Winners and losers in non-alcoholic drinks: Mintel

By Rachel Arthur

- Last updated on GMT

Health and wellness products are driving the non-alcoholic beverage market in the UK. Pic:iStock/tezzstock
Health and wellness products are driving the non-alcoholic beverage market in the UK. Pic:iStock/tezzstock

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With consumers concerned about the sugar content of their drinks, bottled water is a clear winner in today’s UK non-alcoholic beverage market. But what other drinks are doing well - and which ones are struggling?

Health and wellness is driving consumers’ choices in the non-alcoholic beverage market. With the upcoming levy on sugar sweetened beverages due to be implemented in April 2018 in the UK, brands and own labels have responded with increased reformulation and NPD.

In fact, a low, no, or reduced sugar claim featured on 23% of new product launches in non-alcoholic drinks in 2016; up from 15% in 2011.

“The negative attention on sugar continues to affect the non-alcoholic drinks market, with the upcoming sugar levy in 2018 continuing to put the spotlight on this ingredient,”​ said Amy Price, senior food and drink analyst, Mintel.

“Operators are responding by reformulating or through looking to tap into the health halo of products such as bottled water via category blurring.

“In addition to the coming levy on soft drinks, the weakening pound sees the market face dual pressures to raise prices, with inflation expected to fuel value sales going forward. A largely discretionary purchase, soft drinks are vulnerable to cutbacks under price rises and the expected squeeze on incomes.”


Bottled water

Bottled water has been the success story of the non-alcoholic drinks market, says Mintel, benefiting from heightened sugar concerns. Meanwhile, flavored waters have also performed strongly.

“Coca-Cola’s Glacéau Smartwater has also benefited from increased advertising spend, whilst a tangible point of difference arising from its electrolyte content is also likely to have been advantageous for the brand.

“Given the strong consumer interest in making bottled water more environmentally friendly, moves to address environmental concerns could further aid growth in the market. This could be through packaging made from recycled plastic, protecting the environment at the water’s source or through off-setting carbon footprint.”

Coffee pods

In the UK, 29% of people live in a household with a coffee pod machine and a further 22% would be interested in buying one, according to Mintel data.

“Sales of coffee pods have increased on the back of growing penetration of coffee pod machines and strong NPD activity in coffee pods,”​ says Mintel. “Pods are taking a growing share of new product launches, with the end of Nespresso’s patent opening up the market. This has included operators undercutting Nespresso on price, which should be helping to bring new users to the market.”

Fruit, herbal and speciality teas

tea infusion botanical herbal zia_shusha iStock

In the UK, 81% of people drink tea; and standard black tea is still drunk by seven out of 10 people.

But the market is changing: consumers are losing interest in ‘ordinary’ [black] tea while turning to fruit, herbal and speciality options.

“In contrast to standard black tea, green, fruit and herbal teabags and speciality teabags have grown value sales and gained share, managing to appeal to a more youthful audience who buy into the health properties of these drinks and the variety of choice they offer,” ​says Mintel.


Cordials and squashes

Sugar concerns have hit cordials and squashes, which have seen the biggest drop in value sales in non-alcoholic drinks across the last five years to 2016. Seen as a ‘cupboard staple’, they have struggled to encourage consumers to trade up.

“Super-concentrated squashes have had some success in raising the average price in the category, but many appear to be put off by relatively high prices,” ​says Mintel.

“Other players are looking to category blurring as a way to appeal to consumers’ preference for other drinks, such as bottled water. Capri-Sun launched Fruity Waters in 2016 and Vimto is looking to harness consumer interest in flavored water through extending into this category with Vim2o, in a 500ml bottle in March 2017. A lunchbox format is set to follow later in the year.”


Tea has experienced a decline in sales that is expected to continue.

“The market is facing mixed fortunes, with ordinary teabags losing share to newer varieties such as green tea, which is seen to be healthier,”​ says Mintel.

The fall in sales of ordinary teabags reflects a long-term decline in tea consumption, with younger people drinking fewer cups of tea than the (growing) older generation.

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