Soft drinks: the Covid effect

Larger format soft drinks and multipacks are driving the growth in the soft drinks category under lockdown, a trend that has big implications for local retailers.

It’s been a tumultuous year in local retailing with rapid transformation making it difficult to keep pace with rapidly evolving consumer trends, and nowhere more so than in the critical and very high volume soft drinks category.

So what has last year done to the category? “In recent months we’ve seen an increase in drink-later formats, which are growing strongly with multi-packs driving that growth,” says Matt Gouldsmith, Channel Director, Wholesale, Suntory Beverage & Food GB&I.

“Our portfolio replicates this, as we’ve seen strong growth in Lucozade Energy’s and in Ribena’s drink-later portfolios. In fact, the top three 1L Lucozade Energy SKUs represent 22% [IRI, May 2020] of the brand’s total sales, meaning it’s increasingly important retailers have a larger format offering in-store for this demand.”

But has this been at the expense of impulse and drink-now sales? “We’ve seen encouraging evidence that the impulse and drink-now occasions will re-emerge when lockdowns are relaxed,” says Gouldsmith. “As local and national lockdown restrictions continue to be reviewed, we’d advise retailers to pay close attention to the needs of their shoppers and adapt their soft drinks range accordingly.”

Pricing & PMPs

One key tool in maximising sales is ensuring that consumers understand the value they’re getting when they shop in your store, which is why value pricing and price-marked packs (PMPs) are so important at this time.

“We understand how important it is to offer competitively priced drinks for retailers who want to demonstrate value to their shoppers,” says Gouldsmith. “To help retailers cater for shoppers drinking more soft drinks at home, we have reduced the on-pack price of some of our most popular drink-later products, including Ribena 600ml squash and Lucozade Energy 1L format drinks. Reduced to £1.50, these drinks will tap into the continued popularity of price-marked packs, and the growth in sales of drink-later formats.”

The reduced PMPs across the Ribena and Lucozade Energy drink-later range offer a lower everyday price to consumers at a time when many shoppers will be looking for increased value from their regular purchases. Now is the perfect time for retailers to capitalise on the popularity of the drink later format with a new reduced price-marked pack.

Plain packs are, of course, still available across the range, including leading brands Lucozade Energy, Lucozade Revive, Lucozade Sport and Ribena.

Trends

One of the most prominent trends in recent times has been flavour innovation, as Amy Burgess, Senior External Communications Manager at Coca-Cola European Partners GB (CCEP), comments: “We’re seeing more innovation in the category, as shoppers become increasingly adventurous, and experiment with new and exciting variants of their favourite soft drinks. That’s why it’s essential that retailers look out for the latest launches and emerging sectors.

“Consumers are becoming more adventurous than ever and are looking to experiment with new and exciting variants of their favourite soft drinks. More than a third of shoppers (35%) agree that they like trying new things when grocery shopping [HIM, 2018], so it is increasingly important for retailers to keep an eye out for the latest flavour innovations launching this summer.”

To make the most of the growing demand for innovation, CCEP has evolved its flavoured carbonates portfolio even further in 2020 with the launch of Fanta Raspberry. The new variant has already delivered sales worth almost £3m in GB, contributing to an impressive 31% of the Fanta Zero brand’s growth in the last year [Nielsen, Sep 2020].

“Elsewhere, our Light Cola flavours have also proven extremely popular,” says Burgess. “Earlier this year we expanded our range further with the launch of Diet Coke Sublime Lime, combining the much-loved taste of Diet Coke with a refreshing citrus twist, which has delivered £5m worth of sales since launching in January 2020 [Nielsen, Sep 2020].

“In energy, we recently added three new flavour variants to our range – Monster Mule, Monster Ultra Fiesta and Monster Juiced Monarch – to tap into growing demand for new flavours in the category.

“Some 72% of energy sector growth over the last year has come from new products [Nielsen, Sep 2020]. Much of this is thanks to the huge success of Monster’s new variants which contributed to over half of this.”

Another key trend is low and no sugar, as Gouldsmith explains: “The demand for lower-sugar drinks will likely continue throughout the category irrespective of the radical changes brought on by coronavirus. We have seen a long-term trend towards drinks with lower sugar as consumers are becoming more aware of their health and wellbeing.

“With 45.8% of soft drinks shoppers agreeing they ‘try to lead a healthy lifestyle’, retailers should ensure their chillers are stocked up on lower-sugar soft drinks such as Ribena Light and Lucozade Zero to capitalise on the ongoing trend towards lower-sugar choices.”

NPD

In terms of growth drivers, it’s important to remember shoppers want variety when buying soft drinks.

“We are investing in ambitious innovations across our portfolio of leading brands to drive sales for retailers by giving consumers a choice of exciting flavours in a range of formats,” says Gouldsmith.

“Ribena has brought its unique taste and vitamin C to the flavoured carbonates category with the launch of new Ribena Sparkling, in two exciting flavours. Ribena Sparkling Blackcurrant and Ribena Sparkling Raspberry are both available in 500ML and 2L bottles and – newly available – 330ML single cans.

“Ribena is also helping retailers capitalise on the growing demand for interesting and great-tasting squash options with the recent launch of a new flavour. Ribena Raspberry & Rhubarb squash is available in 600ml bottles which are perfect for sharing.

“Also relatively new is Ribena Raspberry Rays. The thirst-quenching flavour, rich in Vitamin C, is ideal for shoppers looking for a burst of summer sunshine from their soft drink.

“Additionally, Lucozade, the UK’s biggest sport & energy drink brand, tapped into the no- and low-sugar trend last year with the launch of Lucozade Revive. Sweetened with Stevia, and with 4.3g sugar per 100ml, the sub-brand is designed to offer a different type of energy. It’s not a boost or a buzz, it’s a naturally inspired uplift that makes drinkers feel revitalised and back in the groove. By stocking up on price-marked formats of these drinks, retailers can help to encourage sales from new shoppers.

Premiumisation

Another key trend under lockdown, says Burgess, is ’premiumisation’: “With people spending more time at home, many are looking for ways to make nights in feel special – especially if they’re marking an occasion.

“Adult soft drinks like Appletiser offer a sophisticated, soft alternative to beer, wine and cocktails to enjoy alongside a meal in. Made with pure fruit juice, and with no added sugar, Appletiser is particularly appealing to health-conscious consumers.

“Premium pack formats can also help to create a sense of occasion. Our iconic Coca-Cola glass bottles are a good example of this and are currently in 87% growth [Nielsen Sep 2020].”