The functional wellness drinks segment is presenting the convenience channel with a healthy £27m opportunity this year, equating to an additional £812 per store, according to the latest Britvic Soft Drinks Review. At a time when the pandemic has shone a light on health and wellness for many, 37% of people are now positively interested in premium soft drinks with added benefits (Mintel).
Owing to changing shopper behaviour during the pandemic, categories traditionally associated with food to go were heavily impacted – but a focus on wellness as restrictions continue to ease is set to help retailers regain sales in this area of soft drinks. While overall the category experienced value and volume declines in total convenience (IRI) last year, take home, larger format soft drinks were one of the channel’s outstanding performers. Reaching a third of soft drinks sales and growing 19%, +£117.9m (IRI), the performance cements 2020 as a year of two halves for the category.
While healthier alternatives such as low and no sugar options have been gaining ground for some time, the pandemic has shone a light on health and wellness for many. 64% of consumers are prioritising health (Mintel) and seeking to integrate wellbeing into nearly all aspects of their lives, including food and drink.
Phil Sanders, out of home commercial director at Britvic, comments: “After the challenges retailers have faced in the past year, we’re dedicated to support our customers as they navigate changing shopper needs, and that includes looking ahead and making them aware of growing soft drink trends. The functional wellness market is currently worth an impressive £240.1m, and what’s more, shoppers are willing to pay more than double the average price for premium soft drinks with added benefits than a soft drink or 34% more than the average single serve, which is already priced at a premium.
“It’s vital that retailers are adapting their ranges accordingly to take advantage of this shift in consumer demand. Purdey’s, the UK’s leading sparkling vitality brand, is perfectly placed to lead the wellness soft drinks category. Made with naturally sourced ingredients – real fruit juice, boosted by botanicals and energising B vitamins – it offers a no added sugar energy lift, something we know shoppers are on the lookout for.”
Changing shopper habits
The pandemic changed consumers’ lives unimaginably and impacted shopping habits in ways that could never have been imagined or forecasted. As millions switched to working from home, lunchtime trade suffered. At the peak of the pandemic in April 2020, 60% of convenience shoppers were working from home (Lumina), relying on home kitchens for meals. This move created a change in dynamic for shopper missions, with planned top up shops becoming more important at the expense of on-the-go food and drink (Lumina).
Sanders continues: “As supermarkets and online adapted to increased demand in the first lockdown, discounters and local convenience stores all benefited. Shopping habits shifted sharply from little and often, to less frequent, bigger baskets, with planned top up missions growing in importance from 18% in 2019, to 24% by October 2020 – indicating consistency of new shopper habits even after the initial period of lockdown. Good news for retailers who have adapted their stores and offerings to cater to the needs of local communities.”
The top up mission accelerated its position as the number one reason to visit a convenience store and the share of planned top ups grew (Lumina). Unsurprisingly, as the pandemic set in, out of home soft drinks declined as fewer shoppers (-23%) bought less often, -12% (Kantar).
Three key soft drink needs emerged last year, with ‘energy boost’, ‘in-home refreshment and socialising’ and ‘a new stance of hydration’ heavily impacting category winners. The top five soft drink segments remained as cola, stimulants, fruit carbs, plain water and juice drinks – the former three added £80.3m growth alone – but stimulants was the star contributor by far (IRI).
Sanders concludes: “As they adjusted to the ‘new normal’, consumers sought ‘pick me ups’ and stimulants, the leading soft drinks category in convenience, were well placed to benefit. As the channel’s biggest success story, stimulants grew in both take home and on the go, bucking the single serve trend and adding £57.2m in value. Outgrowing all other soft drinks combined, the segment attracted shoppers to buy more volume per trip at a higher price, performing especially well in symbols and forecourts.”
Carbonates and mixers also outperformed soft drinks overall, playing a key role in refreshment and socialising at home (IRI). Cola was the largest contributor to carbonates’ growth in convenience, adding £20.5m to channel sales (IRI). Pepsi MAX, the No. 1 sugar free cola in convenience, grew £7.8m and became the third biggest sub-brand in the convenience market in 2020 (IRI). Traditional mixers were convenience’s fastest growing category, up +47.8%, followed by lemonade, +26% (IRI). Squash was the in-home hydration hero as consumers turned to the tap, accelerating +21.1% (+£8.2m (IRI). Robinsons was 2020’s leading squash brand and biggest growth contributor, through its single concentrate and double concentrate ranges and Fruit Creations.
Plain water and flavoured hydration – such as juice drinks, ice tea and water plus – had a more difficult 2020, traditionally strong in on the go formats and transient channels and locations like high street and travel, both hit hard by the pandemic (IRI).
The foodservice sector lost 362.1 million litres of soft drinks sales over the past year, equating to 145 Olympic swimming pools, according to the latest Britvic Soft Drinks Review. The Foodservice report showcases that this part of the soft drinks market closed 2020 at -37.2% in value, and -33.5% in volume, versus 2019.
The report highlights that at a time when the channel is re-opening and planning its road to recovery, soft drinks can play a crucial role here to help meet the change in consumer needs. According to CGA, there is a view that the market may become polarised – some consumers seeking value while others look to trade up their experiences – representing a real opportunity for foodservice outlets that can adapt their offer to serve both audiences.
The versatility and breadth of the soft drinks category allows operators to meet various consumer demands. Whether guests are looking for a meal deal that includes an on the go drink, a more premium experience when dining in or healthier alternatives that continue to perform well in light of a renewed focus on wellbeing – there is something for everyone. Alongside an eagerness among consumers to return to the channel, all is not doom and gloom.
By the time the lockdown was announced in March 2020, UK retail footfall was already down over 34%, creating even more difficulties for foodservice as consumer habits were impacted by health and safety concerns.
Adam Russell, director of foodservice & licensed at Britvic, comments: “While the foodservice and hospitality sector has experienced and overcome challenges before, the past year has been like no other. Due to restrictions and the ‘stay at home’ rule during the first lockdown, travel and leisure were the most impacted sub-channels, followed by workplaces, education and high streets as workers and students avoided commuting.
“Quick service restaurants (QSR) proved to be the most resilient foodservice channel for soft drinks, accounting for 44.4% of total foodservice value sales in 2020, versus 35.5% in 2019. Its buoyancy meant the trusted cola and flavoured carbonates brands thrived over this period as ideal pairings with food. As a result, Pepsi performed well with value (+3.1%) and volume (+3.8%) share increases, and Tango and 7UP grew +3.0% and +2.6% respectively – something we expect to continue.”
As the growing demand for delivered food and drink continues, and the pandemic accelerating the online trend by 10 years (CGA), the QSR segment is expected to continue to deliver strong results. Soft drinks saw strong growth in fast food quick service restaurants, with the foodservice channel’s soft drinks volume share up +9.6% in November/December 2020 (CGA). Other sectors will need to adapt their service offer to keep up with evolving trends and consumer behaviours.
Russell continues: “Despite the backdrop of the last year, the roadmap out of lockdown is in full swing and it’s promising to see consumers excited to socialise again out of home. We’re confident that the soft drinks category has a vital role to play in helping cater to new consumer needs, in particular the renewed focus on healthier options.”
During the course of the pandemic, it has shone a light for many on their health and wellness – and the food and drink choices they make as a result. Within foodservice, sugar free soft drinks have grown at +4.5% in value, while full sugar has lost -3.6% (CGA) – demonstrating the appetite consumers have for healthier alternatives. In turn, the wellness drinks category is worth a huge £240.1m and offers opportunity for further growth (Nielsen).
Russell concludes: “Offering a broad portfolio of low and no sugar options, we are ideally placed to supply operators with big name brands such as Pepsi MAX, Tango Sugar Free and 7UP Free – those consumers trust for great taste and quality. In addition, Purdey’s, the UK’s leading sparkling vitality brand, is perfectly placed to lead the wellness soft drinks category. Made with naturally sourced ingredients – real fruit juice, boosted by botanicals and energising B vitamins – it offers a no added sugar energy lift. Consumers who buy into wellness out of home have a higher spend per trip (+15%) compared to total single serve drinks out of home, so we encourage outlets to include the three-strong line up as part of their offering to take advantage of this growing opportunity.”