The soft drinks category has been directly impacted by the varying degrees of lockdown and tier systems that the UK has experienced.
The economic hardship that has occurred as a ripple effect from the pandemic has caused considerable changes in the way consumers are behaving and valuing products.
This has changed traditional shopping missions, purchases and overall basket spend, with many people now more mindful about their spending.
Looking to the months ahead, the roll out of multiple vaccinations against Covid-19 offers some hope of a not-too-distant recovery and some semblance of normality.
“As people start to feel more confident about returning to variations of their old day to day routines – whether that be attending small social gatherings or heading out for a summers picnic at the park – wholesalers will need to prepare accordingly to ensure retailers stock a range of soft drinks that cater for the latest consumer needs,” comments Ian Patefield, GB Wholesale Director at Britvic.
There is a growing desire to look and feel good, and as a result, wellness is one of the latest soft drink segments to come under the spotlight, with 31% of shoppers interested in premium soft drinks that contain additional functional benefits (Mintel).
More people are looking for benefits above and beyond their standard diets, such as boosting energy levels, maintaining a healthy heart and encouraging strong brain function (IGD). As a result, wellness drinks are now more prevalent than ever. The offering of ‘added benefit’ products, that contain naturally sourced ingredients, fruit juice and provide added health benefits, is also on the rise.
Purdey’s, the sparkling vitality drinks brand, delivers the important benefits shoppers look for in functional soft drinks – taste, wellness and energy. Containing energising B-Vitamins, botanicals, and real fruit juice, as well as only naturally occurring sugars, Purdey’s gives consumers a refreshingly energising lift. Purdey’s has grown by +67.7% in the past 4 years (Nielsen), adding +£3.5m of incremental value to the soft drinks category (Kantar). Purdey’s is expecting to continue this growth in 2021, refreshing its range and adding new products, which will appeal to shoppers who want additional wellness benefits from their soft drink choices.
“We know that the rise of low/no sugar is a key trend within the soft drinks category that shows no sign of slowing down,” adds Patefield. “We have seen an increase in the value of low-calorie soft drinks (+9.4%), so it’s vital to cater to those looking for low and no sugar alternatives of the core range, with products such as Tango Sugar Free and Pepsi MAX.”
When it comes to their diets, there is an uplift in people adopting a more natural approach, including more natural or plant-based diets (Kantar). To align with this trend, brands need to provide naturally healthier options, that are also free from artificial ingredients, yet still deliver on taste. Aqua Libra, the best-performing infused sparkling water brand in terms of value rate of sale (Nielsen), plays into this, offering a truly healthier alternative to full/low/no sugar drinks and a more flavoursome option than plain water. Aqua Libra contains zero-sugar, zero-calories, is free from sweeteners and artificial ingredients, and is also suitable for vegans.
Aqua Libra is being supported this year with a large-scale communication plan. The brand also launched a new pack design last spring to pull out the key health credentials and deliver ‘refreshment’ cues to those consumers looking for more natural products. Following on from the re-brand last year, Britvic launched a new Raspberry & Blackcurrant flavour in March.
Socialising in the house has increased, with 2.1 billion at home social soft drinks occasions for adults, up +14.7% (Kantar). Shoppers want to make their at home social experiences as exciting as possible, but with two-thirds of people concerned about the economic outlook and making efforts to tighten their finances (Kantar), this will still play a key part in what they choose to buy as a treat.
“For adults looking for a premium night in or a treat, J2O is the perfect choice if they’re looking for something different” says Patefield. “People are continually looking for new and novel soft drinks, so it is important for retailers to be able to cater for this space to ensure they can drive sales of this segment. J2O Spritz Apple & Elderflower, launched last March, is the first Spritz flavour to feature a botanical ingredient, and is already established as the second best-selling flavour in the Spritz range, driven by a 25% increase in rate of sale.”
Cola is the second most consumed mixer with spirits and this is growing at a faster rate than overall cola consumption (Kantar). Pepsi MAX was extended in 2019 with the launch of Pepsi MAX Raspberry, which is already worth £20m (Nielsen). Pepsi MAX Cherry is also going from strength to strength, delivering +23.9% YOY growth (Nielsen). Pepsi MAX flavours (Ginger, Cherry and Raspberry) now make up 53% of the total flavoured cola segment (Nielsen).
“The pandemic has helped us all to reevaluate our priorities, with renewed importance especially placed on family mealtimes and socialising,” continues Patefield. “As part of this, we are seeing consumers turn to brands that they know, trust and love.”
Robinsons, the number one GB squash brand, is a prime example of this, having seen +27% value sales growth during the first lockdown (Nielsen). With no artificial colours or flavourings, trusted brands like Robinsons can offer shoppers a healthy alternative and will be key to a retailer’s core range.
Angela Reay, Brand and Innovation Controller at Nichols, comments: “The soft drinks industry has seen a dramatic switch-up in consumer trends as a direct result of the pandemic and subsequent lockdowns.”
As we continue to reflect on 2020, we can also see a significant number of consumers adapting to become ‘thoughtful shoppers’, with 21% in particular looking to take advantage of special offers and discounts as they sought out value-for-money items and 62% of shoppers having an increased focus on using coupons and vouchers (IGD).
“As value for money will likely remain key for consumers, PMPs will remain a tried and tested way for retailers to communicate value and build trust with their customers,” adds Reay. “Stocking PMP options will enable your retailer customers to capitalise on this. We offer a wide variety of PMP options across our portfolio.”
Nichols’ latest addition, Levi Roots Tropical Punch, a mix of pineapple and sweet mango, is available in a convenience-focused 500ml PMP. Levi Roots has grown +13% in value in the impulse channel during the last 12 months, outperforming the category sector by +13% points (Nielsen).
Larger formats have done particularly well over the past year, and sales of Vimto’s 6-pack format increased by +15% in impulse (Nielsen), bolstered by the variety of the brand’s take-home pack portfolio including the Vimto 2L fizzy bottle and squash range. “Ensuring that a range of SKU sizes are available in depot and highlighting the opportunity to your retailer customer will be key to unlocking this opportunity,” suggests Reay.
“Balanced choices have also become a priority amongst consumers and recent events have only accelerated this trend,” Reay continues. “We already know that tap water is becoming more widely consumed due to the rising interest in conscious consumption. There is ample opportunity for wholesalers to drive sales in line with this trend, leveraging the rising popularity of squash.”
Since the beginning of the pandemic, total squash sector value sales have increased +12.8% (Nielsen), with Vimto currently the no.2 squash brand and the fastest growing in the UK, having increased sales by 24% (Nielsen).
“Providing a range of squash options, such as Vimto No Added Sugar Squash, can help drive sales as retailers look to tap into the balanced lifestyle trend,” advises Reay. “In order to maximise this opportunity, we also recommend maintaining a broad interesting range of low-sugar soft drinks for sale, offering retailers options that cater to balanced lifestyle choices.”
Consumers are drawn to brands they know and trust, and brands such as Vimto not only provide clear recognition but due to the taste profile, also deliver a unique and instantly recognisable taste experience. This continues to be demonstrated throughout the entire Vimto range, which has been ranked a top 10 brand in the off-trade across dilutables, RTDs and flavoured carbs (Nielsen).
“It is vital that retailers and wholesalers are making informed decisions when it comes to merchandising and creating their soft drink range,” adds Reay. “We consistently share impartial insight on category performance to help retailers develop bespoke ranges and impart Category Strategy advice. Ensuring that the correct range of products are available can make all the difference between increasing or losing sales.”
Having grown consecutively YOY for the past decade, Vimto is now worth a staggering £96.5 million and brand sales are up +6.7% year-on-year, growing almost three times faster than the category (Nielsen). With such a strong YOY performance, January 2021 was the perfect time to launch the new Vimto brand redesign.
A Red Bull spokesperson comments: “Red Bull continues to drive growth across the wider market, embracing changes in shopper behaviour has boosted sales £35.4m vs YTD last year (Nielsen). Shoppers are also putting more Red Bull in their baskets, more frequently and Red Bull will continue to support this positive category growth throughout 2021.”
This March, Red Bull unveiled the latest in its seasonal Editions series with the launch of the Red Bull Summer Edition in a cactus fruit flavour. Red Bull Editions grew +32.6% in value last year (Nielsen), and shoppers are buying Red Bull Editions more frequently with average frequency double its rate a year ago (Kantar).
Products that deliver added value for a range of summer occasions, such as multi-vitamins, protein or a functional energy boost, continue to be popular.
In the latest six months, Red Bull sold 32.5% more Sugarfree volume through multipacks (Nielsen) – with these variants also growing penetration by 24.6% (Kantar).
Red Bull Energy Drink 250ml is worth over £135m. “We believe this is the perfect pack size for Functional Energy and it fits most consumers’ energy needs, containing the same amount of sugar as a glass of apple juice and the same amount of caffeine as a cup of coffee,” adds the spokesperson.
Red Bull has partnered with Bestway Wholesale to create a digital consultancy tool enabling retailers to receive tailored advice on how to maximise soft drinks sales in-store.
The online platform is quick and easy to use and takes retailers through a simple step-by-step consultancy process, first asking for the store’s geographic location, followed by the chiller size – either via pre-suggested measurements or bespoke entry, followed by submitting the number of facings per branded SKU. The tool then calculates the best SKU ratio, delivering a personalised, downloadable planogram.
The tool is available to stores within England, Wales and Scotland and aims to help retailers remove soft drinks from their chillers that aren’t performing as well in the store’s local area, and replace with more popular SKUs to maximise profit and sales by advising which facings should be decreased or upweighted. The tool also allows retailers to simply access the suggested replacement SKUs through Bestway online, delivering a seamless purchasing transaction from start to finish.
Amy Burgess, Senior External Communications Manager at Coca-Cola European Partners GB, comments: “Consumers continue to make positive changes to their lifestyles, with 63% saying they are trying to be healthier. Since 2015, we have reduced the sugar in our portfolio in GB by 22% – surpassing our ‘20% by 2020’ target – and now two thirds of our volume in GB now come from low or zero sugar soft drinks.”
CCEP has seen continued growth across consumer favourites in its light colas range – including Coca-Cola zero sugar, which has recently been relaunched.
The Fanta Zero range also remains in growth (Nielsen). In mixers, CCEP has seen increased popularity of Schweppes Slimline Tonic, growing by 20% year on year (Nielsen).
“At the same time, we remain firm in our belief that people want choice and don’t want their options edited for them,” adds Burgess.
For example, Coca-Cola remains the number one soft drink in GB, while Monster Energy Green is the third biggest soft drink SKU in symbols and independents (Nielsen), highlighting that a strong core offering is still a key driver of sales.
“This means there’s a balance for wholesalers to find, between stocking the classics that consumers know and love, while flexing their ranges to include the latest innovations,” suggests Burgess. “Dedicating space in store to products with the strongest sustainability credentials is becoming more important. It’s the right thing to do for the planet, and it’s an increasingly important factor in consumers’ buying decisions. In fact, post-Covid, consumers’ motivation to buy products made with recycled materials has gone up.”
As of September 2020, all plastic bottles across CCEP’s core brands made in GB – including Coca-Cola, Coca-Cola Zero Sugar, Diet Coke, Fanta, Sprite, Dr Pepper and Lilt – are made with 50 per cent recycled plastic. This is communicated on-pack to make shoppers aware, and to help wholesalers drive sales.
In early 2020 CCEP also moved the entire GLACÉAU Smartwater range – including 600ml and 850ml servings – into bottles made from 100% recycled PET plastic.
“Consumers are becoming more adventurous than ever and are looking to experiment with new and exciting variants of their favourite soft drinks,” advises Burgess. “More than a third of shoppers (35%) agree that they like trying new things when grocery shopping, so it is increasingly important for wholesalers to keep an eye out for the latest flavour innovations launching this summer.”
To make the most of the growing demand for innovation, CCEP evolved its flavoured carbonates portfolio even further in 2020 with the launch of Fanta Raspberry. The new variant has already delivered sales worth almost £3m in GB, contributing to 31% of the Fanta Zero brand’s growth in the last year (Nielsen).
CCEP’s Light Cola flavours have also proven popular. In January 2020 the range was expanded with the launch of Diet Coke Sublime Lime, combining the taste of Diet Coke with a refreshing citrus twist, which has since delivered £5m worth of sales (Nielsen).
In energy, CCEP recently added three new flavour variants to our range – Monster Mule, Monster Ultra Fiesta and Monster Juiced Monarch – to tap into growing demand for new flavours in the category.
72% of energy sector growth over the last year has come from new products (Nielsen). Much of this is thanks to the success of Monster’s new variants which contributed to over half of this (Nielsen).
35% of consumers say their income has taken a hit as a result of the coronavirus pandemic – and many remain focussed on saving money as a result.
“Price-marked packs have an important role to play in delivering visible value for shoppers, and give convenience retailers a point of difference versus the supermarkets,” adds Burgess. “PMPs account for more than 60% of total soft drink sales in convenience stores, and can reassure shoppers that they can get the products they want, at an affordable price.”
CCEP’s best-loved brands, including Coca-Cola, Fanta, Sprite, Dr Pepper and Monster are all available in PMPs and plain packs, so retailers can choose the best option for their stores. To help retailers respond to ongoing shopper demand for value, CCEP reduced the recommended price points on PMPs across its colas portfolio in May 2020, including 1.75l sharing bottles of Coca-Cola zero sugar and Diet Coke, and 1.5l bottles of Coca-Cola Original Taste.
Larger packs are also in high demand – thanks to the volume and value they offer, and suitability for sharing in the home. The value of the sharing packs across CCEP’s portfolio has grown by 7.8%, driven mainly by multipacks of cans, which have increased in value by 14.3% (Nielsen).
Adrian Troy, Marketing Director at Barr Soft Drinks, comments: “The UK’s £2.5 billion convenience soft drinks category is one of the most profitable categories for retailers and wholesalers during the summer months. Summer is key to the entire soft drinks market and retailers need to ensure that their fixture is balanced to reflect seasonal category uplifts in order to generate maximum profits. From June to August – the crucial period for soft drinks sales – shoppers purchase 15% more soft drinks than any other time of the year, with water, flavoured sparkling water and other flavoured carbonates seeing the most benefit.”
Despite Covid restrictions in Summer 2020, the UK saw a 44% increase in BBQs, with 100 million of these taking place between April and August. And with 73% of the population expecting to have a UK staycation in 2021, we can expect this trend to continue.
“The balance of Drink Now and Take Home Soft Drinks changed during lockdown as social occasions moved to ‘in home’ and, while we expect ‘food to go’ shopping missions to recover, the warm weather, combined with sporting events and longer evenings, creates the perfect opportunity for retailers to continue to drive take home sales by inspiring and exciting their shoppers,” adds Troy.
As the trend of health continues to grow, so does the range of products that are available to shoppers.
“However, taste remains the number one reason for shoppers to choose a soft drink and it is essential that retailers offer a wide choice of flavours to satisfy their many different needs,” Troy emphasises. “Plain water was significantly hit during lockdown, both from a Drink Now and Take Home perspective, with shoppers switching their spend into flavoured sparkling water as consumers are not prepared to compromise on taste when looking for healthier options. Flavoured sparkling water delivers 50% more value through retailers’ tills so retailers need to ensure they have the right balance of products in their stores to meet shopper needs and maximise their sales.”
The other biggest growth area in the summer is flavoured carbonates, which sees a +17% seasonal uplift, with new trending flavours accounting for 80% of sales last summer (IRI). Carbonates remain the backbone of the fixture, worth £1.8 billion and accounting for 66% of the total convenience soft drinks category (IRI).
“It is one of the most important categories for retailers to get right and shoppers are looking for a good range of great-tasting, fruity flavours,” says Troy.
Mark Tanner, Head of Wholesale and Routes To Market at Carabao, comments: “While the demand for healthier energy drinks was already very evident pre COVID, the current pandemic has made shoppers even more conscious of what they consume and the desire to buy lower sugar, healthier drinks has skyrocketed, with 89% of shoppers expressing an aspiration to eat & drink more healthily.”
Carabao is well placed to capitalise on the need for healthier products, since each of its fruit-flavoured energy drinks contain only 63 calories per can.
Since the release of Carabao Energy Drink’s PMP cans across Original, Green Apple and Mandarin Orange single serve (330ml) products in June 2020, and then later the launch of Mixed Berry PMP in November, the brand has seen value sales growth.
On the back of the successful introduction of its PMP range Carabao has now introduced its newest and best-selling flavour, Mixed Berry as an ‘only 69p’ priced-marked pack. Mixed Berry is the #2 energy launch in the total market for 2020 YTD (Nielsen).
Carabao has grown in both units (+114%) and value (+62%) in the latest quarter delivering well over half a million additional units when compared to the same period a year ago. This is the second highest absolute unit growth of all brands operating within the Energy instant consumption category (Nielsen).
“Stocking PMPs is crucial within the energy drinks category as 18% of shoppers believe that energy drinks are too expensive,” says Tanner. “However, we know that PMPs only work if the price point is attractive to shoppers; in this time of economic recession, consumers who see a price-marked can at £1.00+ are going to question the value for money when making their selection. Wholesalers should look to improve by stocking up on a range of price-marked energy drinks like Carabao, that not only offer attractive pricing, but contain only 63 calories per can.”
Well known for its football partnership with the EFL via title sponsorship of the Carabao Cup, as well as a global partnership with Chelsea FC, the brand has recently taken this north of the border by becoming the official energy drink sponsor of both Heart of Midlothian and Hibernian FC.
Carabao is also giving retailers the chance to win pairs of tickets to England Cricket matches this summer. To qualify, retailers simply need to purchase a case of Carabao, take a picture of the cans sitting proudly in their chillers and head to the competition landing page to be entered into the prize draw.
“Energy drinks can continue to be a key growth driver for the wider soft drinks market with a variety of options that satisfy a number of consumer trends,” Tanner continues. “There is a potential opportunity for wholesalers in the summer as the weather improves and lockdown restrictions eventually ease. Ahead of a huge summer of sport, with the Euro’s and Olympic games coming up, sports fans will be hoping to gather in gardens across the UK to enjoy the action, depending on government restrictions.”
Speaking on product margins, Tanner adds: “The way Carabao’s EDLP pricing strategy is set up should always allow for a minimum of 45% shared margin across the board. Of course, this may vary slightly as the wholesale price across multiple routes will differ, but generally wholesaler members should expect around 10% margin plus standard membership rebates allowing all parties to make a sustainable profit margin.”
Matt Gouldsmith, Channel Director, Wholesale, Suntory Beverage & Food GB&I, comments: “We’ve seen encouraging evidence that the impulse and drink-now occasions will re-emerge as lockdowns are relaxed. As lockdown restrictions continue to be reviewed, we’d advise retailers and wholesalers alike to pay close attention to the needs of their shoppers and adapt their soft drinks range accordingly. We understand how important it is to offer competitively priced drinks for wholesalers who want to demonstrate value to their shoppers.”
To help wholesalers cater for shoppers drinking more soft drinks at home, Suntory has reduced the on-pack price of some of its most popular drink-later products, including Ribena 600ml squash and Lucozade Energy 1L format drinks. Reduced to £1.50, these drinks will tap into the continued popularity of price-marked packs, and the growth in sales of drink-later formats.
The reduced PMPs across the Ribena and Lucozade Energy drink-later range offer a lower everyday price to consumers – at a time when many shoppers will be looking for increased value from their regular purchases.
“Now is the perfect time for wholesalers to capitalise on the popularity of the drink later format with a new reduced price-marked pack,” suggests Gouldsmith.
Ongoing trends, such as the demand for lower-sugar drinks will likely continue irrespective of the radical changes brought on by coronavirus. We have seen a long-term trend towards drinks with lower sugar as consumers are becoming more aware of their health and wellbeing.
“With 45.8% of soft drinks shoppers agreeing they “try to lead a healthy lifestyle”, wholesalers should ensure their chillers are stocked up on lower-sugar soft drinks such as Ribena Light and Lucozade Zero – now worth a combined £45.7M – to capitalise on the ongoing trend towards lower-sugar choices,” adds Gouldsmith.
This segment of the market is extremely important in contributing to the growth of take-home soft drinks with Diet & Zero drinks growing 19.3% (Kantar) and outperforming the total drink-later market. Lucozade Zero has expanded its range with the brand’s first ever flavour launch – Lucozade Zero Tropical – available now.
Flavours is another strong area of growth for the soft drinks category. The Lucozade Energy range has already contributed a significant £60.7M (IRI) worth of sales to the energy category, showing just how important it is for wholesalers to offer a diverse selection for shoppers to choose from. Recently, Lucozade Energy introduced a cool new addition to its category-leading range – Lucozade Energy Citrus Chill. Available in 380ML PMP and standard packs, the new lemon & lime flavour alone has already added £1.73M (IRI) in category sales.