There’s something new every day in this fast moving sector! Carol Saunders, Head of Customer Marketing, Highland Spring Group, takes a look at the latest flavours and styles, and the underlying trends driving sales.
Market Overview
The total soft drinks market is in decline, while plain bottled water (comprising of still and sparkling) is showing significant growth as consumers switch into the category from sugary soft drinks. In fact, it is the biggest growth contributor in total soft drinks, and we predict volumes will hit around 3 billion litres by 2018.
For context, it is now bigger than canned soup, toothpaste, baked beans and chocolate biscuit bars. It contributed £46m additional sales year-on-year to the UK grocery trade and attracted an additional 900,000 new consumers to the category (Source: Kantar Worldpanel Usage – In Home / Carried Out Consumption – 52 w/e 21st June 2015). On average, bottled water was present in an extra 0.7 shopping trips over the past year (14 shopping trips in total), showing that there are more consumers spending more on more trips to the shops (Source: Kantar Worldpanel Usage- In Home / Carried Out Consumption – 52 w/e 21st June 2015). At a time when growth is hard to come by, this reinforces the fact that bottled water is a hero category right now.
Within this category, Highland Spring Group (HSG) is the UK’s leading producer of naturallysourced bottled water and is now bottling 500m litres of water a year, indicative of the fact that consumers are drinking more bottled water than ever before.
Market Trends
Health remains high on the consumer agenda. We understand from recent research that 29% of consumers are “very concerned” about sugar and 92% are trying to manage or reduce the amount of sugar in the foods they buy (KWP Sugar Concerns questionnaire Feb 2016). Parents in particular are increasingly concerned about what their children drink.
The growing issues with obesity and the government’s impending childhood obesity strategy, has brought consumption habits, calorie control, weight gain and sedentary living to front of mind and this is one of the reasons why we are seeing consumers switch into the category from sugary soft drinks.
We believe that health improves when people drink more water and our existing product family is designed to encourage that by actively promoting healthy hydration.
Given the growing health consciousness and concerns of shoppers, educating store owners and in turn their consumers, on the benefits of hydrating with plain bottled water is key. At the same time, consumers should be provided with sufficient choice of product as a potential solution to these concerns.
As with our Highland Spring Still and Sparkling water brands, these product solutions must cater to consumer demand for health and enjoyment across an increasing number of need states.
According to our research, these need states include routine hydration, health, meal accompaniment, convenience and taste. This reveals that bottled water fulfils a number of consumer needs and not only those most commonly associated such as health and hydration. Consumers are also looking to bottled water at mealtimes and specifically for its taste credentials, progressing from its functionality to fulfil consumers drinking occasions. This provides a significant opportunity for the bottled water category to deliver against genuine consumer needs and drive growth.
Consumers are also increasingly choosing to purchase chilled on-thego formats like our best-selling 500ml PET bottle or 750ml sportscap.
We find that waters are often that ‘one extra item’ for shoppers. Retailers should be maximising this opportunity and situating on-the-go drinks in chillers located at payment points and near the entrance of the store – the highest footfall area.
Given that the cash and carry customer can span a number of channels, ranging is key to make the most of available opportunities across all bottled water consumption occasions.
Wholesalers should be reacting to trends by stocking in-demand formats in various sizes. On-the-go formats are incredibly important – particularly for small retail outlets and catering customers. However, larger ‘take home’ still and sparkling formats are also benefitting from the health trend and are a big hit when it comes to hydrating during the day as well as entertaining. Both represent valuable segments of the market and it is therefore important for wholesalers to achieve a balance of the most popular products when defining their range.
Latest Products and Promotional Strategies
We have a strong summer of planned activity to support the Highland Spring brand. Highland Spring has been back on TV serving up a new campaign of tennis activity, with a £3M integrated campaign ‘Anywhere for Tennis’. The campaign builds on the success of last year’s ‘Everyone for Tennis’ campaign and includes an on-pack promotion giving consumers the chance to win 1000’s of tennis sets, plus an active holiday.
The campaign and on-pack promotion is showcased in an updated version of last year’s ‘Magic Carpet’ 30 second TV ad, with further out of home media, digital and PR.
The new promotional packs are available now with consumers able to enter the competition to win. Water (bottled and tap) accounts for the largest percentage of children’s consumption of total drinks, this diminishes as consumers get older and move into other drinks categories such as tea and coffee (Kantar Worldpanel Usage- In Home / Carried Out Consumption – 52 w/e 21st June 2015). By encouraging parents to inspire their children to adopt healthy hydration habits at a young age, we’re increasing the likelihood that families will maintain those healthy hydration habits and live happy active lives. This will help ensure we sustain category growth long-term.
2016 looks set to be another busy year of international sporting events taking place during summer, such as Rio 2016 Olympic Games and UEFA EURO 2016. Highland Spring is once more supporting the Lawn Tennis Association and its calendar of event including the Aegon Championships at The Queens Club and the final stages of the Davis Cup.
Wholesalers should tap into the increased focus on fitness and hydration generated by these events and ensure that additional space is given to plain bottled water. Water fixtures should be clearly visible and easily accessible.
Convenience stores should look to further exploit this opportunity by stocking indemand formats such as the bestselling Highland Spring 500ml PET bottle or 750ml sports cap bottles that are popular ‘one extra items’ for shoppers on-thego.
Some shoppers like to treat themselves to sparkling water so stocking the Highland Spring 500ml bottle will help satisfy this need Which core lines to stock and how wholesalers/cash & carries can help to encourage trial and repeat purchase rates
It is important for both wholesalers and retailers alike to actively promote healthy drink alternatives and responsible drinking. Wholesalers can encourage retailers to buy in bulk and strategically position water alongside other soft drinks and alcohol fixtures. This will also help retailers do the same in store.
Separate still from sparkling water in depot and ensure the high volume lines are on pallets with slower sellers on the shelves above.
Wholesalers should advise retailers about marketing premium still and sparkling water – brands that consumers instantly recognise and trust. Give sufficient space to core brands such as Highland Spring and limit brands with lower awareness and rate of sale, which can easily dilute and clutter the soft drinks category.
Water is a relatively risk-free purchase for customers so independent retailers need to make use of off-shelf displays to help interrupt shoppers and provide tradeup opportunities. Ready-to-drink products are key profit drivers for convenience outlets. Consumers prefer on-the-go drinks to be chilled so it is essential to have a core range of single pack formats in the fridge. It is therefore important for wholesalers to stock recognisable brand ranges of single pack formats.
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