Growth has slowed in the soft drinks market in the past year as the industry tries to keep up with changing tastes. Helen Lewis reports
The good news is that we’re a thirsty bunch of people in the UK, although quite how thirsty is debatable.
According to TNS, last year the take-home soft drinks category posted value sales of £3bn [TNS Superpanel 52 w/e January 30, 2005]. However, ACNielsen is more optimistic, placing this figure at more than £5bn [ACNielsen Scantrak Impulse, MAT December 25, 2004].
But, unfortunately, the good news ends there.
Whichever data you regard as most accurate, one message is consistent - growth is sluggish at between 0.5-1%, with consumers buying less frequently, causing the industry to start looking at what can be done to add fizz to a market in danger of going flat.
Colas occupy a fifth of take-home value sales but remain in decline, falling by 3.7% in value [TNS Superpanel 52 w/e January 30, 2005], as shoppers turn to drinks with added health benefits and functionality.
Fruit squash and carbonated flavoured drinks are also on the decline, dropping in value by 4.2% and 3.2% respectively.
The exceptionally poor summer can be blamed for some of this slow growth. As Shloer MD Mike Coppard points out, demand can change “according to the weather, time of day, occasion and mood”. For example, spend in the off-trade did increase as the Olympics and Euro 2004 lured people away from their sofas.
However, weather is not the only factor influencing consumer drinking habits. Consumers this year are likely to buy into more mainstream premium products, such as mineral water, as innovative flavours and sophisticated new products are no longer restricted to the top-end categories.
Both TNS and ACNielsen data shows that consumers are paying more for drinks, especially in the premium sector, which is driving value growth in the market.
Peverel Manners, Belvoir’s general manager, says: “Our target audience is adults interested in the good things in life. They want products that are 100% natural with nothing added and are prepared to pay for quality.”
Consumers are starting to assess the health credentials of drinks and question the merits of drinking sugar versus sweeteners. Fruit juices have
benefited from the shift towards healthier drinks and are now ahead of colas in value as the biggest category, worth £780m[TNS Superpanel 52 w/e January 30, 2005].
Take-home growth of 4.6% in value in fruit juices was led by a migration to premium, chilled juices from drinks such as fruit squashes and flavoured carbonated drinks.
“Juice has benefited at a time when people are moving away from carbonates,” says Roderick Groundes-Peace, European marketing director at Del Monte.
Identifying health, convenience and enjoyment as the three consumer drivers in soft drinks, he believes a combination of all three “hits the centre of the bull’s eye”.
Mineral water is also proving to be a winning combination of health and convenience. The category experienced a 4% growth in value [TNS Superpanel 52 w/e January 30, 2005] to £270m as consumers look for drinks perceived to be more refreshing and healthy than flavoured soft drinks.
“There is a consumer trend towards health and the evidence is the continued growth in juice and water categories in an almost stationary soft drinks market”, says Keith McIlwain, MD of The Strathmore Mineral Water Company.
Even the Dasani débâcle failed to
make a dent in water’s trendy image: “In fact, for the first time perhaps, the mass media, in debunking Dasani, made genuine mineral water a worthwhile product and highlighted the relevance of provenance,” says Charlotte Morey, trading manager at Musgrave Budgens-Londis.
The natural image of water is key to future growth strategies, which according to McIlwain has benefited the soft drinks market as a whole: “A healthy image is very important to the sector. Consumers want natural drinks, and where a product comes from is critical. Provenance naturally works well for bottled water.”
Functional drinks, including flavoured milk-based drinks such For Goodness Shakes, which targets males after they have exercised, are claimed to be performing well, as are probiotics.
The good news is that we’re a thirsty bunch of people in the UK, although quite how thirsty is debatable.
According to TNS, last year the take-home soft drinks category posted value sales of £3bn [TNS Superpanel 52 w/e January 30, 2005]. However, ACNielsen is more optimistic, placing this figure at more than £5bn [ACNielsen Scantrak Impulse, MAT December 25, 2004].
But, unfortunately, the good news ends there.
Whichever data you regard as most accurate, one message is consistent - growth is sluggish at between 0.5-1%, with consumers buying less frequently, causing the industry to start looking at what can be done to add fizz to a market in danger of going flat.
Colas occupy a fifth of take-home value sales but remain in decline, falling by 3.7% in value [TNS Superpanel 52 w/e January 30, 2005], as shoppers turn to drinks with added health benefits and functionality.
Fruit squash and carbonated flavoured drinks are also on the decline, dropping in value by 4.2% and 3.2% respectively.
The exceptionally poor summer can be blamed for some of this slow growth. As Shloer MD Mike Coppard points out, demand can change “according to the weather, time of day, occasion and mood”. For example, spend in the off-trade did increase as the Olympics and Euro 2004 lured people away from their sofas.
However, weather is not the only factor influencing consumer drinking habits. Consumers this year are likely to buy into more mainstream premium products, such as mineral water, as innovative flavours and sophisticated new products are no longer restricted to the top-end categories.
Both TNS and ACNielsen data shows that consumers are paying more for drinks, especially in the premium sector, which is driving value growth in the market.
Peverel Manners, Belvoir’s general manager, says: “Our target audience is adults interested in the good things in life. They want products that are 100% natural with nothing added and are prepared to pay for quality.”
Consumers are starting to assess the health credentials of drinks and question the merits of drinking sugar versus sweeteners. Fruit juices have
benefited from the shift towards healthier drinks and are now ahead of colas in value as the biggest category, worth £780m[TNS Superpanel 52 w/e January 30, 2005].
Take-home growth of 4.6% in value in fruit juices was led by a migration to premium, chilled juices from drinks such as fruit squashes and flavoured carbonated drinks.
“Juice has benefited at a time when people are moving away from carbonates,” says Roderick Groundes-Peace, European marketing director at Del Monte.
Identifying health, convenience and enjoyment as the three consumer drivers in soft drinks, he believes a combination of all three “hits the centre of the bull’s eye”.
Mineral water is also proving to be a winning combination of health and convenience. The category experienced a 4% growth in value [TNS Superpanel 52 w/e January 30, 2005] to £270m as consumers look for drinks perceived to be more refreshing and healthy than flavoured soft drinks.
“There is a consumer trend towards health and the evidence is the continued growth in juice and water categories in an almost stationary soft drinks market”, says Keith McIlwain, MD of The Strathmore Mineral Water Company.
Even the Dasani débâcle failed to
make a dent in water’s trendy image: “In fact, for the first time perhaps, the mass media, in debunking Dasani, made genuine mineral water a worthwhile product and highlighted the relevance of provenance,” says Charlotte Morey, trading manager at Musgrave Budgens-Londis.
The natural image of water is key to future growth strategies, which according to McIlwain has benefited the soft drinks market as a whole: “A healthy image is very important to the sector. Consumers want natural drinks, and where a product comes from is critical. Provenance naturally works well for bottled water.”
Functional drinks, including flavoured milk-based drinks such For Goodness Shakes, which targets males after they have exercised, are claimed to be performing well, as are probiotics.
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