to be healthier, sugar content has become a major factor in their choices and they’re continuously on the lookout for more low-sugar options in their food and drink,” comments Amy Burgess, Senior Trade Communications Manager at Coca-Cola European Partners (CCEP).
Healthy options have undoubtedly gained mainstream appeal, with 90% of consumers saying that they’re influenced by health when shopping (Kantar). As a result, we have seen an increasing love of low and no sugar products in their own right, with brands such as Coca-Cola zero sugar growing significantly.
“The adult soft drink sector continues to grow thanks in part to the growing teetotal trend,” adds Burgess. “One quarter of those looking to reduce their alcohol intake are turning to adult soft drinks as an alternative, so retailers should make sure they have a wide offering of premium drinks such as Appletiser to cater to this growing market.”
The demand for premium spirits is also increasing the popularity of premium mixers. Consumers are drinking less but drinking better, and are prepared to pay more for an indulgent beverage (GlobalData). This is helping to grow adult soft drinks, as shoppers look to stock up their drinks cabinet with products that are of higher quality, use better ingredients and have a more authentic story to create a sophisticated at-home drinking experience.
“While it is important to ensure you have a wide range of low and zero sugar products in stock, don’t reduce space given to your current best sellers, shoppers still want choice,” suggests Burgess. “Place your lower and zero sugar soft drinks next to great tasting original variants, e.g. Coca-Cola original taste should always be stocked next to Diet Coke and Coca-Cola zero sugar. Review your range and remove slowest selling lines to make space for flavoured varieties of lower and zero sugar variants including Coca-Cola zero sugar Peach and Diet Coke Exotic Mango.”
Burgess advises retailers to pick the products that are being well supported by manufacturers, those that have been developed in response to consumer trends and from large or growing soft drink segments, and finally avoid duplication. “Whilst choice remains important, ranges shouldn’t become too broad and confusing for shoppers,” she comments. “Retailers need to look at their sales data and trim the tail. Removing slower selling lines and duplication to free up space and allow for multiple facings of best sellers or the stocking of new products.”
Events and occasions also present a huge opportunity, Burgess points out. Retailers should proactively look ahead and see which notable TV moments, sporting or seasonal events are coming up like Easter.
“Consumers are also more likely to indulge in special drinks on the lead up to special occasions and Schweppes remains one of the nation’s favourite mixers, with sales up +10.8% in grocery and convenience according to Nielsen,” says Burgess. “Retailers should keep stocks high of the classic range including Schweppes Indian Tonic Water and Schweppes Slimline Tonic Water.”
This year, CCEP is giving Coca-Cola drinkers across the nation the chance to get closer to the passion and magic of the Premier League with a new on pack promotion entitled ‘Be the 12th’.
With football being Great Britain’s most loved sport and with 70% of adults tuning into last year’s Premier League (Nielsen), it’s an inclusive sport that brings the whole nation together. CCEP’s Where Everyone Plays campaign is all about the ‘We’ in football and how fans refer to their team or discuss match performance.
As part of the promotion, CCEP has unveiled special packs of Coca-Cola original taste, zero sugar and Diet Coke featuring images of 20 star players from each of the Premier League clubs, as well as a silhouette of a 12th players across on-the-go formats, take-home large PET bottles and multipack cans.
One winner will be selected to feature as the 12th man on one of the limited-edition packs. They will also win a host of experiences for their club, including a pair of tickets for every home game in the 2019/20 season, a match day with mates and football legends, club hospitality and signed club shirts and balls. There will also be thousands of other footy prizes rewarding Premier League fans across the country every week.
The sponsorship kicked off with Coca-Cola zero sugar, but the three-and-a-half-year partnership will feature activity across the portfolio later in the year highlighting a broad range of refreshment options for the 70% of Premier League fans who drink soft drinks.
Lower in sugar
In recent years we have seen a long-term trend towards drinks with lower sugar as consumers become more and more interested in living healthier lifestyles, says Matt Gouldsmith – Channel Director, Wholesale at Lucozade Ribena Suntory (LRS).
Shoppers spending on zero sugar and low-sugar drinks has increased by 33% and 29% respectively, showing just how important this segment of the market is. This is mirrored at the other end of the market with a decline in high-sugar drinks (with over 8g sugar per 100ml), which are down by 8% in the months following the sugar levy. These patterns of behaviour illustrate the relevance of our range of drinks to today’s consumer as they become increasingly aware of making healthier choices.
After reformulations, Lucozade Energy and Ribena now contain less sugar, and LRS’ core brands are also available in very low or zero-sugar alternatives in the form of Lucozade Zero, Lucozade Sport Low Cal and Ribena Light to offer consumers a full range of choice.
“We advise retailers to take advantage of this range and to stock up on the various SKUs to capitalise on the ongoing health trend,” says Gouldsmith. “Having the right range available to shoppers will drive sales from those looking for healthier soft drink options.”
Gouldsmith continues: “Now is the time for retailers to start reviewing their range to ensure chillers are ready for the busy summer season. The opportunity for additional sales during the summer is clear, with consumers out more during warmer weather and looking for their favourite soft drinks for on the go and at summer occasions such as barbecues.”
In 2018 soft drink sales in independent convenience stores were up to 84%higher in July than in January (IRI). This translates into a substantial sales opportunity for independent retailers throughout the warmer months.
A spike in sales can be expected at this time of year regardless of the weather, but when the sun comes out this can be boosted even further. For every 1-degree temperature change, soft drink sales increase by +1.6% (IRI), so it’s hugely important for retailers to have their impulse soft drinks range ready and fully stocked for the added demand as the weather gets warmer.
“Recognisable, established brands with a high rate of sale, like Lucozade Energy, will comprise the must-stock essentials within each category in convenience,” says Gouldsmith. “With a category like soft drinks, where the market is fast-moving and full of innovation from large and small brands, it becomes even more important to include must-stocks in every range to ensure shoppers can always find the drinks they’re looking for.”
Lucozade Energy, the UK’s number one energy brand, is growing at 12% (IRI). LRS offers customers a range of flavours and formats to target different types of shoppers, including pricemarked packs to help retailers demonstrate value-for-money in store.
Lucozade Sport, the best-selling sports drink in the category (IRI), grew by over 4M9 litres in the symbols and independents channel in the past year; the largest growth contributed by any sports drink brand. “It’s essential several facings of the popular flavours – including best-selling Orange and the fastest-growing variant Raspberry – are always available for retailers to pick up in depot,” advises Gouldsmith.
Ribena is the biggest juice-drink brand in the independent and symbols channel (IRI), meaning it will signpost the rest of the segment in the chiller to consumers. Ribena Light offers a lower-sugar juice drink option.
“In order to mirror what shoppers will be looking for, space in the soft drinks chiller should be allocated according to what sells best,” suggests Gouldsmith. “The bulk of each segment should be made up of the biggest brands, including Lucozade Energy and Lucozade Sport. It’s also crucial that the brands’ zero-sugar variants – Lucozade Zero and Lucozade Sport Low Cal – are available for retailers to stock up on too, as the number of sugar-conscious shoppers looking for zero-calorie options continues to grow.”
Ribena is getting ready for summer with the grand launch of its new sub-brand Ribena Frusion. The new innovation sees the Ribena brand move into the enhanced and flavoured water category for the first time ever. Harnessing Ribena’s trusted expertise and passion in blackcurrants, Ribena Frusion is unique in the soft drink category as it uses blackcurrant water that has been naturally infused with real fruit.
2018 was the biggest year ever for Lucozade Sport, as it delivered total sales of over £131M and grew by +14% (IRI). The brand has teamed up with Anthony Joshua, to launch a new special-edition variant. The NPD, Fruit Punch, comes in eye-catching packaging featuring a distinctive gold cap, reflecting Joshua’s Olympic, Commonwealth and British championships.
Sugar tax one year on
Despite the increased spotlight on the sugar content of soft drinks, with 92% of consumers aware of the tax, the size of the category has not been impacted and there was no shock to the category size (Nielsen). The soft drinks sector even experienced growth – it is now worth £8.4bn, compared to a pre-levy £7.8bn (Nielsen). However, this sales growth can also be attributed to a number of external factors including the long summer heatwave and football World Cup.
“Vimto has proven robust in the face of the sugar levy – in fact, 100% of the Nichols owned portfolio is sugar levy exempt and has been for some time,” says Emma Hunt, Marketing Director, Vimto Soft Drinks. “In the ten years leading up to the new legislation, we removed 2,000 tonnes of sugar from our products whilst ensuring each drink retained the same great taste. And, while we’ve reduced sugar, our sales have only increased – we recently achieved a record high brand value of £87m.”
The trend for watching what we put into our bodies is continuing to gather pace. There has been a clear increase in consumers choosing low and no sugar options in the wake of the 2018 sugar tax, with sales of low-calorie soft drinks experiencing growth of +71%. Sales of Vimto No Added Sugar is growing at a massive +23%, with sales of No Added Sugar variants contributing to almost half of all Vimto sales (49%) according to Nielsen.
The category has not just been impacted by the sugar however, increasingly shoppers are avoiding alcohol too – one in four 18-24-year olds are now teetotal.
This means there is a higher expectation from consumers today that products will both be healthy and taste good.
Over 12 million households now buy flavoured water and the category is growing at 8.1%. Water is experiencing a great amount of innovation and interesting flavour combinations, reflected in recent NPD. It’s led Vimto’s innovation too, as the brand entered the water category with Vim2o, a water product infused with the refreshingly different taste of Vimto. A year since being introduced to the market Vim2o is worth £1.5m (Nielsen).
“Stocking up on the most popular brands, as well as tapping into the latest trends is essential when considering what to stock,” comments Hunt. “To add excitement to your soft drinks offering think about stocking unusual, adventurous flavours to engage consumers. Shoppers are increasingly looking for different formats and flavours, with many looking towards craft soft drinks and premium offerings to recreate bar and restaurant standard drinks at home.”
Get the balance
“It is critical for retailers to ensure that they get the balance of categories right in their chillers, with the biggest key drivers being sports & energy, water, colas and flavoured carbs, says Adrian Troy, Marketing Director at Barr Soft Drinks.
Energy drinks account for 1 in 3 drink now products, with big can energy driving a significant amount of this volume and growing at +14%. Within this, flavours offer the choice that shoppers are looking for and Rockstar the UK’s No.1 Big Can Flavoured Energy Drink, currently growing at +8% in convenience, and the top 2 fastest selling flavoured big cans are Rockstar flavours – Punched Guava (No.1) and Xdurance (No.2) according to IRI.
Water is also a key category within the chiller, growing at +5% in UK convenience (IRI). “Whilst it is important for retailers to offer trusted, quality brands such as Strathmore, currently growing at +25%, they also need to consider the growing number of consumers who are looking for healthier options, but are not prepared to compromise on taste,” adds Troy. “Rubicon Spring, a full-tasting product with 15 calories or less, is currently growing at +25% and is a massive opportunity for retailers.”
Within the cola convenience category, low calorie is driving volume growth at +11% with regular colas declining by -10% (IRI). Barr Cola is performing strongly within this sector, growing at +39% (IRI). Barr Cola was changed to a low sugar, levy free product in 2017 in line with shopper demand and continues to provide the flavour, quality and value that soft drinks shoppers expect.