A Bigger splash Tapping into water and juices profits

The first thing you need to maximise your drinks sales in the summer is availability. The first rule is to make sure that when the weather gets hot, you have stock available, so customers can capitalise on increased summer sales. That’s the message from William Watkins, MD of Radnor Hills Mineral Water Company in our exclusive interview in this issue.

The wholesale sector is key to Radnor Hills’ business and they are set up to supply anything from very small operations with one man and a van to national wholesalers.

Radnor Hills often send sales support staff into outlets to ensure their products are visible, as well as doing tasting sessions. It’s a classic case of suppliers working together with retailers to build categories.

Looking at the overall waters and juices market, Mintel’s March 2016 Bottled Water report quoted Anita Winther, Food and Drink Analyst as saying bottled water has enjoyed robust growth, benefiting as a lowcost option on the go while incomes were squeezed and boosted by good weather and its sugar-free credentials. Anita also pinpointed convenience continuing to play a central role as the reason for choosing bottled water. Packaging developments bolstering convenience on the go and at home therefore retained their relevance. Meanwhile the marked interest in lightly carbonated and lightly flavoured products suggests opportunities to build much-needed differentiation through small adjustments.

In a follow up report in March this year, Mintel’s Research Analyst Alice Baker was more austere, saying the fact that 46% of drinkers/buyers cut back when money is tight signals a warning for the market, given the economic uncertainty and threat of future inflation.

The same report points to fruit juices and squashes being repitched for the 21st century as “make-your-own flavoured water kits,” catering to consumer desire for customisation, while parents’ strong tendency to buy bottled water for their families provides scope for expansion in children’s products.

There are different pressures in the fruit juices category. Mintel’s report in November 2016 quoted Alyson Parkes, another research analyst at the company as saying that concerns around sugar continue to plague the category: “While fruit juice is struggling under this pressure, the launch of no added or low sugar products and varieties claiming functional benefits appears to be helping fruit juice and smoothies. Unease around artificial sweeteners however remains a concern.”

Fruit juice looks likely to continue to suffer from this sugar scrutiny, contributing to the forecasted volume decline over 2016-21. With no one able to predict anything about Brexit and all that at the moment, price rises on the back of import inflation will prop up value sales but may dampen volumes further.

Meanwhile the good news is that juice drinks have maintained volume growth according to Mintel, despite the focus on sugar with a number of low/no/reduced sugar launches, which should help to grow the segment.