UK carbonates are worth some £6 billion and value growth, though limited, continues (+1.4% in 2008). Despite the vigour of some newer soft drinks sectors, such as premium soft drinks and sports & energy drinks, the resilience of carbonates is proven.
Carbonates have come in for more than their share of criticism from the diet and health lobby, particularly in relation to childhood obesity. However, whilst the challenge from other, more obviously ‘healthy’ soft drinks, such as bottled water and fruit juice, is real, it is a scarcely a threat to a market which continues to sell well over four billion litres every year. Manufacturers are removing sugar, artificial additives, flavours and aspartame however. Introducing these more natural drinks should help bring lapsed consumers back to the market.
Cola takes more than 60% of retail sales and has grown ahead of the retail sector as a whole since 2006. Colas have also benefited from the highest amount of new product development during 2008. Opaque fruit-flavoured carbonates are not doing as well as clear carbonates because, according to the trade, consumers consider opaque fruit carbonates to be less healthy than clear variants, perhaps because they feel clarity equals no additives. Diet varieties are strongest in cola, where they now hold over 50% of retail sales and are weakest in non-fruit flavours and in lemonade, taking around a quarter.
Retail sales have substantially under-performed on-trade sales, due to fierce discounting in the multiples and by falling volume consumption. The on-trade meanwhile has benefited from a broad trend away from alcohol. Soft drink ranges have been improved significantly to meet this growing demand and the quality of pre-mix carbonates is being addressed.
Mintel forecasts that the value of the carbonates market will increase by 9% over the next five years while in volume terms, carbonates are expected to decline by 5%. This means that price per litre is expected to rise from £1.35 to £1.40. This will protect the market from lost value caused by lower demand.