Very few categories in local retailing are undergoing change on the scale seen in the soft drinks market thanks to the sugar tax – but what does it mean for local retailers? SLR speaks to some experts from key soft drinks players.
The media focus on sugar has led to an increasing number of consumers switching from sugary soft drinks altogether in favour of healthier alternatives. KWP research shows that 92% of consumers are trying to manage or reduce the amount of sugar in the foods they buy and 29% of consumers are ‘very concerned’ about sugar.
As a consequence, the soft drinks scene is undergoing a massive overhaul in response to the notorious Sugar Tax. The majority of all research, development and marketing spend is being funnelled into low and no sugar variants by the major UK and global manufacturers, making sure they keep profits up. Manufacturers hope these new innovations and reformulations will provide consumers with the products they demand at affordable price points.
As shoppers become more conscious of the volume of sugar in their diets, it is important, therefore, that retailers provide a selection of healthy soft drinks. There are numerous drinks on the market that claim to be ‘low in sugar’ or ‘healthier’, but which of these products should retailers stock their drinks cabinets?
“With a value of more than £7.6bn [Nielsen Data], soft drinks present a huge sales opportunity for retailers as consumers look to refresh and rehydrate, whether they’re on-the-go, have their feet up at home, or are planning to host a dinner party or family gathering,” says Amy Burgess, Trade Communications Manager at Coca-Cola European Partners (CCEP). “For retailers, offering a wide choice of different products, including a range of flavours and variants, as well as pack formats, is the key to making the most of soft drinks sales.”
As the trend towards healthier soft drinks progresses, Burgess urges retailers to keep a wide selection of zero or low-calorie drinks, as well as constantly reviewing their soft drinks range to track the demand from consumers and what new, lighter offerings they should make space for.
The importance of offering chilled soft drinks should remain a key focus for retailers as on-the-go purchases are a key driver in the convenience sector. Consumers prefer their drinks to be chilled, with ‘Drink now’ sales accounting for more than three quarters of all soft drinks sales in Scotland convenience, according to IRI research.
From April to August, the crucial summer period for soft drinks sales, shoppers consume 14% more soft drinks (IRI Research), with Water, Fruit Drinks and Other Flavoured Carbonates seeing the most benefit. “Retailers who adapt their ranges to reflect this will benefit significantly”, says Adrian Troy, Marketing Director at AG Barr.
- Group different sectors together such as, colas, flavoured carbonates, energy drinks, waters, juice and juice drinks.
- Identify your best performing brands in each category and stock these at eye level.
- Stock different variants of the same brand together.
- Stock soft drinks alongside their calorie-free equivalents.
- Look out for products that are being backed by marketing investments.
- Ensure that your soft drinks fixture is highly visible, well presented and located in a high footfall area.
- Ensure effective ranging, space allocation and stock availability.
- Restock regularly, especially during the summer months.
- If a product is selling out regularly increase the number of facings.
- Talk to your customers to find out what they want.
Healthier drinks
Why?
Soft drinks giants Coca-Cola and Irn-Bru continue to extend their healthier offerings to keep interest in a constantly diversifying market, taking the bull by the horns with sugar reductions and new brand permanent lines.
Key products
- Coca-Cola Zero Sugar
- Coca-Cola Zero Sugar Vanilla
- Diet Coke
- Irn-Bru Sugar Free
- Irn Bru Xtra
Last Summer, Coke Zero became Coca-Cola Zero Sugar, following extensive reformulation and development to get the recipe as close to the 130-year-old original as possible, and hoping to encourage more Coca-Cola Classic drinkers to give it a try. The new name and new look is to enhance its sugar-free credentials even clearer to consumers.
“The reaction has been really positive so far and we’re encouraged by Coca-Cola Zero Sugar’s performance to date, which has seen it become the fastest growing top-five cola brand,” says CCEP’s Amy Burgess.
The success of the reformulation saw the arrival last month of Coca-Cola Zero Sugar Vanilla variant, which is to be joined later this summer with a reformulated Coke Zero Cherry. Both, along with Diet Coke’s recently unveiled brand ambassador, Holly Willoughby, are seeing significant marketing support which should boost sales of the products
Since its launch last year, Irn-Bru Xtra – the first permanent product from the popular Scottish drink – has seen a positive response following extensive, ongoing marketing. The AG Barr brand’s healthier options are proving themselves popular as Irn-Bru Sugar Free offer has become Scotland’s number one low-calorie flavoured carbonate, according to IRI marketplace data.
Juice and carbonated drinks
Why?
The demand for lighter options can be seen across the soft drinks category and juice drinks are no exception.
Key products
- Capri-Sun No Added Sugar Orange-Lemon
- Oasis Zero
- Fanta Zero Sugar
- Rubicon Spring
- Rubicon Light & Fruity
To tap into this consumer demand, retailers may consider stocking a range of low and no calorie juice drinks, such as Oasis Zero and the Capri-Sun No Added Sugar range, which is available in Orange, Blackcurrant, Tropical and recently introduced Orange-Lemon flavours.
“We’re launching Capri-Sun No Added Sugar Orange-Lemon 330ml as the brand continues to help retailers tap into the growing demand for low calorie juice drinks for immediate consumption,” says CCEP’s Amy Burgess. “It has been designed to support retailers’ sales as 50% of millennials now claim to eat healthier than they ever have in the past.”
Also in growth are flavoured carbonate brands, such as Fanta, which saw steady growth that the brand attributes to a large portfolio of different flavours and Zero Sugar options.
“With consumers becoming ever more health conscious, stocking zero sugar variants of well-loved brands like Fanta, Dr Pepper, Lilt and Sprite, can help retailers meet demand for bold and refreshing fruit flavours whilst enabling consumers to enjoy lighter products,” Burgess advises.
From AG Barr comes Rubicon Spring, a range of four products combining sparkling spring water with fruit juice, containing 15 calories or less per bottle, and Rubicon Light & Fruity, a new range of three products which claim to deliver the Rubicon taste with half the sugar.
“Branded flavoured sparkling water is currently one of the strongest performing areas within the soft drinks market, growing at +144%,” says AG Barr’s Adrian Troy. “Rubicon Spring has delivered nearly a third of this growth, with sales of over £10 million since it was launched in July 2016.”
Bottled Water
Why?
The nation’s focus on health, particularly sugar, is having a big impact on soft drinks. An increasing number of consumers are switching from sugary soft drinks to healthier alternatives.
Key products
- glacéau smartwater
- glacéau smartwater sparkling
- Highland Spring
- Highland Spring Sparkling
- Strathmore water
Bottled water is one of the fastest growing soft drinks sectors, having achieved 12.4% growth in the convenience sector over the past year [IRI data], with sales of both immediate and future consumption formats on the rise. The bulk of bottled water sales within independent and symbol retailers are made up of immediate consumption formats and so offering a range from well-known brands such as Highland Spring, Strathmore and glaceau smartwater, is likely to drive sales.
“Demand from health-conscious consumers has undoubtedly played a role in the growth of bottled water as shoppers look to reduce their calorie intake whilst hydrating at the same time,” Amy Burgess explains. “This trend has also had an impact on the sparkling water market, which currently makes up 15% of the total plain bottled water sector, and has enjoyed 8.6% growth over the past year.” CCEP launched its 600ml glaceau smartwater sparkling at the beginning of the year to capture this growing market.
- Position key water lines in the bottom right or left hand side of the chiller
- Avoid single facings to help maintain availability
- Ensure water is always visible and always available
- Include water in your meal deal soft drinks range
- Stock large single bottles and a small range of multipacks in ambient space in larger stores
Energy Drinks
Why?
Energy is the best-selling soft drinks sector for independents according to Nielsen data, with sales being driven by a focus on innovation to ensure there’s a choice for every consumer.
Key products
- Monster Energy Ultra Citron
- Relentless Passion Punch
- Rockstar Revolt Killer Citrus
- Rockstar Revolt Killer Cooler
- Red Bull
Most recently, much of this new product development is focused on low or zero sugar variants, helping to appeal to consumers who are increasingly demanding healthier options within the energy sector. Low calorie energy drinks grew by 32% over the past year (Nielsen), making it the highest performing segment in the energy drinks sector.
“We helped retailers meet the demand for zero sugar drinks with the launch of Monster Energy Ultra, a range of three calorie free flavours, in January 2016,” says CCEP’s Amy Burgess. “Monster Energy Ultra White was joined by Ultra Sunrise. Ultra Red completed the trio. This increasing demand was reflected further in January 2017 with the launch of a fourth Monster Energy Ultra variant, Monster Energy Ultra Citron, further increasing the choice of sugar-free energy drinks for health-conscious consumers.”
Also accelerating into the zero sugar range is AG Barr’s energy drinks staple, Rockstar, with the launch of a category-boosting new range, Rockstar Revolt. The range comprises two of 500ml varieties, Killer Citrus and Killer Cooler, which Adrian Troy says are: “Revolutionary zero sugar energy drinks that don’t compromise on look, taste or energy boost.”
Energy drinks specialist Red Bull’s Category Development Manager, Richard Fisher, recommends retailers rationalise their range to focus on the key SKUs, providing them with the right amount of space on shelf to drive growth and maximise sales. “Currently,” he says, “both core and sizes are under-represented on shelf vs. share of sales, yet flavours are overrepresented.
“In terms of the category, product size is the first or second most important decision for a consumer, behind which brand to choose. Both size and diet are driving the category, so by offering different sizes and charging a premium accordingly, retailers can ensure they are maintaining value in the category.”
As the soft drinks market continues to grow and change, local retailers should take heed of Scotland’s proposed Deposit Return Scheme and what it could mean for their stores. More information on this can be found in our May 2017 cover story.
Adult Soft Drinks and Mixers
Why?
Figures from the Office of National Statistics also show 21% of adults in the UK do not drink alcohol at all, and so it is more important than ever to offer consumers a range of great-tasting, premium soft drink alternatives. Mixers is a fast-growing sector, having enjoyed 10.4% growth over the past year, and is popular whether mixed with alcohol or served on their own.
Key products
- Appletiser
- Schweppes Sparkling Juice Dinks 250ml
- Schweppes Tonic Water
“As well as delivering on taste and refreshment, adult soft drinks offer consumers a sophisticated alternative to alcohol that they are happy to consume while others may be drinking beer, wine or cocktails,” says CCEP’s Amy Burgess.
Schweppes Sparkling Juice Drinks and Appletiser are now both available in a smaller 250ml can. The new format replaces the 330ml can and hopes to appeal to health-conscious consumers as it contains only 50 calories per 250ml portion. The cans are available in a 69p PMP which is likely to help consumers try the new range.
PMPs
Value for money plays a big part in consumers’ shopping decisions and price-marked packs are an ideal tool to help retailers grow their sales. IRI data show that price-marked soft drinks are delivering 26% more value than plain packs and are driving growth by 6%, making them vital for retailers to drive sales
PMPs can be a particularly effective way to encourage consumers to trial new products, thanks to the perceived value they offer, and research from him! shows that 43% of shoppers claim that they’d be more likely to try a new line if it was sold in a PMP.
“PMPs are provided at a price that offers a fair and competitive margin that helps to increase consumer appeal by offering a great perception of value, whilst allowing our customers to reap the full benefits of increased sales,” says CCEP’s Amy Burgess.
“While our PMPs are designed to provide an affordable single price point, we also provide plain packs across all of our formats and brands to help retailers choose the right option for them and, ultimately, it’s their choice as to which products they choose to focus on in store.”
