In the UK consumers are seeking healthier options – particularly with fewer calories and less sugar – while the soft drinks industry levy is also putting pressure on the industry to reformulate.
“Health continued to be one of the defining trends for soft drinks in 2017,” says Britvic in its 2018 Soft Drinks Review. “Low and no sugar variants grew in carbonates categories, while water and water plus, continued to experienced strong growth as consumers searched for healthier hydration solutions.”
In the UK, low and no calorie drinks make up 43% of the carbonated drinks category, with a further 5% being mid-calorie, according to the British Soft Drinks Association.
Consumers’ sugar intake from carbonates has fell 19% between 2013 and 2017; and during the past year manufacturers have continued to reformulate beverages and reduce sugar in preparation of the UK soft drinks industry levy.
Britvic sees consumers turning to both low and no sugar versions of carbonated drinks as well as other categories that are perceived as healthier.
“The health agenda continued to be one of the defining trends in soft drinks in 2017, as great tasting low and no sugar brands outperformed their full sugar rivals in categories like cola, fruit carbonates and lemonade.
“As expected, traditional healthier segments such as water, water plus and particularly smoothies also continued to experience strong growth.
“Range rationalisation across the category remained an important focus for retailers. However, attention turned to re-balancing space to the categories that showed long term growth potential, such as those with a focus on health and products that were ‘on trend’.
“Despite this continued shift towards healthier lifestyles, choice is still important and sub categories such as full sugar cola continue to remain relevant. However, with the forthcoming sugar levy looming, it was no surprise that most manufacturers focused heavily on leading their execution strategy with low and no sugar variants, or reformulating products altogether.
“But did consumers universally like these new, reformulated additions? Taste is the number one factor when choosing a soft drink and in reality, 2017 saw varied levels of brand performance following the introduction of some of these new recipes.”
Fanta Zero, for example, grew 46%, while classic Fanta also continued to grow at a more modest 5%. On the other hand, however, Lucozade Energy has reportedly suffered a sales decline after reformulation.
Last year Coca-Cola reported that sales of sugar free Coca-Cola (Zero Sugar and Diet Coke) match those of Coca-Cola Classic in the UK. However, it has ditched stevia-sweetened Coca-Cola Life in the UK, saying it wanted to simplify the choice for consumers.
Winning in water
Britvic sees increasing opportunity for water and water plus drinks.
“Water has long been heralded as a success story in soft drinks and is now the largest volume segment in the category growing at +6.1% ," the company observes. "2017 saw significant innovation, with leading brands seeking to build on the benefits of hydration, with products bringing excitement or functionality to plain water.
“The flavored water segment was invigorated by many exciting new entrants. Robinsons Refresh’d gave consumers a tasty way to hydrate, low in sugar and using naturally sourced ingredients.
"In addition, a new segment emerged for consumers to experience 100% naturally infused sparkling water products. While this segment is new in the UK, its potential is huge with global sales doubling in the last four years.”
Finding ways to build on the benefits of water and healthy hydration provide an opportunity to growth the category: particularly with the water plus sector (sparkling or still flavored water), says Britvic.
“Retailers should concentrate on using plain water to create health and hydration hot spots for shoppers but seek to capture more value by locating enhanced categories like water plus or dilutes next to water to encourage shoppers to trade up their purchase, therefore capturing more value.”
Brands such as Rubicon Spring, Glaceau Smartwater and Robinsons Refresh’d have grown significantly in convenience and impulse channels, Britvic says.
- Rubicon Spring – a sparkling spring water range with fruit juice and 15 calories or less per bottle
- Glaceau smartwater – vapour distilled water with added electrolytes
- Robinsons Refresh’d – a blend of spring water and fruit juice
“Three brands - Rubicon Spring, Glaceau Smartwater and Robinsons Refresh’d - contributed at least £3.7m in absolute value growth each as shoppers looked for water with something extra, be it added functionality or a bit more flavor,” says the report.
Health for kids
Britvic notes there are over 16m children in the UK, and on average these consume more soft drinks than adults.
“Childhood obesity was amongst the leading health concerns in the UK putting pressure on parents to make the right choices. Parents remain more likely to say ‘yes’ to a treat out of home; but in home the focus remains on healthier options with additional benefits like added vitamins or no artificials.
“Brand leaders like Fruit Shoot responded to these needs by launching new packaging that reinforces its ‘made with added fruit’ and ‘no sugar’ credentials whilst Capri Sun launched a summer TV campaign focusing on its No Added Sugar range. Retailers can help reassure parents and build their trust in the category by offering the right range of products to suit different ages and balance the offer between more treat-based products and those that are healthier and school approved.”
Taking advantage of reduced alcohol consumption
In 2017, low and no alcohol sales grew 20.1% to £35m, according to Nielsen figures. As people seek to reduce their alcohol consumption, the soft drinks industry has been working to appeal to these consumers.
“The soft drinks industry aimed to seize this opportunity by increasing range and visibility of great tasting, sophisticated adult drinks. Super premium beverages, termed ‘zeroproof’, were developed to mimic the positive cues of the alcohol without any compromise. These products will play an increasingly important role for premium outlets who want to create a high-end range to drive distinctiveness. Ensuring these products are visible, endorsed by staff and activated as appealing alternatives to alcohol will deliver premium growth.
“Adult propositions have included brands such as Robinsons Creations and Cordials Ranges, alongside more sophisticated flavors in smoothies and juices with vegetable flavors becoming more commonplace.”
In 2016, 25% of soft drinks volume in the UK would have been subject to the levy. Today, around 12% is affected.
“With the announcement of the Soft Drinks Industry Levy in 2016, soft drinks manufacturers have accelerated healthier product innovation. Equally a number of retailers have followed suit by reformulating own brand offerings to make them levy exempt,” says Britvic.
“While the intention of the levy is to encourage consumers to make healthier choices, delivering on taste will remain the key driver of growth.
“Taste remains the No 1 factor when choosing a drink but this needs to be balanced with healthier credentials too, meaning retailers need to carefully consider range and space choices to offer an increasing selection of great tasting, healthier offerings.
“Using brands that are proven successes as beacons, retailers should consider increasing visibility to help more shoppers switch to healthier choices and supplement this with a combination of some simple activation at fixture, visible promotions to drive trial or even educational messages. The incentive to get this right is greater than just “doing the right thing”, the sugar free shopper spends more, visits more often and buys more volume than a full sugar shopper.”