The UK’s 2.6 billion (IRI) convenience soft drinks category continues to be one of the most profitable categories for wholesalers and retailers.
A fast-moving and multi-faceted category, it offers impulse retailers with the right product range handsome profits– and of course, the cash ‘n’ carry operators and delivered wholesalers who supply them!
At polar ends of the category, carbonates and bottled waters dominate the market and have done so for decades.
A great example of how fast-moving this category is can be found with how the trend for healthy products and a greater awareness of sugar intake has driven innovation in both of these category leaders.
This has led to carbonates diversifying with low-sugar and no-sugar alternatives, while water brands have innovated by adding vitamins, minerals and healthy flavours.
There are plenty of other sectors with soft drinks vying for attention amongst thirsty shoppers. These include premium or adult soft drinks, juice & fruit juice brands, milk & chocolate drinks, and the ever-profitable sports & energy drinks.
“Although the world of soft drinks is changing, the overriding reasons why consumers choose a soft drink will remain constant – great taste, flavour choice and the right pack formats,” says Adrian Troy, Marketing Director at Barr Soft Drinks.
“By understanding how shopper need states are changing, wholesalers and retailers can stock the right choices to stand out from the crowd and maximise sales opportunities.”
AG Barr have a category vision to help wholesalers serve their customers, which breaks everything down into six specific shopper need states which cover all the major soft drinks’ consumption occasions. Picking out some of these states most pertinent to wholesale includes ‘Tasty Hydration’.
Born out of the growing trend for health, Adrian says brands such as Rubicon Spring are the high taste, low calorie alternative that shoppers are looking for – a bridge between the healthiness of water and the taste of carbonates and fruit drinks.
Then there is ‘Energy’. “In convenience stores, nearly 1 in 2 drink-now products bought is an energy drink and big can flavoured energy is driving this growth [like Rockstar], so giving this sub-category the right amount of space on shelf is crucial.”
‘Everyday Enjoyment’ sums up carbonates – “the backbone of the fixture”. Adrian points out to wholesalers that flavoured carbonates as a sub sector is growing at +12%, faster than total soft drinks (IRI), and that IRN-BRU is the UK’s leading flavoured carbonate brand.
An increasingly important shopping state is ‘Adult Social’, tending to the growing number of consumers who choose not to drink alcohol.
“Many of these consumers still want to enjoy the social aspect of drinking but are looking for more unusually flavoured adult soft drinks and more premium pack formats,” says Adrian, highlighting AG Barr brands such as Snapple and San Benedetto.
These sales trends have led other soft drink suppliers to innovate too.
Consumers have a greater awareness of health and wellness than ever before, which is why Coca-Cola has seen an increase in demand for its portfolio of low to no-sugar carbonates.
Diet Coke remains the most popular light cola brand in the UK (Nielsen), while Coca-Cola zero sugar is growing significantly, currently up 28.9% (Nielsen) in value in the UK.
“Our flavoured carbonates, which includes zero sugar variants across our portfolio, are also growing 9.7% in value (Nielsen), highlighting the popularity of brands like Fanta Zero and Sprite Zero,” says Amy Burgess, Senior Trade Communications Manager at Coca-Cola European Partners.
More than a third of shoppers (35%) agree that they like trying new things when grocery shopping (HIM), so it is increasingly important for wholesalers to keep an eye out for the latest flavour innovations launching in 2020.
“To make the most of the growing demand for innovation, we evolved our flavoured carbonates portfolio even in 2019 with a new grape-flavoured addition to our Fanta Zero range, Fanta Grape Zero,” says Amy.
“Elsewhere, our Light Cola flavours have also proven extremely popular. Last year we expanded our range further with the launch of two new flavours, Diet Coke Twisted Strawberry and Coca-Cola zero sugar Raspberry.”
The ‘health’ and ‘flavours’ trends have driven much of the innovation at Lucozade Ribena Suntory too.
The suppliers’ core brands are available in very low or zero-sugar alternatives in the form of Lucozade Zero, Ribena Light and Lucozade Sport Low Cal to offer consumers a full range of choice.
Meanwhile, the Lucozade Energy flavours range has already contributed a significant £72m worth of sales to the energy category (IRI).
Two of the brand’s latest launches have been successful is building on this trend, with Lucozade Energy Apple Blast and Lucozade Energy Watermelon and Strawberry Cooler now worth over £11m combined (IRI).
“We advise wholesalers to take advantage of the range of drinks available and to stock up on the various SKUs in order to offer retailers a range which fits their store,” says Matt Gouldsmith – Channel Director, Wholesale at Lucozade Ribena Suntory.
Last summer saw a raft of activity from Lucozade with the launch of its latest product, Anthony Joshua Fruit Punch.
The brand also partnered with the England Lionesses and the Netball World Cup last summer and continues to invest in PR and social media to celebrate inspiring fitness enthusiasts throughout the year.
Finally, Ribena moved into the enhanced and flavoured waters category for the first time last year with the launch of Ribena Frusion.
The new range is unique in the soft drink category, a flavoured and enhanced water drink that uses blackcurrant water infused with real fruits and botanicals.
For the past decade, Energy Drinks have been the fastest growing segment within the Soft Drinks category (Euromonitor) with growth predicted to continue for the next five years (Mintel Sports & Energy Drinks Report 2019).
So any wholesaler or retailer not thinking of energy drinks when curating their soft drinks category would be missing a trick.
“More energy products are being consumed as snacks or for health reasons. This is reflected in the most valuable impulse packs in store which lean towards soft drinks with a strong presence of Functional Energy,” says Mark Bell, Strategy & Planning Manager at Red Bull UK.
As consumers increasingly pick up a sugarfree alternative, the Red Bull range has been expanded to include a sugarfree variant of every pack in the range.
This has seen Red Bull launch Sugarfree 473ml, Tropical Sugarfree Edition in 2018, along with Coconut Berry Sugarfree Edition in 2019.
“These packs have contributed over £61m to the category in the latest year, highest ever amount of Sugarfree variants sold by Red Bull,” says Mark. “We will continue to offer choice to shoppers as we face into 2020.”
Further innovation in the energy drinks sub sector came from Coca-Cola, who in October 2019 launched their performance energy drink product – Reign Total Body Fuel.
A new drinks range from Monster Energy, it is engineered to fuel optimum performance for workouts and strength training.
In the fast growing bottled water sub-section, Gary Lavin, founder of VITHIT says consumers are now more inclined to purchase drinks that can add further nutritional value into their diet – “so we should see a dramatic increase in the number of multivitamin drinks on the market in the next twelve months”.
This year, VITHIT has emerged as a strong contender in this sub-sector and has secured €1 million funding to ramp up its expansion, offering a range of drinks with significant health benefits into the market.
“It’s important for wholesalers to get the right balance between established favourites and latest trends in the soft drink category,” says Gary.
VITHIT offers a range of products, incorporating well-known flavours such as Mango and Passionfruit, alongside new, innovative flavour combinations including Dragonfruit and Yuzu to appeal to a wide range of consumers.
UK based drinks manufacturer, Clearly Drinks is re-launching its Perfectly Clear flavoured water brand in 2020, its biggest announcement in many years.
Targeting families, the all new Perfectly Clear aims to bring new shoppers into the flavoured water market by offering a healthier choice to sugary juice and carbonated drinks.
The current range includes a strong hit of fruity flavour with zero sugar and will relaunch with flavours such as summer fruits, strawberry and lemon and lime as well as brand-new flavours orange and mango and peach and apricot, sold in 330ml, 500ml and 1.5 litre bottle.
The relaunch will be supported by an integrated marketing campaign from May including a national TV advert, print and online advertising as well as national and regional PR which will include influencer activity.
Perfectly Clear draws crystal clear spring water at source directly from on-site boreholes at its North East headquarters.
Across the other side of the UK, in mid-Wales, Radnorshire is where drinks brand Radnor sources its water – and health credentials – for its new range of sparking infusion drinks, Radnor Infusions.
The range comprises gently sparkling Welsh spring water infused with natural flavours and fruit extracts to create a beverage that is free from sugars, sweeteners, calories and preservatives.
Another launch in the bottled water sub sector comes from Dash Water, with their new 750ml glass bottles of British sparkling water.
Dash Water has a unqiue concept in that they use wonky British fruit and veg, that has been rejected by supermarkets, to naturally infuse water with a ‘dash’ of flavour, free from sugar and zero calories.
Last week, the company announced the success of their latest funding round, resulting in £1.6m of new investment.
Flavoured milk is a well-established soft drink segment currently worth £353m, growing +13.9% year on year with over 10m households buying into the category (IRI).
“The category’s strong performance is in part due to the innovation within the market amplifying the benefits of milk such as RTD coffee, protein, being a breakfast alternative and no added sugar or lower sugar variants,” says Wayne Thompson, Business Unit Controller at FrieslandCampina.
As the nation’s leading milk drink, Yazoo has 23% market share, with the core Strawberry flavour continuing to be a best-seller across convenience and grocery.
“Our portfolio is also seeing a format expansion, our one litre bottles are popular with those who want to enjoy the drink at home with friends or family and our £1 PMP bottles, which remain our best-sellers, are ideal for on-the-go,” says Wayne.
“Our Yazoo Kids range is completely free from added sugar and sweeteners, appealing to parents looking for a healthy snack option for children.”
Within milk drinks, chocolate flavoured milk remains the most important segment for convenience growing by 5.9% year-on-year with a market share of 29% (IRI).
Mars Chocolate Drinks & Treats has recently launched two dairy alternative drinks in this sector – Galaxy Oat and Bounty Coconut.
The drinks offer consumers the taste of the well-established confectionery brands in a bottle, with no added sugar and also are registered with the Vegan Society.
In 2019, Mars Chocolate Drinks & Treats added a new Twix milk drink to its range, which also includes a 350 ml PMP on-the-go bottle.
Michelle Frost, General Manager at Mars Chocolate Drinks and Treats, says: “Our PMP range continues to prove popular with retailers and consumers alike. We hope that these new SKUs will encourage even more consumers to enjoy their favourite confectionery in a milk drink.”
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