Squashes were the star of the soft drinks sector as shoppers sought value in lines such as the new double concentrate
If there were a catchphrase to sum up the key trend in soft drinks this year it would be “value for money”. As such, the king of the category is the squashes and cordials sector. It has seen a higher value increase than any other, up 5.8% to £468.2m, compared with only 0.5% in value sales growth last year.
The recession has driven people to go for value, quality and brands they know and trust, says Leslie Davey, brands director at Britvic. Cordials represent one of the cheapest drinks per serving, and so their success comes as no surprise in the current climate, agrees Simon Mills, category manager for soft drinks at Booker.
The fly in squashes and cordials’ glass appears to be volume sales, which are down 2.9%. However, industry experts put this down to a very specific innovation in the category – the introduction of double-concentrated own-label squash.
“The whole idea behind double concentrate is that consumers use less volume,” says Davey. “It’s double concentrate that has led to the radical drop in volume.”
But the shopper isn’t only concerned about value, and other NPD within the category addressed long-term health concerns over health. Britvic’s Be Natural, a range of fruit squashes made only from naturally sourced ingredients, was launched in March this year after consumers of Britvic’s market-leading brand Robinsons said they wanted an all-natural drink.
With value sales of £204.9m, Robinsons squash still dominates the sector, but much faster growth has come from brands such as Vimto and premium Bottle Green, which has seen value sales rise 22.2% to £8.8m over the past year.
“We aren’t the cheapest in the market, but people are looking for special treats that are better for them,” explains Simon Speers, MD of Bottle Green.
Some treats, however, are evidently just not affordable enough, if the results for juice drinks and smoothies are anything to go by. As we reported last year, the sector had a “woeful” 2008 but this year was down 4.9% by volume, worse than any other sector in the category, including water.
“Smoothies are massively down due to the high retail prices, and have been hit harder than any other soft drink category since the economic downturn,” says Mills.
The biggest brand in the sector, PepsiCo’s Tropicana has seen a reversal in its fortunes, from value sales growth of 16.6% last year to a drop of 4.2% in 2009. Innocent has also taken a battering over the past year with sales dropping 19.2% to £94.3m, although the company says sales are up 18% in the past 12 weeks compared with the same period last year, and it now has an 80% share of the smoothies market.
The only rays of sunshine in the sector come from Prince’s ambient range and Coca-Cola’s Oasis and Capri-Sun brands – both juice drinks.
“Overall, both Capri-Sun and Oasis have benefited from consumers seeking drinks that are ‘better for you’, but which do not compromise on taste,” says Andrew Nunney, category insight controller at Coca-Cola Enterprises. He attributes their value sales growth to a relaunch of Capri-Sun, focusing on its “natural and modern personality” as well as targeted advertising support. It also helped that these juice drinks are considerably cheaper.
If juices and smoothies have fallen into negative growth, then growth of 3.4% in the sports and energy drinks sector appears on the surface to look much brighter – until you compare it with last year, when it was the fastest-growing category in the Top Products Survey, with 15.1% growth.
Category leader Lucozade has taken a knock, with Energy sales dropping 1.8% compared with 8.5% growth last year, and Sport was down 6.4%. Owner GlaxoSmithKline puts this down to increasing competition and new entrants to the market.
Having said that, it is not all doom and gloom. For one thing, the category has been hot on the NPD front, with new energy shots from Red Bull, Relentless and Lucozade. Shots are big news in the US, and it is still early days for the UK energy shot market, which will “bed down” next year, says Lotte Tregear, off-trade channel marketing manager at Red Bull. The energy giant also launched its super-size 473ml can in March this year and so far it has gone great guns, she adds.
It has also been a good year for other large-format energy products, with 500ml can brands such as Monster, Relentless and Rockstar storming ahead, says Mills. “The 500ml format is now a serious segment within energy and the growth has been almost completely incremental to the category”.
Sports drinks are a different story. “Sports drinks have for the past few years been one of the great successes of the category and this year has been very disappointing. Partly this is due to the high retail prices versus other soft drinks. Sports drinks that have performed well have tended to be value products,” he says.
This may explain why own label is still powering ahead, but a key requisite for the sector over the past year has been functionality, explains Jonathan Gatward, Pepsi brand director at Britvic. He admits that sports drinks can be an expensive option for consumers seeking value.
“Those who were buying sports drinks for badge value, rather than the functional benefit, will be switching. Those buying because they like it may be buying something else, such as colas, but those who buy for function continue to buy very strongly,” he says.
Compared with the NPD activity in other sectors, carbonates may appear relatively un-newsworthy, with value sales growth a solid 3.6% this year, but volumes pretty much static. However, the apparently stable performance of the soft drinks leviathan belies what is perhaps soft drinks’ biggest story – cola has become cool again.
Its success is attributed in part to its value as an “affordable pleasure” by Nunney at CCE. Despite the delisting of Diet Coke Plus and Coca-Cola Light, sales of Coca-Cola overall were up by £31m, with ‘red’ Coke sales growing by £21.7m alone and Diet Coke by £13.4m. “The main trend we have seen in the last year is a resurgence in colas and other carbonated beverages,” says Mills. “As the economy has taken a battering, consumers seem to be taking comfort in familiar, trusted brands.”
Shoppers’ habits have changed, making them more likely to turn to branded colas and flavoured carbonates, like 7Up, which is up 13.4%, and Barr, up 39.2%, as consumers revert back to old favourites for a treat, agrees Peter Hindmarsh, Nisa trading controller for soft drinks.
With sales of Pepsi up £15.1m, or 6.0%, it wasn’t a shabby year for PepsiCo either, but there is a change in the way the category is being shopped.
Shoppers plan their trips more now and tend to spend in grocery rather than on impulse or small basket shopping, says Gatward. Pepsi Max, in particular, has been darling of the Britvic portfolio, with value sales up an impressive 10.8% [Nielsen 52w/e 3 October].
A new focus on matching packs to consumer “occasions” such as the Pepsi ‘Big Night In’ promotion and working with retailers to “win the battle at point of sale” have led to success, Gatward says. Pepsi Max’s Max it for a Million global tie-up with the ICC World Twenty20 England 2009 cricket tournament drew more than 1.5 million consumer entries, “the largest consumer response we’ve heard of within fmcg promotions, let alone within Pepsi”, Gatward says.
Finally, and perhaps surprisingly in these value-driven times, and with the relentless environmental march against it, bottled water has seen its value sales slow somewhat to –3.2%, but on a positive note volumes are up, albeit by a tiny 0.2%.
Nestlé Waters’ Buxton was a rare success with 9.4% growth. It made the most of its homegrown provenance through sponsoring the Ashes-winning English cricket team. However its brand stablemate Vittel slumped 54% as Nestlé slashed the number of Vittel SKUs by 60% over the past two years. But its UK-born Pure Life sprang to life to replace it in the top 10.
Top launch: Innocent Kids Squeezies, Innocent Drinks
Put an apple in a kid’s lunchbox and there’s a pretty good chance it will still be there at home time – battered, bruised and uneaten. Well aware of this, Innocent launched Kids Pure Fruit Squeezies, chilled tubes full of crushed fruit but without dairy, sugar or additives.
Smoothie sales may have dropped, but Innocent seems determined to show that crushed fruit still has more to offer the market.
Top Products Survey 2009