Health and well-being are the key drivers in the soft drinks market at the moment and the experts reckon they are likely to remain so for some time. Of course, you can’t get a much healthier drink than water. According to Britvic’s soft drinks report, the bottled water market was worth pound;643m in the take-home channel last year, up 11% on 2005. In the on-trade, it was the fastest growing category, up 28% in value to reach pound;75m. But despite excellent growth in both sectors, there is still a colossal sales opportunity as UK consumption of bottled water lags way behind other countries.
Sales of bottled water traditionally increase in the summer months because of the hot weather but this summer sales have been boosted in some parts of the country by unseasonable weather. Unfortunately floods have led to contamination of water supplies, which in turn has led to stampedes for bottled water and some stores having to ration the drinks.
It’s an understatement to say that this summer is different to last year’s. Then Britain had the hottest summer since records began but 2007 is likely to go down as one of the wettest. However Steve Flanagan, category strategy manager at Danone Waters, says at least nowadays consumers are used to buying bottled water as a soft drink so there is a core number of customers, rain or shine. He says: “Wholesalers need to be aware that bottled water is now seen as a soft drink of choice, and so it needs to be given the space in-depot that it deserves. Brand names are increasingly becoming a factor in the consumers’ decision-making process, so stocking the best selling brands is imperative.”
And those best sellers just happen to be Danone brands. Danone’s Evian is the best selling water brand, with a 15.7% share of the category according to Nielsen figures, with the company’s Volvic second, with a 13.1% share.
Evian has been given a facelift and is currently being rolled out in new bottles that feature a vibrant pink colour plus the introduction of mountain visuals to highlight the brand’s 15-year filtration through the French Alps.
Meanwhile the Volvic range has been extended with the launch of Volvic Revive, a healthy energy drink that aims to refresh and revitalise consumers. It has no added sugar but contains stimulating plant extracts such as ginseng and guarana. It comes in citrus kick and berry blast flavours, in 50cl bottles.
Flanagan comments: “Our research reveals that one of the growing concerns for Revive’s core target market of 18-35 year olds is tiredness. As Volvic Revive not only hydrates, but increases alertness, this makes it the perfect solution for those constantly on the go and looking for a quick and refreshing pick-me-up.”
When it comes to trade channels, Flanagan says cash and carries and wholesalers are very important to his company. “We have a field sales force calling on 9,000-plus independent outlets, and they will be pulling through stock from depots into stores.
“We have a good relationship with most of the cash and carries; we talk to them about our shopper research. We do this on a regular basis and are just about to talk to them again about our latest research.”
He says that by and large depots are getting the ranging and pack sizes right but reckons there’s room for improvement when it comes to flavoured water. “There needs to be more clarity about the ranges for instance, with original waters versus sugar free.”
He has three pieces of advice for depot managers: maximise floor space and increase stockholding in depot; offer advice on merchandising to retail customers; and highlight promotions to make them more visible to retailers.
Brands may be important but increasingly so are things like ethics and provenance, with consumers keen to know much more about what they are buying.
Charity water brand Thirsty Planet has been selling well in its initial 1.5ltr size, so much so that a 500ml bottle has been launched for the foodservice sector. Money from each bottle purchased goes to the Pump Aid charity. To date three million 1.5ltr bottles have been sold, which has helped more than a quarter of a million people in sub-Saharan Africa gain access to clean water.
Paul Martin, managing director of Waterbrands, says: “Ethical issues are having more and more of an impact on the products consumers choose. Brand loyalty is no longer built around quality and value alone, but on the impact people believe a product has on the world around them.”
Ethics may inspire some people to purchase a particular brand but many more are persuaded by advertising.
Big pub brand Strathmore Spring Water is backed by its first ever TV advertising campaign with a theme that emphasises its Scottish heritage.
Barr Soft Drinks purchased the brand last year. Adrian Troy, head of marketing at the company, says: “The ad reflects the brand’s core values as it invigorates and energises while being fresh and unpretentious and very definitely Scottish.”
The end line – ‘From the Vale of Strathmore’ – further reinforces the brand’s Scottish credentials.
Strathmore claims to be the number one bottled water in the on-trade but Troy hopes the new ad campaign will broaden its appeal to 18- to 34-year-old consumers in the impulse market.
“Strathmore has long been recognised as one of the UK’s strongest bottled water brands and already, since joining our portfolio, the spring water has been responsible for a significant growth in our company’s total sales.”
Meanwhile Britvic has chosen national press and radio as the mediums through which to advertise its new-look Drench. The brand’s pound;2.4m campaign uses the tagline “Your brain is 75% water”.
Andrew Marsden, marketing director at Britvic, comments: “Drench has established itself as a credible and youthful brand and this new campaign will build on this by using charm and humour to continue to give Drench a distinctive and appealing personality.”
The campaign will support the recently-launched new pack design for Drench which features a crisper and cleaner look to improve shelf stand-out while communicating functionality for the drinker. An easy-grip bottle shape in 500ml and 750ml sizes and a convenient on-the-go sports cap make the new Drench pack ideal for impulse purchase occasions.
Marsden says: “The bottled water sub-category is of huge importance, with the increasing consumer shift towards healthier soft drinks options driving continued growth. According to research and analysis company, Synesis, bottled water is set to be the largest softs drink category, as drunk, by 2008.”
== Fruit punch ==
Another soft drinks sub-sector that’s benefited from consumer demand for healthier beverages is fruit juice and juice drinks. According to Britvic, pure juice is the second largest sub-category in take-home after cola, and is worth pound;1.1bn. Sales of juice drinks contribute a further pound;529m to the category. In the on-trade pure juice achieved sales of pound;180m last year, with juice drinks doing better at pound;206m.
Bestway reports a general increase in fruit juice sales, which it puts down to the fact that the healthy eating and drinking message is getting through to consumers. The cash and carry group says Rubicon is selling particularly well.
According to Nitin Menon, the brand’s head of sales and commercial services, sales of Rubicon are up 30% year on year through cash and carries. He says: “The company was founded 25 years ago and maintaining good working relations with the cash and carry market has helped provide a strong foundation for the business.”
He says the best sellers through the channel are mango, guava and passionfruit juices. “More recently we have seen strong sales of our new superfood juice drinks of pomegranate and our latest, papaya.
Menon praises the cash and carry sector for being “acutely aware of the massive sales opportunity that the soft drinks market brings and acknowledging this with additional space and visibility during the high sales period of summer”. He says Rubicon has always supported the cash and carry channel with strong deals on trade days as well as sampling for new product launches.
“In terms of merchandising we look to drive additional brand communication and sales through our ‘exotic’ branded bays and towers.”
Pomegranate is a very popular flavour at present. Indeed one of the biggest success stories in juice drinks over the past year is Pomegreat which, according to the Britvic Soft Drinks report, grew 264%, adding pound;13.8m to the category and gaining 4% market share.
Bob Cheeseman is sales director at Chartered Brands, whose portfolio includes Pomegreat. He says: “Pomegreat bucks the trend of the average juice SKUs prevalent in cash and carries, which are largely price driven. There’s no question that independent retailers recognise there is a growing market for premium juices of this nature so it is logical for cash and carries to respond to this ‘pull through’ demand.”
According to Cheeseman sales in depots have been impressive. “To better target the wholesale/cash and carry market, we repackaged Pomegreat into a 6x1ltr pack format exclusively for this trade channel. It is available in both the original and pomegranate blueberry varieties.” He believes there will be a continuing demand for premium juices via the cash and carry sector. “I think they have developed a distinct niche and a loyal consumer following. Consumers are increasingly aware of products with discernible health benefits. From the trade’s point of view premium juices offer a quality alternative – and healthy margins.”
PepsiCo has a strong portfolio in the juices category. Tropicana is now the number one juice brand and the fourth biggest soft drinks brand, and it also supplies PJ Smoothies and Copella. Tropicana has branched out from being just orange juice and is now seen as a wider fruit juice brand.
In February it added cranberry and pomegranate blends, which along with blueberry gave it three ‘superfruit” varieties. In addition it launched Tropicana Go! in April last year, a blend of juice and water designed for children’s lunchboxes. In January it added a new apple flavour and it has committed a total of pound;6m marketing support in 2007 including TV, press, sampling and direct marketing.
Tropicana marketing director Will Ghali comments: “Apple is the second most popular juice flavour, after orange, growing at 46%. It is especially popular with children and we believe new apple flavour Tropicana Go! will appeal to mums who want to buy a tasty apple juice drink for their children with no artificial ingredients.”
Meanwhile what Thirsty Planet has done for clean water in Africa; Cracker hopes to do for trees in Ghana. Cracker is a new range of smoothie fruit drinks and the company that makes it – also called Cracker – gives 10% of its profits to the Trees for Life project in Ghana.
The Cracker drinks come in a number of flavours including thick and smooth peach and plum and freshly mashed apple, strawberry cranberry. All the drinks are made from crushed fresh fruit and any water that has to be added comes from a natural artesian well source.
Many juice drink brands, which rely heavily on the lunchbox market, are being extended to include formulations that are in keeping with government guidelines on drinks for schoolchildren.
Um Bongo, for example, is launching two new pure juice variants in September. New Um Bongo tropical pure juice and exotic smoothie will be marketed as ‘healthy but fun’. The packaging has been redesigned to reflect a healthy and fresh image and the Libby’s logo – long associated with fortified drinks – has been removed to ensure the ‘pure’ juice message stands out.
Um Bongo tropical pure juice is available in single 200ml cartons and in five-packs while the exotic smoothie comes in single 200ml cartons and three-packs.
Another brand to have already gone down the pure juice route is Robinsons Fruit Shoot with its 100% variant. It is available in orange, apple and apple blackcurrant flavours, with each bottle counting as one of the five recommended daily portions of fruit and vegetables.
And the Panda Juice range was created specifically for the schools market. The drinks contain 70% fruit juice and 30% water and nothing else. The first two flavours in the range are apple, strawberry banana and orange, lemon lime, packaged in a 250ml prisma carton each containing one of the ‘five a day’ in terms of recommended daily portions of fruit and vegetables.
Panda brand manager Claire Witt says: “The creation of Panda Juice provides the foodservice sector with a solution to delivering a product that meets school food guidelines while identifying with kids’ needs.”
Earlier this summer Coca-Cola Enterprises relaunched Capri-Sun juice drinks with no artificial ingredients, less sugar and more juice. Packaging is also being updated to include ‘guideline daily amounts’ on the front of the packs to help parents make informed choices about the nutritional content of the drinks they give their children.
And Ribena, which is the UK’s number one juice drink according to Nielsen Scantrack data, has extended its really light blueberry variant with the launch of a 600ml and 1ltr squash and a 288ml tetra pack. According to brand owner GSK, the 500ml ready-to-drink format added an incremental pound;800,000 to the category in its first five weeks and is now, a year after launch, worth pound;2.4m.
=== Wholesale Perspective ===
Jon Burton, Landmark Wholesale’s soft drink category controller, analyses the top ten juices and waters by volume, according to the group’s EIS system, which takes daily sales data from members.
== Fruit Juice ==
The fruit juice category is experiencing strong growth via innovation and through category partnerships with suppliers and our members. Wholesale deals are being tailored to meet the needs of the retailer and their customers.
Category management projects focusing on the benefits of chilled, including short life juice and smoothies, will increase sales. Within Landmark our Hot House initiative focuses on developing key categories, including juice and waters, for 1,200 stores.
On brands, Just Juice, an exclusive to the independent sector, has established a franchise of users at a competitive price. 200ml packs have achieved strong growth with 25% extra value packs.
Tropical juices such as Rubicon continue to perform as tastes diversify and healthy drinks increase in popularity. The sector still underperforms on short-life juice and smoothies, including products such as Tropicana.
On pricing, the concentrated orange juice price continues to rise, although the top may have been reached by the Brazilian market. This will reduce demand and move business into cheaper juice blends.
== Water ==
The category has continued to perform well over the past four years and still has growth potential. Flavoured and functional waters have the greatest profit opportunities for wholesalers and retailers.
The TV campaign “Volcanicity” continues to dominate water campaigns – with Volvic remaining at number one.
Highland Spring has been extremely creative with its pack designs and dealing in the sector. Regional brands continue to do well where there is good distribution.
On commodity pricing Green Valley continues to grow this fragmented area.
On the premium side exotic flavours such as Lifestyle Strawberry Kiwi fruit assist the category to add value. The emergence of functional waters such as Hydro and new Revive berry flavour give massive untapped growth potential.
== Outlook ==
Sales have outstripped last year on both categories and whilst weather is a factor in July we will attain good growth this year through excellent category support initiatives and good supplier collaboration.
=== Top 10 Fruit Juices by Volume Variance over last year ===
1. Sun Pride TRopical Juice Drink 1 Ltr 11%
2. Just Juice Orange 1 Ltr 23%
3. LifeStyle Pure Orange Juice 1 LTR 7%
4. Rubicon Mango 330ml 24%
5. Kulana Orange juice 27x200ml 141%
6. LifeStyle Apple Juice 1 Ltr 1%
7. Just Juice Orange 6x500ml -20%
8. Just Juice Pineapple 1Ltr 15%
9. Just Juice Orange 200ml 370%
10. Del Monte Orange juice 12x1LTR -19%
Source: Landmark Wholesale’s EIS
=== Top 10 Water by Volume variance over last year ===
1. Volvic Water 500ml 23%
2. Volvic Water 1.5Ltr -23%
3. Highland Spring Still 24x500ml 45%
4. Volvic Sportscap 1 Ltr 20%
5. Vittel Water 24x500ml -1%
6. Evian Water 500ml 13%
7. Brecon Carreg Still 24x500ml 3%
8. Hadrian Spring 34%
9. Green Valley Sportscap 500ml 41%
10. LifeStyle Water Strawberry Kiwi Fruit 500ml 131%
Source: Landmark Wholesale’s EIS