Soft drinks bubble hasn’t burst yet Sales sparkle as sugar tax prompt healthier consumer choices

At £8billion the UK soft drinks category continues to be one of the most profitable for retailers, growing at an annual eight percent. Talking to the major suppliers, the sugar tax has served its purpose in prompting consumers to rethink their soft drinks consumption.

“Recent months have seen growing numbers changing from full sugar drinks to low and no added sugar options,” says Phil Sanders, GB Commercial Director, At Home at Britvic.

“Our portfolio spans a number of soft drinks segments, so we take a broad view on the impact of the Soft Drinks Industry Levy. Consumers have got the message and embraced the change and manufacturers are adapting their brands accordingly. We are proud that ninety-nine percent of our GB brand portfolio, including juice drinks such as J2O, Robinsons Fruit Shoot and Drench, is below or exempt from the Levy.”

Britvic’s J2O has had a “fantastic: year in the grocery channel, says Phil, with growth driven by their campaign featuring Mojo the cockney alpaca and the limited edition Glitterberry flavour, only available around the festive season. J2O is currently growing +17%, with penetration at its highest since September 2017.

“We know that ‘functional drinks’ is a growing area, particularly in the juices market, but J2O’s performance demonstrates the ongoing consumer appetite for great tasting juice drinks from brands they know and trust.

“Innovation is also key to helping retailers drive sales and with ninety percent of our NPD in 2018 being low or no added sugar, we have a very strong offer for the take home market. Our latest addition to the Robinsons Fruit Shoot portfolio is the Juiced range. A fifty/fifty blend of juice and water, sweetened with real fruit, it was the number one kids’ drinks launch over the last year.”

Britain’s largest supplier of branded still soft drinks and the number two supplier of branded carbonates, Britvic combines its own portfolio of leading brands including Robinsons, Purdey’s, Drench, Tango, J2O and Fruit Shoot with PepsiCo brands such as Pepsi, 7UP and Lipton Ice Tea, which it produces and sells in GB and Ireland under exclusive agreements.

Emma Hunt, Marketing Director at Vimto Soft Drinks confirms that Vimto has also proved to be robust in the face of the sugar levy, recently achieving a record high brand value of £87m. The whole of its portfolio is levy-exempt and has been for some time:

“In the ten years before the new legislation came in, we removed two thousand tonnes of sugar from our products while ensuring they kept the same great taste. We’ve reduced the sugar content, but our sales have increased.”

Emma sees healthy hydration as the biggest single trend affecting the soft drinks market:

“The trend for watching what we put into our bodies continues to gather pace.” There has been a clear increase in consumers choosing low and no sugar options in the wake of the sugar tax, with low-calorie soft drinks experiencing growth of seventy-one percent.”

Emma Hunt reports sales of Vimto No Added Sugar growing at +25%, with No Added Sugar variants contributing to 48% of all Vimto sales. But she says the sugar tax isn’t the only thing impacting on the category:

“Consumers are increasingly choosing to avoid alcohol and one in four eighteen to twenty-fours are now teetotal. There’s a higher expectation for products to taste good and be healthy.”

Vimto has also entered the water category with Vim2o, a water product infused with the taste of Vimto. Meanwhile adult consumers cutting down on alcohol are looking for taste, benefiting both Vimto and the Levi Roots and Vimto Remix sub brands.

Two years after launch Vimto Remix is worth £9m, growing +44% annually. The latest Remix variant is Raspberry, Orange and Passionfruit. Flavoured carbonates are currently growing at 11.1%, with Vimto’s carbonates outperforming the market at 16.5%..

Adrian Troy, is Marketing Director at Barr Soft Drinks, another British soft drink company, who have announced their new category vision based on understanding shoppers at local level, which they believe will increase sales if retailers adopt it. Adrian explains:

“It is critical for retailers to get the right balance of soft drinks in their chillers. Major lifestyle changes are under way, impacting how soft drinks are consumed. It’s challenging for retailers to be experts on every category, but our new category vision can help.”

AG Barr’s trasnsformative approach to managing the soft drinks fixture focuses on three key drivers that they believe will be a major contributor to category growth in convenience retailing:

“The three factors, health and wellbeing, taste & fun and lifestyle & culture reflect our changing consumer lifestyles, influences and needs in relation to buying and consuming soft drinks. We’ve used these drivers to develop a blueprint for the future of soft drinks merchandising in the UK, translating them into six specific shopper need states which cover all the major soft drinks consumption occasions.”

The new Barr vision has been trialled at three stores in different regions with different shopper profiles and delivered an average sales uplift of 18%. Barr is backing its new category vision with a range of trade-facing communications, including a new online retailer resource.

AG Barr offer regional planograms based on their shoppers’ need states to ensure they are offering the local range their shoppers want, says Adrian Troy:

“The relative size of each section and which products a retailer should stock in each section will vary dependent on geographical location and shopper profile. Merchandising the chiller in a clear and engaging way with our bespoke POS to signpost each need state, will make shopping the soft drinks fixture much easier and ensure that your store stands out from the crowd.”

Barr Soft Drinks’ bestselling carbonated soft drinks brands include:

• IRN-BRU – the UK’s No.1 Flavoured Carbonate brand growing at +11%

• Barr Flavours range – the UK’s most popular range of flavours growing at +31%

Barr Cola – currently growing at +39%

• Rubicon Spring – the UK’s No.1 sparkling flavoured water growing at +25%

• Rockstar – UK’s No.1 big can flavoured energy brand, growing at +8%

• Strathmore – a quality, trusted Scottish spring water brand, growing at 25%

• San Benedetto – the premium Italian soft drink made using the first squeeze of the fruit, and containing less than 70 calories per can.

• Bundaberg – a unique range of craft-brewed, premium nonalcoholic beverages from Australian family-owned Bundaberg Brewed Drinks. The Bundaberg range includes two sparkling variants –

Blood Orange and Pink Grapefruit. Another exciting trend in soft drinks is the growth of the chilled coffee category, where Starbucks have joined up with Arla Foods to deliver Starbucks’ big brand presence in retail with a range of ready-to-drink products.

Charlotta Oldham, Senior Marketing Manager, Starbucks EMEA says the Chilled Coffee category is in 33.8% YOY value growth. Starbucks is growing at 20.5% in value and 20.8% volume. The Starbucks brand currently accounts for four of the top five best-selling lines in retailers, with a combined 34.9% increase in volume YOY. Starbucks Chilled Classics Caffé Latte is the number one bestseller accounting for 17.1%, followed by Starbucks Doubleshot Espresso at 15.3%, then Starbucks Frappuccino Mocha and Starbucks Chilled Classics Caramel Macchiato respectively, totalling 47.1% of the chilled coffee sector.

In Starbucks’ latest retail NPD, April will see the launch of Starbucks Almond plant-based ice coffee. Made with 100% Fairtrade, bold Arabica coffee beans, the new ice coffee is the first ever dairyfree drink in the Chilled Classic range and is suitable for vegans.

Charlotta Oldham says: “The trend for health and wellness continues to grow, so stocking products such as Starbucks Doubleshot No Added Sugar, Starbucks Doubleshot Black and the Lactose-Free, No Added Sugar Skinny Latte in the Chilled Classics range helps retailers cater to a wider audience and introduce more consumers into the chilled coffee category.”

Another part of the soft drinks category, flavoured milk continues to deliver strong year on year sales, showing 11% growth and worth £360m, with 11 million households buying into the category.

Chocolate flavoured milk remains the most important segment for convenience format stores, growing 13% year on year with a total worth of £45 million%. Michelle Frost, General Manager at Mars Chocolate Drinks and Treats (MCDT), says: “The retail market is moving towards everyday low prices, so retailers should look out for price marked packs (PMP) to offer shoppers obvious value for money.”

Research from HIM! found 75% of shoppers view price as a crucial factor in product purchase, with half stating that PMPs reassure them they are not being overcharged.

Mars Chocolate Drinks and Treats’ range of 350ml skus are available in PMP, including Mars, Galaxy, Mars Caramel, Milky Way, Bounty, Maltesers, Snickers and M&M’s Peanut, all with On The Go’ bottle tops. For consumers who enjoy milk drinks at home the range also includes a 702ml bottle of Mars Milk in no added sugar format. Michelle Frost says Mars Chocolate Drinks and Treats has an ambition that by the end of 2019 all its milk based drinks portfolio will be no added sugar.

Mark Bell, Strategy and Planning Manager at Red Bull UK, says sugar free plays a strong role in the brand’s growth and Red Bull Sugarfree 250ml is the number one low kcal sports and energy drink.

With consumers rating refreshing taste and health as the most important factors when choosing a drink, Red Bull Tropical Edition and Red Bull Sugarfree appeal to a more female audience, with sales extending across the evening.

Completing the lineup Red Bull’s recently launched ORGANICS range taps into consumer demand for organically certified food and drink products, with flavours including Simply Cola, Ginger Ale, Tonic Water and Bitter Lemon.

Chris Sanders, Sales Director at Radnor Hills, the specialist soft drinks and waters supplier, says retailers should look beyond the standard product selections if they want to build their category sales:

“To maximise soft drinks sales retailers should stock a respectable range of low-sugar options appealing to health-conscious consumers. Offering a choice of functional waters and the chance to ‘trade up’ from the standard water selection is also a good idea.

“It’s really important for retailers to keep their soft drinks and waters selection current and on-trend, as the market moves so quickly. We identified that the functional water category was growing, so we launched our Radnor+ Energy range. The market for zeroalcohol drinks with adult appeal is also on the move, and bringing authentic, traditional favours to the table is the name of the game. Our Heartsease Farm brand taps into the growing audience for non-alcoholic premium drinks that taste just as good and look just as appealing as alcoholic beverages.

“The energy market is in growth but is dominated by high sugar options, so we wanted to create the ultimate energy drink, with natural caffeine and zero sugar. Radnor+ Energy is aimed at onthe- go consumers wanting fast hydration with a convenient energy boost.”

Finally, Franklin & Sons have responded to the distillers’ growing experimentation with new ingredients to create flavoured gins, rums, brandies and vodkas by creating a premium range of tonics, mixers and soft drinks, which take the sophistication of cocktail flavours and encapsulate them in premium, natural soft drinks. Jen Draper, Marketing Director at Franklin & Sons tells the story:

“Consumers are focusing more on provenance, natural flavours and quality. They’re much more interested in new experiences, savouring flavours, trying new tastes and learning about what they like. This is why there’s been such a boom in craft, small-batch spirits and beers. 2019 will see this same consumer attitude extending to premium soft drinks and mixers.”

Franklin & Son have extended their range with the creation of ‘The Flavour Collection,’ four unique dual-flavoured tonics, developed alongside experienced mixologists. The tonics includes Rhubarb with Hibiscus, Rosemary with Black Olive, Pink Grapefruit with Bergamot and Elderflower with Cucumber, made using natural and high-quality ingredients and carbonated to the highest possible level, to lift the most delicate botanicals and flavours in spirits.

Jen Draper continues: “It’s important that retailers looking to appeal to the mindful drinking trend offer no-alcohol products made with the same care and attention as premium cocktails, spirits and mixers.”

Following research showing younger generations are willing to spend more on drinks, and almost half of under 35s are likely to order non-alcoholic drinks on a night out, Franklins & Sons have also introduced three Infused Sodas, Fragrant Guava & Persian Lime with Root Ginger, Exotic Pineapple & Aromatic Cardamom with Cracked Cubeb Pepper, and Succulent Pomegranate & Floral Hibiscus with Delicate Rose.

Offering the complex taste and interesting flavour of a cocktail, but minus the alcohol content, the Sodas have been created to be served in a tall wine glass, over ice with a fruit garnish, for a great tasting nonalcoholic drink. Each infused flavour contains just 4.2g sugar per 100ml, and comes in at just 49 calories per 275ml bottle.