Disappointing summer weather and a campaign encouraging consumers to drink tap water depressed bottled water sales during 2007 and 2008, but this year has seen a strong upturn in cash and carry.
According to Neilsen, sales were up 11% and volume increased 9% in the six months to June, and Highland Spring had the highest brand share in cash and carry at 27%.
Marketing manager Paul Condron says: “Highland Spring’s 24 x 500ml screw-cap is the number one SKU in cash and carry and accounts for 13% share of all bottled water sales in the sector. Highland Spring 12 x 1.5 litre is the number one sparkling SKU in cash and carry with 17% volume share of all sparkling sales, up 53.6% on last year.”
The summer period is vital for water sales and a hot spell can drive a massive increase. Helped by a warm May and a scorching June value sales for these two months accounted for 44% of the total sales in the last six months in cash and carry, and Highland Spring was up 34.2% in June compared with the same month last year.
The back-to-school period is another important time with sales of bottled water typically increasing by up to 50% in the first week of September as it takes its place in kids’ lunch boxes. To coincide with this Highland Spring will be introducing new designs across all kids packs in August featuring cartoon animals.
Nestlé Waters is the world’s number one bottled water company with sales across 130 countries totalling Â£5.5bn, and has introduced the world’s largest bottled water brand by volume, Nestlé Pure Life, to the UK. The brand is described as “healthy hydration for all the family at an everyday price” and was launched in the multiple sector although it is slowly entering the wholesale channel.
In the impulse channel the company’s core brand is Buxton and it has been a strong supporter of the FWD’s My Shop is Your Shop campaign and contributed a 20p off coupon to the National Independents’ Week offer. The brand is also official water of the England Cricket Team, and a TV campaign and special pack during the Ashes series should ensure it has a high profile.
Also in the wholesale channel, but more on the catering and foodservice side is S Pellegrino, which is associated with fine dining, and Perrier which has a role to play in the out of home market.
Jenny Bond, Nestlé Waters’ head of customer marketing, challenges the premise of the campaign against bottled water. She says: “It is not an either/or choice versus tap water. As bottled consumption has increased over the past 20 years, tap water consumption has not decreased.” She says restaurants should offer their customers a choice of bottled or tap water and that bottled water helps to keep people healthily hydrated when they are out of home. She also points out her company’s environmental credentials, saying it has reduced the PET used in its bottles by 20% since 2006, with a further 25% cut planned by the end of 2009, and the majority of bottled water consumed in the UK is locally sourced.
In the overall GB market Danone Waters is the market leader. Its Evian brand was number one with a 17% share of the bottled water category at the end of 2008, and Volvic Plain was number two with a 12.5% share. The company has had a succession of activity on its brands such as Evian’s annual Detox campaign at the beginning of the year and most recently its sponsorship of the Wimbledon Tennis Championships.
Btitvic is another big spender in supporting its brands and sales director Murray Harris comments: “Following on from last year’s memorable ‘Brains’ ad, we are heavily supporting the drench brand through an engaging on-pack promotion that communicates the benefits of staying hydrated.”
Schweppes Abbey Well has a tie-in to one of the biggest media events of the next few years through parent company Coca-Cola’s partnership in the 2012 Olympic Games. It launched a campaign in March which offers consumers a free swim through a promotional bottle cap and for each one redeemed it will donate Â£1 to get Britain ‘Sch…imming’ in the run-up to the games.
Although the total bottled water market was in decline during 2007-08 Waterbrands has racked up year-on-year growth of 20% for the last three years from its flagship brand Harrogate Spa Water. Paul Martin, managing director of Waterbrands, comments: “It’s a premium product but Harrogate Spa Water offers favourable margins to wholesalers and retailers.”
The number of consumers seeking ethical products is also growing, and sister brand Thirsty Planet became the number one good cause water brand within months of its launch in March 2007. It guarantees a donation to its charity partner for every bottle sold. For example the sale of one 500ml bottle generates a 5p donation to the charity Pump Aid, which works on water projects in sub-Saharan Africa. By the end of August Thirsty Planet is forecast to hit Â£1m in donations. “Once consumers understand the principle they become very loyal to the brand because it offers a simple way to make a difference to the lives of some of the poorest people in the world,” says Martin.
== PURE JUICES AND JUICE DRINKS ==
Sales of these products have proved vulnerable to the effects of the recession. Nick Short, commercial manager, Ocean Spray, says: “The juice and juice drinks category has taken a hit as price sensitive shoppers re-evaluate their basket spend, and are swapping for products such as dilutes and carbonates.”
However, consumers have also stayed loyal to known and trusted brands. He adds: “Ocean Spray and Tropicana have both held up well so major brands with sustained above the line investment should lead recovery and growth. That’s why, despite the market conditions, Ocean Spray is investing in heavyweight TV this year.”
With consumers seeking value for money, he advises that independent retailers should take advantage of price-marked pack (PMP) offers as they provide an opportunity to compete directly with the multiples on price. He says: “Ocean Spray’s PMP promotion in May gave the independent best in trade pricing and the promotional allocation sold through in just six weeks – half the time that it took last year. As a result we will be repeating the activity in September.”
The company also runs its Harvest Club loyalty and reward scheme for independent retailers where they can ‘harvest’ berry points from cases which can be exchanged for branded POS, merchandise and gifts including digital cameras, iPods and luxury spa experiences. Short says: “Wholesalers do a good job and some in particular have really got behind our Harvest Club reward scheme, helping us to execute eye-catching rack ends in depot and we have achieved a great level of brochure features and PLOF inserts in delivered wholesale.
“Wholesalers can add value by providing recommendations of must stock and core ranges to CTNs and convenience stores while highlighting when brands are on TV to ensure the additional demand can be translated into sales.”
Another company investing in supporting its brand is Sunmagic. Peter Hindmarsh, Nisa-Today’s category controller for soft drinks, says: “I have been thoroughly impressed with the significant investment and effort put behind the Sunmagic brand, having introduced the range of products available to our members via central distribution services earlier this year. With good shelf stand-out Sunmagic has proved to have strong consumer and retailer appeal and is producing good sales. As a result we have also broadened the range and replaced a number of our existing products with Sunmagic.”
Sunmagic brand manager Razin Ali says: “We have managed to avoid the current economic trends by increasing our distribution nationally; our retail distribution has doubled in the last 18 – 24 months. This coupled with a major above the line campaign launched in June, has resulted in our highest monthly sales – up 50.5%. Great weather, new distribution and the ATL campaign blended perfectly.”
Sunmagic is looking to capitalise on the recent gains by targeting the back to school market with a tailored school friendly range. It comprises a range of 200ml and 330ml cartons and cans and complies with the government’s latest advice on healthy drinks for children and counts as one portion of the recommended daily intake of fruit and vegetables.
Granini has also seen major increases in take-home sales and distribution, according to sales and marketing director Steve Wheatley. He says: “The delivered wholesale sector is a major channel for our 200ml on-the-go range. As a premium continental brand, our juice range particularly lends itself to upmarket cafes, restaurants and delicatessens, which most of our wholesale customers tend to supply our range to.
“Our 100% pure orange and apple juices continue to be the main volume drivers within the wholesale channel. However, we are seeing massive increases in sales of more unusual variants such as peach, pear, mango and apricot.
“According to our research, there is an un-met demand for these more unique variants and consumers actually perceive them as more premium, making them potentially more profitable, with scope for higher cash margins.
“Generally wholesalers are great at servicing their existing customers, however, they could be more pro-active in driving more specialist (and potentially more profitable) brands, such as Granini, rather than focusing on the big brands that everyone stocks. We have a dedicated sales and marketing team on hand to help wholesalers drive sales and build brand awareness with their customers and their consumers.”
Coca-Cola Enterprises is another company targeting the kids lunchbox market and will be re-launching its Capri-Sun range with a new pack design and advertising campaign focusing on its ‘nothing artificial at all’ slogan in time for the back to school season. Ed Knight, head of communications at Coca-Cola Enterprises, says: “Capri-Sun Juice Drinks is in value growth of +3.9% and Capri-Sun 100% Pure Juice has experienced an extensive awareness increase of up to +40% following the successful TV and print advertising campaign launched earlier in the year. In fact, consumer research has shown 60% of mums felt significantly better about buying the brand for their families after seeing the ads.”
GSK has been targeting an older lunch-time demographic with its Out for Lunch on-pack promotion. Featured on 500ml bottles and 288ml cartons of Ribena, the promotion offers consumers the chance to win one of a million inflatable lunch-time assistants to cover for them at work while they are out.
Following the launch of the ‘all natural’ Sunny D earlier this year, The Sunny Delight Beverage Co (SDBC) has invested in an above the line campaign starting in June aimed at tackling old perceptions of the brand.
The second phase of the campaign will include a Â£1.1m TV campaign starting in September as well as a sampling programme aimed at reaching up to 200,000 consumers.
Sunny D’s commercial manager, Richard Baragwanath, says: “With Sunny D now containing 70% fruit juice and no artificial colours or preservatives, we can expect to see Sunny D shine once again as a fruit juice aimed at the children’s drinks market.
“With increased visibility due to our above the line campaign, we expect to draw old consumers back to Sunny D as well as introducing new consumers to the brand.”
The Outspan range of drinks from Aimia Foods is continuing to expand through the launch of Juice Splash, made with 60% juice. Neal Haworth, category marketing manager at Aimia Foods, says the school compliant drinks are ideally suited for lunch boxes, independent retailers or schools. He says the high-impact, premium packaging ensures the drinks stand out on shelf, offering retailers great margin potential.
Haworth adds: “Outspan Juice Splash has a nine-month shelf life and comes with the reassurance of the Outspan brand, synonymous with premium quality fruit. With every Outspan drink sold, Aimia makes a donation to support the education of under privileged children in South Africa too.”
== Smoothies ==
The biggest casualty of the recession in the soft drinks sector has been smoothies. After two years as the fastest growing sub-category of soft drinks, according to Nielsen Scantrack MAT to 27/12/08 smoothies were down 20% in value to Â£172m, and volume was down 15%. Innocent, the market leader, was hit particularly hard, with sales down 26%, although the new Tropicana brand launched in February 2008 achieved Â£16m sales in the year.
However, John Taylor, who covers the convenience sector for Innocent, says the situation has improved over the last six to eight months, with sales rising. Also, a number of major competitors have dropped out of the market, and according to IRI at 21/3/09 Innocent’s market share stood at 82%.
He says: “We have a strong strategy to get smoothies back on track and moving forward and a major factor in this has been reducing the price on shelf.” Prices have been reduced through promotional activity and during September and October it will be emphasising value with price-marked packs in Budgens.
Aimia Foods has launched the newest addition to the ambient smoothie market, under the Outspan brand. Category marketing manager Neal Haworth says the new smoothies have a six-month shelf life and with good margins, offer affordable and profitable opportunities in a rapidly growing sector.
He adds: “Each smoothie provides one portion of the recommended daily allowance of fruit and vegetables, making them an ideal choice to be used within packed lunch boxes, independent retailers and throughout the education sector as a whole.
“Stocking Outspan considerably strengthens the range of products on offer for a retailer or operator by providing consumers with a low cost option from a trusted brand.”
=== Foodservice viewpoint ===
Phil Smith, product marketing manager for drinks, cereals and impulse, Brakes
We’re all familiar with the hit soft drinks took in the education sector due to changes in guidelines on health, but during the last few months, branded drinks have experienced a decline across all channels.
With the economic downturn, it has been the best in class own label smoothies and fruit juices making real gains at the expense of branded products, as consumers choose drinks that deliver on quality, health and taste, but cost less.
Although strongly associated with breakfast service, fruit juices and smoothies offer operators a genuine opportunity for fresh growth. Inherently healthy drinks drive demand throughout the day and this is what caterers should be tapping into. With renewed interest in fruit juices – pure and from concentrate – caterers should at the very least stock a good orange and apple variety. With orange remaining the most popular flavour and a firm breakfast staple, apple juice is the number one choice with the younger generation. However new exotic flavours such as cranberry, pineapple and grapefruit are growing in popularity.