Warmer weather means bigger soft drinks sales. Joseph Lee looks at five sections of your soft drinks display that you need to get right to have a profitable summer
1. Flavoured carbonates
Flavoured carbonates is the segment that faces the biggest upheaval from the soft drinks levy, but they are still central to your store’s sales. Cola makes up 25% of spend and is the biggest contributor to growth, while other carbonates represent 16% of sales.
“The soft drinks industry levy has resulted in many manufacturers reformulating and resizing their products. Ths means that the current trend towards sugar-free options will continue and that reformulated products now below the sugar threshold will continue to do well,” says Maria Teresa, category management executive for Danone Waters. Most of that growth comes from sugar-free varieties, which were responsible for 64% of the growth in colas, so suppliers say it’s vital to stock a wide range.
Amy Burgess, trade communications manager at Coca-Cola European Partners (CCEP), says: “It is especially important to keep a wide selection of low or zero-sugar drinks, and retailers should constantly review their soft drinks range as manufacturers launch new lighter options to meet rising consumer demand for healthier options.
“We have continued to focus on innovation in response to shifting consumer trends like health, premium drinks and convenience.” The growing importance of convenience for soft drinks shoppers means merchandising is key. Retailers should maintain high availability in the chiller and ensure they maximise choice in products and pack sizes.
Adrian Troy, AG Barr marketing director, says: “The world of soft drinks is changing with shopper demand for low and no-sugar soft drinks growing. However the reasons why consumers choose a soft drink have remain constant – great taste, flavour choice and the right pack formats.”
The search for healthier drinks has led many customers to water, making it the second-biggest contributor to growth in soft drinks and it is predicted to grow by another 36% by 2020.
“Bottled water continues to be the star of the soft drinks category, as shoppers continue to make healthier choices,” says CCEP’s Amy. “The flavoured sparkling water sub-category is particularly popular among young people, as this consumer group is increasingly health-conscious but also looking for new flavours at the same time.”
John Letford, Danone sales development controller, says flavoured sparkling water has “exploded” in growth in the past three years, and now makes up 8.6% of all flavoured water sales. “The lines between soft drinks categories are becoming increasingly blurred with the recent success story bottled water, sparkling juice drinks, a case in point,” he says. Convenience is the main growth driver in water, thanks to rising sales of small single formats.
Shoppers are also increasingly stocking up on multi-packs to ensure they have a bottle of water to carry throughout their day. Letford says this trend has driven a 30.9% year-on-year rise in sales of small multipacks of bottled water.
3. Energy and functional drinks
Energy drinks have been one of the category’s major success stories, but there’s some evidence that traditional options might be running out of steam, with sales falling by 1% last year according to Danone‘s Maria Teresa.
But some brands have managed to buck the trend: CCEP’s Monster, for instance, reports growth of 22.7%, equivalent to an extra £23.8m in sales. “Innovation remains a key driver to the success of the energy sector and much of this is coming from a focus on low or zero-sugar flavours,” says Burgess at CCEP. The crucial elements in this segment are flavour and additional benefits.
Rich Fisher, Red Bull category development manager, says: “Products that deliver added value for a range of occasions, such as multi-vitamins, protein or a functional energy boost, continue to be popular.” Sports drinks are especially important this time of year as warmer weather kicks off more sporting activities. Scott Meredith, Lucozade Ribena Suntory sales director, says: “A good range should contain multiple lines from the Lucozade Sport range, including low-calorie flavours, to offer consumers plenty of choice.” Energy isn’t the only functional benefit – protein continues to be a significant health trend. Simon Gray, Boost managing director, says: “Protein is one area that continues to grow in popularity, with sales increasing year on year as the modern consumer regularly looks to have more access to exciting but healthier alternatives to their everyday soft drink.”
Clare Denham, head of market strategy and category management at Danone Dairies UK and Ireland, says dairy drinks can also drive sales in this area. “We see six key growth areas; naturality, less fat, reduced sugar, protein, good grains, and probiotics.
“We are working to ensure that we cater to people’s diverse needs,” she says. Protein drinks are growing at 12.9% a year and active health drinks with probiotics are now worth £179m, with growth of 1%.
4. Premium drinks
Alongside health and convenience, the other main trend propelling growth in soft drinks is primum drinks. “Other sub-categories that have massively benefitted from this development are mixers and adult soft drinks; they are the fastest growing segments, mainly driven by Fever Tree, Purdeys Rejuvenate and Carters,” says Danone‘s Maria Teresa.
CCEP’s Amy Burgess says that the trend is partly fuelled by the big night in occasion. Adults are looking for drinks that will make socialising at home feel special. “We’ve seen demand for premium products go up as more people choose to socialise at home. There is also a trend for recreating cocktails and bar-quality drinks at home to bring a sense of occasion to a night in,” she says.
“Social media is also having an impact, with people looking for trendy products they can photograph and share with friends on Facebook or Instagram.” That’s why the company invested in the biggest redesign of the Schweppes bottle, with a design that harked back to the company’s roots in 1783. “Like the glass Icon bottle is for Coca-Cola, the skittle shape marries the history of the Schweppes brand with the premium liquid inside and is an ideal accompaniment to a night in,” says Burgess.
Premium soft drinks also have an increasingly important to role play as consumers continue to move away from alcohol. Ed Jones, Vimto senior customer marketing manager, says: “One in four 18 – 24 year olds are now teetotal. But shoppers aren’t just looking for any old to replace alcohol consumption, or to serve when hosting friends and family at home, they’re conscious of what they are putting in their bodies.”
5. Juices and smoothies
Fruit juices without any added sugar are exempt from the soft drinks levy and can capitalise on a perceived health advantage. This healthy lifestyle appeal is one reason why smoothies are growing by 10%, prompting CCEP to enter the market.
“CCEP has recently unveiled its long-term business strategy to become a ‘total beverage company’ in response to changing consumer preferences. As part of this strategy, we’re broadening our portfolio and introducing a succession of great-tasting new drinks to offer consumers more choice for more occasions,” says Burgess.
In March, the company launched its AdeZ dairy-free smoothie, using ingredients such as almond, rice and oats alongside fruit juices. Burgess says: “They offer more choice for increasingly health-conscious consumers who are looking for nutritional, great-tasting products as part of a balanced diet. “AdeZ presents a great opportunity for retailers to tap into the health and wellness trend, which is showing no sign of slowing down in 2018.”