Twelve months ago the juices and smoothies market was in a sorry state.
Volume and value sales had fallen for the second year in a row and the washed-out summer of 2009 had done little to dissuade recession-hit consumers from trading down, particularly from smoothies.
The good news is that the past year has brought signs of recovery. Overall value sales have risen 3% to £1.4bn [Kantar 52w/e 26 December 2010], and although volume sales have slipped 0.5%, this is a marked improvement on 2009's 2.4% fall.
But although we seem to be seeing the proverbial green shoots in a category whose performance is closely pegged to consumer confidence, their growth is under threat from rising commodity prices.
As The Grocer reported in January, fruit juice prices are set to rise to the extent that orange and apple juice will become luxuries for many. Poor weather in growing areas and increasing demand from the likes of China means factory prices could rise by as much as 80% for orange juice and 60% for apple juice. "We are absolutely a slave to nature," says Mark Walker, managing director of WB&CO (see p54).
This threat notwithstanding, last year was a busy one for the juices and smoothies sector, with smoothies the big winners.
Just as their more premium price tags put them in the front line of recessionary trading down in 2008 and 2009, so they were behind much of the overall sector growth last year, with value sales up 16.4% to £100m and volume sales boosted by a very healthy 13.3%.
While some of this was undoubtedly thanks to returning customer confidence, the brands have been working hard to ensure they are well-placed to benefit from the upturn.
Already the best-selling smoothie brand occupying three of the top five spots in SymphonyIRI's best-selling smoothie list Innocent leapt into the juice category last month, with an orange juice with bits, a smooth orange juice and an apple juice. To avoid cannibalising its smoothie sales, it partially repositioned its smoothies as an alternative to impulse snacks last year. The campaign was backed by a £5.3m ad spend (more than double the previous year's investment), which included the onscreen debut of the Flash Gordon-esque 'Here to save the peckish' campaign (see p57).
"We've put a significant marketing effort behind driving awareness of the category," says Douglas Lamont, director of new ventures. "While in 2008/9 consumer habits were adapted to the slightly tighter economic environment, the underlying theme of healthier, natural drinks drives our sales, and the category itself, forward." Innocent has started 2011 strongly, he adds.
While Innocent is looking towards the impulse market, Tropicana is targeting health-conscious adults with its Naked smoothie range. Each 450ml bottle contains a pound of fruit, along with vitamins, minerals and herbs, claims the company.
AG Barr, better known for Irn Bru, is also active in the smoothies market, with its St Clements Smoothies range, which are sold primarily through the catering sector, with a small quantity available through retail. "I think 2011 will be tough for smoothies, as it will for all premium drinks," says Adrian Troy, head of marketing at AG Barr. "It will be interesting to see if consumers feel confident in trading back up."
Smoothies may have been the success story of 2010, but juices still account for the bulk of the market. Here too, the brands have had to work hard and it seems to have paid off. Much of the improvement was down to the hot summer and December 2010 sales were up on December 2009, despite the harsh economic conditions. This suggests that sustained campaigns to persuade shoppers to make juice part of their daily routine have worked, says Kantar.
Tropicana marketing manager Peter Charles certainly believes they have. "We see quite a lot of volume coming in incrementally," he says. "Juice gives you one of your five-a-day, which is a powerful reason to increase frequency of consumption."
More encouragingly still for the likes of Tropicana, despite its more premium price tag, chilled juice is once more outperforming ambient. While chilled's share of the market grew by 8.9% to 50.1%, ambient's declined 2.1%, to 49.9% [Kantar]. Chilled volume sales grew too, as shoppers bought larger quantities, more often. Ambient volume declines, however, drove the total category volume sales down by 0.5%.
That has not, however, deterred Levi Roots. Better known for his Reggae Reggae sauce, this month he joined forces with Vimto Soft Drinks to launch a range of fizzy drinks and ambient juices, the latter in flavours such as Papaya 'n' Lime and Blood Orange 'n' Pomegranate.
One sub-category that is not, however, benefiting from the general trading up trend is freshly squeezed, sales of which have fallen down 10.6% to £19m [Kantar]. Its failure to hit the mark despite increased consumption of juices at breakfast time is partly down to the natural variability in freshly squeezed juices, which shoppers can find off-putting, says Tropicana's Charles. "Sometimes it's a bit sharper and other times sweeter. Consumers want a consistently delicious product."
Lack of innovation has also slowed the category down, adds Mark Walker, founder and MD of WB&CO, "It's mostly orange and apple juices the market wants something different," he argues.
Chris Verinder-Baker, founder of Five Valleys Cordials (see p54), agrees and says this is why his company tries to be more adventurous on the flavour front. "We have created some very different flavours I love putting unusual flavour combinations together and watching people do a double-take when they try them."
While much innovation is flavour-related, producers are also looking to new formats. PepsiCo brand Copella, for instance, is launching two of its best-selling flavours, English Apple and Apple & Elderflower, in single-serve multipacks in the hope it will be able to persuade consumers to trade up from ambient from-concentrate multipacks to the not-from-concentrate chilled multipack format. "The new wedge format provides on-the-go refreshment while delivering one of their five-a-day," says Copella marketing manager Adrian Baty.
For some shoppers, however, value for money remains the overriding concern and this is reflected in the category's own label figures. Value sales of standard own-label juice grew 3% by value, while sales of premium and organic own label juices suffered from double-digit falls, of 13% and 26.8% respectively.
Sales of healthy own label juices fell by 27.1%, suggesting that brands have got the 'posh' end of the market tied up. A 71% increase in ad spend (see above) has helped, but promotions haven't played quite as big a role as might have been expected.
Last year, the number of featured space promotions fell by 17.6% to 666 [Assosia]. Tesco and Waitrose, which grew value sales most, both scaled back their promotional activity, Tesco running 99 fewer promotions than in 2009. This could explain why volume sales were down last year, albeit not as much as the previous year.
This year, promotions could be back, as producers and retailers struggle to restrain prices in the face of potentially huge jumps in the factory prices of orange and apple juices. But smoothies' success has given the market cause for optimism, and the other sub-sectors look set to benefit from increased consumer confidence too.
Focus On Juices & Smoothies