The fine-weather season is upon us and with it the opportunity to drive summer drinks sales.
By Elena Dimama
Summer is a key period for soft drinks sales and last year brought a welcome bonanza to retailers, aided by unprecedented hot temperatures.
Flavoured carbonates and water saw the most significant uplifts last year, while during the peak of the heatwave, an additional £75m boost in soft drinks sales was recorded in just one week (the one ending 24 July), compared to the year prior.
Value speaks
As cost-of-living concerns persist, shoppers are seeking value to make their pennies go further, with 38% of shoppers focusing on saving money this year, according to IGD. Meanwhile, 72% of UK households are now impacted by the rising costs of food and drink and the number of financially constrained consumers has risen from 23% to 59%, according to NielsenIQ.
“Larger pack formats and multipacks will continue to play an important role, as people look for more opportunities to socialise with family and friends around key calendar events,” Adrian Troy, Marketing Director at Barr Soft Drinks says.
“Retailers have an opportunity to pick up these sales by looking at exciting flavours, bigger formats and multipacks from trusted brands.”
Calli O’Brien, Head of Marketing at Aston Manor Cider, adds: “While many pay more attention to what they are spending their hard-earned money on, don’t forget that the average consumer was feeling the pinch even before now.
“We are here for shoppers, helping them to save with our affordable cider, allowing them to focus their spend on what really matters. Our range provides shoppers with an affordable solution, without trading down on quality, so they can be assured they are not compromising when needing to spend a little less cash on cider but looking to enjoy the summer with friends and family.”
Another trend within the money-saving theme is switching to own label which could potentially hurt brands. “Soft drinks branded spend is in fact 36% higher than own label, suggesting that shoppers prefer to stay brand loyal and are willing to spend more, rather than revert to own label to save money as they do in other categories,” a Red Bull spokesperson says. “As shoppers spend less on non-essential items, such as alcohol and tobacco, soft drinks continue to play an important role in customers’ repertoires. Potentially as an alternative or simply a fundamental item they are not willing to compromise on, despite cutting back in other areas.”
Boost is another brand aiming to help drive sales for retailers while delivering value for customers. “Juic’d is jam-packed full of flavour, with real fruit juice refreshment but at the same great Boost value price point for consumers,” Adrian Hipkiss, Marketing Director at Boost Drinks notes. “With the cost-of-living increases, it’s great to be able to add to this thriving category and provide more choice for consumers.”
Siting within store is an integral part of whether an offering is successful. The RTD Coffee category, including Starbucks chilled coffee, should be sited within the soft drinks fixture alongside dairy drinks and as close as possible to the energy category. It is also important to give RTD coffee SKUs appropriate space within the feature, with multiple facings a key way to encourage a purchase.
RTD coffee is also an ideal addition to meal and link deal executions, many retailers are already experiencing the advantages of including these drinks in their existing offers.
Multipacks can also help with the value proposition of many brands, which is why Yazoo introduced a new PMP offer for the convenience channel, with its core 400ml available with a ‘2 for £2.20’ price mark. “We know from our consumer research that Yazoo shoppers are often looking to make multiple bottle purchases, so the two for £2.20 offer provides value for money in a year of economic uncertainty,” Dan Chesborough, UK Sales Director at FrieslandCampina, explains.
“Retailers can stock the flavours and sizes they know sell well whilst communicating value to their shoppers and maintaining that point of difference.”
Looking at the off-trade, international football gave the alcohol category a boost in the final quarter of 2022, with beer being the only segment in growth (1.8% year-on-year), according to Kantar. However, as price increases and inflation took effect at the start of the year, total beer was down by 12.3% in value MAT, according to Nielsen. “But, the picture is starting to improve in Impulse. Total beer is still in decline, but at a slower rate (-2.5%), but Craft Beer is in growth +2.9% and BrewDog is outperforming Total Craft at +4.2% and Core BrewDog products up +5.2%,” Miriam Thompson, Off-Trade Category Development Manager for BrewDog, explains. “This takes BrewDog’s share of the category in Impulse to 57.9%.”
For Westons Cider, authenticity, craft and “connoisseurship” is of growing interest to consumers, with Sally McKinnon, Head of Marketing, adding: “Today’s consumers are willing to pay more for premium products that are made in a traditional way and have heritage and provenance attributes. The growth of crafted cider demonstrates this trend perfectly.
“This sub-category is in strong growth (+10%) which is all the more impressive considering many other cider sub-categories are struggling to annualise against the highs of 2020 and 2021.”
Flavoured variety
Last summer saw flavoured carbonates achieve the biggest subcategory uplift across soft drinks, growing +55% in retail, according to IRI Marketplace.
“Shoppers look for more exotic and different flavours to try in the summer and this highlights the importance of trusted brands like Irn-Bru and Rubicon Sparkling, known for their iconic flavours and exotic fruitiness,” Troy notes. “Taste remains the top consideration in soft drinks purchases, and flavour innovations are becoming more complex as consumers look for new and interesting tastes, so we expect to see more unique products on shelf as the category grows.”
Seasonal flavours are also big in the summer, as customers tend to be experimental, according to O’Brien. “One of the reasons why consumers opt for flavoured ciders is because there are many different accessible flavours to choose from. Consumers of flavoured ciders tend to traditionally be a younger audience who like to know the ingredients of what they’re drinking and see flavoured cider as an easy-to-drink beverage.
“It is therefore important that retailers offer a range of formats and flavours to make the most of these opportunities.”
The strong appetite for flavours is also witnessed in the hugely popular energy sub-category, with flavours in energy now accounting for 38% of Stimulation sales, according to IRI, and have shown a whopping 48% growth year-no-year.
“Flavours are key to helping drive the growth of Sports & Energy, and the area which sees the most innovation, as shoppers look for variety and hydration, particularly during the summer months. As a result, flavoured Sports & Energy drinks are up +24.4% YoY vs unflavoured at +12.0%, with tropical flavours a core opportunity, growing 18.5% vs mainstream flavours at 17.4%,” a Red Bull spokesperson explains.
Meanwhile, Flavoured Carbonates is the third-largest category in Soft Drinks, now being worth over £291m and growing 8% year-on-year. “The range of flavour profiles and pack sizes on offer from Boost allows consumers to rely on us as a brand that caters to an array of consumption moments, whether on the move or stocking up to enjoy at home,” Hipkiss adds.
“Boost Red Berry is the largest selling 250ml Stimulation Flavour SKU, however, considering the fact that 39% of Stimulation shoppers actually make their purchase based on flavour alone, it’s important to stock a wide variety of flavours to cater to this.”
Flavoured milk is also being rewarded by consumers looking for new, refreshing tastes. “We’ve seen positive growth across all our brands as shoppers embrace the flavoured milk category as both a take-home treat, as well as a great on-the-go refreshment option,” Chesborough explains. “At its heart, flavoured milk is a fun category. Our consumers want innovation, indulgence, and refreshment for both themselves and their families,” he adds.
Meanwhile, flavoured carbonates in a multi-pack format are looking at a win-win this summer, as they have seen a 22% uplift, according to IRI Marketplace (MAT to 25.03.2023).
RTD wins
Not to ignore one of the fastest-growing segments in the category, the RTD coffee sub-category is rising at a rate of 35.4% MAT, making it worth £209m, according to Nielsen. “As the category leader and representing close to 50% of all RTD coffee sales, Starbucks chilled coffee has played a fundamental role in spearheading total category growth, adding more than £13m in incremental sales,” Adam Hacking, Head of Beverages at Arla, notes.
Looking at the RTD Iced Coffee category specifically, the segment is now worth £230m, with sales at symbol stores and independent retail having now grown to over £44m, according to IRI. “We know that the RTD Iced Coffee category is growing rapidly at +24% volume and +31% value YOY, providing a huge opportunity for retailers to draw customers in and maximise sales,” Hipkiss adds. “To successfully capitalise on this trend, retailers and wholesalers should provide enough space to allow for future growth in the category and stock fast-growing brands such as Boost.”
RTD is also a big sales driver for the hard seltzer category, as witnessed by White Claw. “With the warmer weather and longer days, the arrival of summer heralds a variety of drinking opportunities unique to the season, including more outdoor drinking occasions,” Matt Rounding, White Claw’s Off Premise Sales Director, explains. “This marks a huge opportunity for local retailers, as consumers turn to these outlets for easy access to their favourite RTD brands.”
Where possible retailers should try and offer Hard Seltzers their own bay, near to the beer and cider products. This allows consumers to see the ranges on offer and have instant access to a wide variety of flavours and brands that clearly stand out among the rest of the RTD category. This approach has seen huge success in the US and is an easy way to specifically target the appropriate audience – licensed drinking age through to 35-year-olds.
Healthy ways
In the post-pandemic period, health remains a crucial factor influencing purchasing decisions, with shoppers actively looking for lower-calorie products. Flavoured water is growing in popularity as a result, with flavoured sparkling water sales up +10% year on year,” Troy says. “Offer a good choice of low-calorie products that don’t compromise on flavour, taste or value, such as Rubicon Spring, to tap into incremental category sales,” he advises retailers.
Health plays an important role also in the hard seltzer category, especially as retailers try to focus on Gen Z and Millennial shoppers. “Younger drinkers are seeking a beverage that their parents didn’t drink, looking to be more adventurous with their selection, and Gen Z and millennials are making conscious lifestyle choices amid an increased focus on health and wellness compared to previous generations,” Rounding notes. “Retailers should bear these market trends in mind when building a stock portfolio.”
Coca-Cola Europacific Partners (CCEP) also thinks healthier choices have been a priority for consumers for some time, with Amy Burgess, Senior Trade Communications Manager, noting: “That’s why we identified it as one of the key drivers to unlock the growth opportunity in the soft drinks category in our Refresh Tomorrow category vision.
“Since 2015, through reformulation, we have reduced sugar across the CCEP portfolio by more than 25%, and have introduced low and zero sugar variants from nearly all of our brands. This includes our light colas range, comprised of Diet Coke, Coca-Cola Zero Sugar and their respective flavours, and our zero sugar flavoured carbonates including Fanta Zero.”
Impulse buys
During the summer months, impulse buys become ever more important, as the hot weather encourages more impromptu visits to convenience stores. “Cider is the impulse drink of choice during summer months so retailers can support customers by stocking a 100% chilled, wide range of options in cans and bottles,” O’Brien notes. “If a store has limited chiller space, then it’s worth retailers at least ensuring there is a good selection of flavoured ciders available chilled alongside top-selling ciders. When a shopper buys cider on impulse, having it chilled and ready to drink is often more important than price, however, promotions still play an important role in communicating value for money that will help to win longer-term customer loyalty.”
Taste and value are crucial elements of attracting the impulse customer, according to Boost Drinks, with Hipkiss adding: “It is essential that retailers stock an offering that takes the ‘taste’ and ‘value’ drivers into account to effectively maximise sales to impulse shoppers – whilst also appealing to an array of budgets and tastes.
“Taking these factors into account when considering which brands and SKUs to stock provides a great opportunity for retailers to access their key audiences on a personalised level and ensure successful sales rates.”
NPD leads the way
“One of the most exciting things about the RTD Coffee category is the speed at which it is evolving,” Hacking explains. “Innovative NPDs are continuously hitting the shelves keeping this sub-category fresh and relevant as it progresses at pace to match ever-changing consumer consumption habits. With this in mind, Limited Editions will become more of a feature within the Starbucks RTD range.” In June 2022, Starbucks Limited-Edition Frappuccino Toffee Honeycomb was launched.
Boost Drinks’ Juic’d range is also part of an NPD tapping into the largest-selling can segment, including four flavours, made with 5% real fruit juice and price marked at £1.09. “In line with our commitment to always ensuring we invest time and energy into understating the habits of our retail partners’ shoppers, we continue to offer NPDs with price-marked packs that help retailers to communicate great value on fixture, amidst increased consumer price consciousness, while still delivering excellent margins,” Hipkiss adds.
When building a great range, it’s key to remember the four Soft Drink need states – Refresh (Colas and Fruit Carbonates), Hydrate (Waters), Replenish (Sports Drinks) and Energise (Caffeinated Energy Drinks and RTD Coffees).
Shoppers can only see products within a 1.3m breadth, so it’s vital that you signpost each sector with the biggest brands to help them locate what they’re looking for quickly. For Energy Drinks, that is Red Bull. To offer further choice there are four key segments within Energy Drinks to get right again – Core Energy Drink, Sugar-Free options, Flavoured options and Multipacks. If you have all these covered then you will enjoy great growth in your store.
