Despite cash-strapped customers cutting back on a range of non-essential products, the soft drink category continues to provide growth for retailers.
by Elena Dimama
Soft drinks are one of the biggest footfall-driving categories and have continued to perform well in the post-pandemic recovery period.
According to Nielsen, the category was up 9.5% in value in the week ending on 24 December 2022, with sports and energy driving the market, worth £1.9bn (up 15.7%), according to Nielsen. “As shoppers spend less on non-essential items, such as alcohol and tobacco, soft drinks continue to play an important role in customers’ repertoire,” Red Bull tells SLR.
“Potentially as an alternative or simply a fundamental item, they are not willing to compromise, despite cutting back in other areas.”
As you might expect, own label is outperforming brands across most categories due to the cost-of-living crisis, but soft drinks are the exception. In fact, spending on branded soft drinks is 36% higher than own label, rather than reverting to own label to save money as in other categories.
“Red Bull also had a fantastic year, growing ahead of the category at +15.3% to a value of £576m. Within Scottish Impulse soft drinks growth is +8.7%, sports & energy at +10.7% and Red Bull at +12.6%,” Red Bull adds.
Energy drinks are not the only winners in the channel, though. “We managed to maintain strong sales during lockdown with multipacks performing well, alongside people grabbing a treat to enjoy at home,” Dan Chesbrough, UK Sales Director at FrieslandCampina, says. “With more consumption occasions at home, consumers are benefitting from a better price per litre and switched into bigger pack formats. Changes in occasions have led to take-home packs gaining share of shelf in the market and this is happening across all major subcategories, including key market areas such as premium and iced coffee.”
Faith in flavours
“Flavours are key to helping drive the growth of sports and energy, and the area which sees the most innovation, as shoppers look for variety,” Red Bull notes.
“As a result, flavoured sports and energy drinks are up +21.9% YoY vs unflavoured at +10.7%, with tropical flavours a core opportunity, growing 22.5% vs mainstream flavours at 14.5%.”
Flavours are a key driver across the category, with cola flavours growing faster than standard cola over 2021 (+12%).
“Flavours in energy now account for 38% of stimulation sales and have increased 48% vs. 2020, showing us that there’s a significant thirst for a range of flavour variants to suit all tastes,” according to Adrian Hipkiss, Marketing and International Business Director at Boost Drinks.
Brands are ramping up innovation and investment in new flavours to try and capture demand, with Red Bull regularly rotating flavours and introducing new limited-edition variants.
“Red Bull Editions have in fact grown +81% shoppers incrementally YoY and our latest Red Bull Apricot Edition, which launched early last year, has since become our most successful NPD, worth £6.4m YTD and is now a permanent SKU in the portfolio,” Red Bull adds.
Coffee wins
Now worth £214m, the RTD Iced Coffee category is growing rapidly, with Symbols and Independents sales having now grown to over £42m, according to research by IRI.
“As we look towards the summer months with warmer weather approaching, people are seeking refreshing iced beverages to help them feel more refreshed and energised. We know that the RTD Iced Coffee Category is growing rapidly at +34% volume and +34% value YoY, making it the 2nd fastest growing category in Soft Drinks,” Hipkiss says. “So this is a huge opportunity for retailers to draw customers in and maximise sales.”
- Arrange your soft drinks fixture by shopper need states, depending on whether consumers are looking for a treat or something more functional.
- Ensure you provide the appropriate space to sales for your range, by looking at both value sales and unit sales. Sports and energy have a combined 35% share of the category, so should equate to 35% of the fixture.
- Less is more when it comes to offering the right range. Ensure adequate supply of the SKUs that drive 80% of your category sales value.
- Visibility is key to helping your shoppers find what they need quickly:
- Use hero brands to signpost the category;
- Place bestselling SKUs at eye level;
- Block brands together to help them stand out on shelf;
- Shoppers can only see products within a 1.3m breadth, so merchandise similar products vertically.
- Displaying products in multiple locations is a proven way to increase soft drink sales, for example in the chiller or by the till point for impulse purchases and at the gondola end or a dedicated display for take-home.
