Hot weather has a dramatic impact on the soft drinks category sending impulse sales rocketing. The recent trends in heath and well-being has seen a rise in the number of juice drinks and water, but carbonated and energy drinks are holding strong.
According to the Britvic Soft Drinks Report 2007, in 2006 the soft drinks category grew 7% to reach sales of pound;8.3bn in value. Overall, the UK’s annual per capita consumption rose 4% to 251 litres – a 22% increase since 2001.
Andrew Richards, sales director of Britvic, says: “In 2006, still soft drinks continued to outperform carbonates with pure juice, water, functional and smoothies driving value share growth. Sales of fruit flavoured carbonates continued to decline while sales of other carbonates including cola, lemonade, non-fruit carbonates and mixers remained stable. Cola, pure juice and water led the category in value and volume.”
Richard Brittle, purchasing director of Hancocks, says: “While the market is under a fair deal of pressure from health issues and schools taking action to ban certain products, the consumer demand remains strong for a wide variety of drinks. The trick is to know what your local customers are looking for and to plan your range well.”
Hancocks says it has grown its soft drinks category by almost 4% in 2006, which highlights the potential that still remains for independent retailers, especially in the drink-now sector where they hold a 33% share.
Sales of juices, smoothies and waters may be rising, but Coca-Cola Enterprises still has strong sellers. According to CCE, Coke is the number one soft drink brand which is now worth over pound;485m. Early this year CCE announced integrated marketing plans for its three cola brands, Coca-Cola, Diet Coke and the newest addition Coca-Cola Zero.
Coca-Cola Zero, or ‘Bloke Coke’, was launched in July last year and hit pound;24.1m sales after 16 weeks, making it the most successful new food and beverage launch in the past three years, according to data from ACNielsen.
With Coca-Cola Zero targeting the 20-29 male audience, CCE has repositioned Diet Coke as a more female brand following the return of the Diet Coke break adverts and sponsorship of ITV2’s WAGs Boutique.
Anita Huntley, head of marketing at Coca-Cola Enterprises, says: “Well known brands will always sell well, particularly within the immediate consumption opportunity, and are vital to the category overall as this segment accounts for almost one third of total category value. Success is due to a number of factors including increased brand awareness, driven by advertising and promotional activity, and excellent in-store display both on fixture and at the point of purchase. It is within this environment that the market leading brands within the full CCE portfolio can deliver significant success for retailers.”
A new launch for the summer, from July, is Coca Cola Orange, fitting into the Coke Side of Summer campaign. This limited edition is designed to appeal to drinkers who enjoyed the more citrus flavours of Coke with Lemon and Coke with Lime.
Huntley says: “Consumers are becoming increasingly demanding in the search for new and exciting flavours and we are keen to innovate with our most famous brands in exciting ways to drive growth in the category.”
Appletiser has extended its range this year with the introduction of Peartiser. Following Appletiser’s healthy proposition, Peartiser contains no preservatives, additives or added sugar and is made from a variety of pears.
Using its sponsorship of Friends, Appletiser will show six creatives throughout the year starting with the introduction of Peartiser.
Sally Marshall, European marketing manager of Appletiser, says: “Like Appletiser, Peartiser is a stylish, adult alternative to alcohol that can be consumed on a number of drinking occasions from lunchtime eating to a night out with the girls.”
Caroline Cater, business unit controller of Britvic, says: “As the smoking ban comes into force in 2007, soft drinks will become a more important part of the on-premise trade as licensees cater for new customers and a likely increase in the demand for food.
“While the health and well-being trend has prompted growth in bottled water and fruit juice, it is evident that customers are still seeking indulgent and premium soft drinks when they visit a pub, bar, or restaurant. This is demonstrated by the continued success of cola and the growth of premium packaged soft drinks.”
Britvic is currently running a wholesaler exclusive Pepsi World Cup Cricket campaign that offers retailer the chance to win tickets to one day international cricket matches this summer.
According to Shloer, it saw a 13% growth in volume and 12% year on year growth in value. Shloer is now a pound;27.5m brand having repositioned itself in 2005 to appeal to a younger target audience with a core of women aged 25-35.
With pound;10m in brand support Shloer was given new packaging a TV advertising campaign and a season of outdoor summer screenings. All the products are free from preservatives and artificial sweeteners, flavours and colours and are suitable for vegetarians.
This year sees a further pound;9m committed to brand support and Shloer is aiming to increase its presence within the wholesale sector. To this end it has developed a one litre bottle six pack for independent retailers. The six pack is available in White Grape, Mango Passionfruit, and Red Grape.
Mike Coppard, managing director of Shloer, says: “The wholesale sector is an area where we can really grow the Shloer brand in 2007, with the introduction of the new one litre bottle six pack, Shloer will be more accessible to the independents.
“We are very excited about 2007, Shloer outperformed the take home adult soft drinks category in 2006 and our continued commitment to heavyweight marketing support will see Shloer setting the pace in the category again this year.”
Red Bull says the sports and energy drinks category is the fastest growing sector by volume in soft drinks. It is made up of sports drinks, which provide re-hydration and replenishment, and energy drinks, functional soft drinks designed to vitalise body and mind when in need of improved performance such as increasing consumer concentration and reaction speeds.
According to Red Bull, it currently has a 29% value share of sports and energy and is the number one selling soft drink by cash rate of sale in impulse.
Red Bull has launched a new bigger can in response to consumer demand. It hopes the 355ml can will encourage new consumers to buy into the brand and drive penetration and provide an opportunity for retailers to boost sales.
Imogen Pudduck, head of customer marketing and category management at Red Bull, says: “As well as the standard can, we have the two-pack which allows consumers to have one for now and one for later; the multi-pack for take home and now the 355ml can which gives consumers the extra energy they seek immediately.”
The launch of the Red Bull two-pack was designed to up-weight consumer purchases. Caroline Jacomb, customer marketing and category manager of Red Bull, says: “We know that as much as 20% of shoppers don’t buy more than one loose Red Bull can as it proves too awkward to carry, so the introduction of the new two-pack will help to combat this potential barrier to purchase. During the trial we found that the two-pack helped drive incremental sales with little cannibalisation of the single can.”
Red Bull is also re-launching the Red Bull Academy. Pudduck says: “They are a field sales team with a difference. We want them to be the best at engaging with retailers and depots to make their experience of Red Bull less of a traditional sales call and more a sense of what Red Bull is about – doing things differently in a fun and involving way.”
Another energy brand is Lucozade and, according to GlaxoSmithKline, the single most important factor to drive sales within the soft drinks category is to ensure the right range of products is available and clearly displayed.
Helen Tomlinson, category planning controller of GSK, says: “To successfully achieve this, it is important to understand and react to the ever-changing consumer needs which continue to shape the category. Consumers are now looking for products which not only offer refreshment but also functional attributes. As a result, brands with added vitamins, low calorie variants and those that provide extra benefits will be in highest demand at the cash and carry.”
Lucozade is the number two soft drinks brand in the UK, according to GSK, and has outperformed the soft drinks category, with 16.5% growth in 2006 which helped the brand’s sales reach pound;296.2m.
Last year Lucozade Energy launched an apple variant and the brand is currently running a ‘Get Your Edge Back’ pound;8.25m integrated marketing campaign. Lucozade Sport has added two new flavours, Lucozade Sport Raspberry and Lucozade Sport Tropical.
Tomlinson recommends stocking an effective range, guaranteeing the availability of key selling brands, by giving best-sellers the proportion of space that reflects sales contribution, and clearing slow selling lines.
She adds that soft drinks are on 92% of all shopping lists and suggests that the soft drinks feature be at the front of the depot to make it easy to find.
According to Coca-Cola Enterprises, Powerade grew by 21.4% in 2006 and CCE hopes to expand on this success in 2007 by increasing the sport drink’s appeal to a wider consumer base and bringing the brand into the mainstream.
Sarah Mitchell, head of sports and energy of Coca-Cola Enterprises, says: “Although it’s the fastest growing sector in the category, only a third of consumers currently buy sports and energy drinks. CCE sees great potential in driving brands such as Powerade into the mainstream by broadening their consumer appeal. With this substantial investment package, CCE is confident Powerade will deliver even greater growth by giving consumers the opportunity to learn and benefit from the best hydration recommended by the professionals.”
Last year CCE launched a new energy drink, Relentless, which is already valued at more than pound;2.7m, with more than 1.25 million litres sold. Relentless is sold in a 500ml can and aims to meet the requirements of consumers for whom 250ml is not enough.
Huntley says: “Relentless is established as an evolution in energy drinks and offers consumers great value for money, and a new brand experience. It addresses the needs of consumers, 18-35 year-olds. The brand offers ‘No Half Measures’ energy for those with a ‘No Half Measures’ approach at work or play.”
Energy69 was launched this year, aiming to appeal to consumers wanting an energy boost, with a consideration for their health as well. The ingredients include green tea, ginseng and guarana.
According to Energy69, the worldwide market for energy drinks is over $2bn and growing by 50% per year.
The USA alone is $650m, the UK and Germany are the biggest markets in Europe for energy drinks with Ireland as the highest per capita consumption. In the UK pound;1 of every pound;5 spent on soft drinks goes on an energy drink.
Energy69 contains maltodextrin which has a slower release than most other sugars and can stabilise energy levels, as well as blood sugar levels, reducing the risk of gaining body fat.
Richard Horwell, marketing director of Energy69, says: “The wholesale channel is extremely important for new drinks as they have the hands-on ability to promote brands, assist in POS and really partner up with a manufacturer or supplier and market to the independents that welcome new brands instead of bleed them for cash.”
Juices and Waters
Britvic says, in the take home channel in 2006, still soft drinks continued to outperform carbonates with pure juice, water, functional and smoothies driving value share growth.
Cater comments that wholesalers provide a route to market to get to over 250, 000 outlets, pubs, clubs and caterers. Its products are doing well with Robinsons Squash, J2O and Fruit Shoot being star performers.
Cater says: “Wholesalers are an efficient route to market, however they don’t always take advantage of developing trends. They have too much reliance still on carbonates which are really important, but are not growing at the same pace as juice, water and children’s drinks.”
Britvic has been developing full colour shrink-wrap trade packaging for cash and carries to enable retailers to find products more easily. This has been introduced on Robinsons Squash and Fruit Shoot as well as price-marked packs.
Available this month is Fruit Shoot 100% juice, which is aimed at schools as it is a pure juice with no artificial colours or flavours. Further into the summer Robinsons will once again link with Wimbledon.
Ribena is celebrating its 70th birthday this year and is launching new packaging designed to emphasise Ribena’s countryside heritage with images of native wildlife.
According to GSK, Ribena is the UK’s number one juice drink, and Ribena Really Light is driving good growth within impulse, up 30% year on year. Ribena Really Light is also available in Blueberry. Raspberry and Pomegranate are being introduced.
Anne MacCaig, category marketing director at Ribena, says: “Since its launch, Ribena Really Light Blueberry has been a huge success and it’s proving to be extremely popular among young adults. As a result, we’re focused on expanding the range which will enable consumers to enjoy Ribena on the go or at home.”
According to Bottlegreen Drinks Co, adult soft drinks is one of the fastest growing markets within soft drinks. Bottlegreen has a 63% volume share of the adult premium cordial market and is growing at 3% per year.
Simon Speers, managing director of Bottlegreen Drinks Co, says: “The growth of home entertaining and cookery shows is encouraging consumers to be more experimental in their tastes. It is not enough to offer colas and lemonades and consumers don’t always want an alcoholic option. Products from Bottlegreen such as Bottlegreen Elderflower Cordial offer a more sophisticated soft drink, while also providing an easy way to experiment with recipes, and customise cocktails, punches and spritzers.”
Speers continues: “By infusing established variants with new popular flavours through our 25cl press eacute; range we are offering consumers a more sophisticated soft drink, while also providing great mixers.”
Claire Nield, brand manager of Vimto, says: “The size of the brand has never been bigger and Vimto growth has been driven by above the line activity, driving its national platform of distribution and creating meaningful NPD that will help develop the brand long term.”
According to Vimto, it is responding to consumer need and achieving a growth of 10% year on year and is the second fastest growing major dilutable brand.
Vimto will be repeating its TV advertising which has been updated to feature the No Added Sugar 500ml Still variant.
Panda is aiming to create more excitement in the category with new flavours in the Panda Still range. Panda Still Kiwi Pineapple and Orange Passion Fruit will be launched over the summer.
Claire Witt, brand manager of Panda, says: “The portfolio launched last year encompassing Panda Still, Panda Spring and Panda Pops has continued to hit the mark in terms of delivering what children want while also appealing to parents. All the range contains no added sugar, no artificial colours or flavours and real fruit juice.”
A new product this year is Zipp, a better-for-you natural fruit drinks from Infuzions. Zipp combines natural juices with an optimum level of anti-oxidants, vitamins and minerals and a combination of herbal extracts.
According to Infuzions, Zipp Slendrize makes healthy weight loss simple, and Zipp Vitalize has 75% RDA of essential vitamins and minerals to support against daily stress.
Jacob Bruun-Jensen, managing director of Infuzions, says: “Zipp has performed very well in consumer research, with 6 out of 10 consumers saying they would purchase the product on a regular basis. This is a very high score for any new product, especially in the crowded UK soft drink category. We estimate that there is a pound;245m annual off-trade market opportunity for healthy soft drinks in the UK.”
According to Danone Waters, the total UK bottled water category is currently worth of pound;650m in annual sales and has experienced strong double digit growth over the last few years, starting 2007 along similar lines with strong growth versus last year. Last year over 1.3 billion litres of bottled water were drunk is the UK, with UK shoppers spending almost pound;75,000 an hour on bottled water.
Danone’s Evian currently holds 15.7% market share, worth pound;100m in annual sales with various size ranges, in single and multipacks as well as a sportscap 75cl bottle. Danone also has Volvic Plain Still and Volvic Touch of Fruit, which will be available in a choice of either Original or Sugar Free this month.
Steve Flanagan, category strategy manager of Danone Waters, says: “Recent research shows that while 58% prefer sweeteners; 42% prefer sugar, so there is not a one size fits all solution with regards to flavoured water.”
According to Danone, the flavoured water segment is worth over pound;165m each year and Volvic Touch of Fruit accounts for around 35% of the segment with sales of almost pound;58m. Flanagan says: “A change in the temperature can trigger a noticeable effect on water sales. Water in both impulse and multiple formats sees similar increases in actual unit growth. In terms of immediate consumption, if the temperature rises from 14oC to 25oC retailers will see a 75% increase in sales, and if the temperature rises to 30oC water sales will increase by 125%, making it imperative for retailers to be fully prepared and with their water chiller correctly merchandised for the hot summer months.”
Danone Waters has introduced the sportscap format to both Evian and Volvic. Consumers on the go are key consumers and it is important to stock up on the impulse range.
Buxton has launched a one litre still water bottle with an easy grip bottle and hydration message to target impulse purchase. The new look for Buxton Natural Mineral Water is to coincide with the warmer weather.
Catherine Morris, trade marketing manager for Buxton, says: “We have redesigned Buxton Natural Mineral Water to be more appealing to our consumers, maintaining the brand’s unique heritage but in a more confident, modern and impactful way.”
Buxton is again maintaining links with Wimbledon as the Official Mineral Water to the Wimbledon Championship for the seventh year running and will be seen on all Championship Courts.
=== Buyer’s viewpoint ===
The cola and carbonates sector is not performing well in the independent market, with cola up just 1% (mainly attributable to Pepsi) and carbonates down 4%. Yet together they accounted for 45% of the independent market in 2006. Diet flavoured carbonates such as the “Zero” range, and Diet Irn Bru, are two products that are bucking this trend at the moment.
Hancocks maintain strong sales in the carbonates category, despite mounting pressure. Coca Cola 500ml is the top selling carbonate, achieving an impressive 16% growth year on year.
Energy and sports drinks are responsible for much of the growth in the soft drinks market. They account for 24% of the independent soft drinks market and are experiencing an impressive 15% growth. In fact all top 12 brands in this sector are growing.
Juice drinks are showing positive growth of 6% year on year, led by a number of star products, including Oasis and Ribena Really Light, growing at 22% and 37% respectively in the independent sector. Interestingly, Ribena Original is in decline.
Water seems to go from strength to strength. The independent sector holds 11% of the market, with the “drink now” category growing 19% in 2006. Own label products dominate the category with key brands Evian and Volvic holding 21% and 17% share respectively.
=== top tips from hancocks ===
Top Tips from Hancocks to independent retailers to help them maximise their profit from soft drinks.
l Focus on the “drink now” sector as that is the biggest opportunity for independent retailers of all sizes
l Know the requirements of your local customers and seek to provide what they need
l Don’t discount the carbonates sector, there are still big profits to be made, especially by independents
l Shop wisely and take advantage of strong cash and carry promotions to maximise your profits
l Be proactive with new products that are usually promoted well and widely advertised