Soft Drinks Sales Overtake Spirits In On-Trade for First Time

Across all channels, UK sales increased by 2% to £8.5bn and were buoyed by the variety of choice on offer to consumers.

In supermarkets and convenience stores, which represents over 70% of the UK soft drinks market, sales rose 2% to £6.2bn. The report also details how a trend of soft drink swapping emerged in the UK last year with one of the most striking switches seeing shoppers move away from pure juice drinks, down by 4%, in favour of low calorie cola and dairy drinks, as well as more obvious moves to juice drinks and squash. Smoothie consumers similarly altered their buying habits to pick up dairy drinks, as well as fruit carbonates, instead of more premium fruit drinks.

The issues facing the soft drinks industry reflect broader economic trends, with concerns about the economy, debt and job security foremost in their minds. Consumers continued to set themselves smaller budgets and cut back by buying on promotion and switching to cheaper grocery brands, although branded soft drinks again bucked this trend

Energy drinks taking home significant sales growth
2009 saw a number of new glucose and stimulant or ‘energy’ drinks launched in the UK market and the raft of choice meant the segment was the fastest-growing in take-home market by 7% to £567m, along with family favourite squash which also experience strong growth at 7%, taking the category to £476m. Cola, driven by growth in low calorie offerings, remained the leading sub category in soft drinks, with total sales growing by 4% to £1.35bn.

However, it was not all good news for the category in take-home, as smoothies continued their fall, recording a 27% drop in sales. Similarly, pure juice drinks with their more premium pricing experienced a 4% decrease in sales as price-conscious consumers opted for lower cost alternatives. Lemonade enjoyed a welcome 4% rise in sales to £148m, as the UK proved it is no longer a nation of secret lemonade drinkers.

Consumers continue to take the soft option
Commenting on the 2009 Soft Drinks Report, Simon Stewart, Britvic’s marketing director, said: “The UK has once again demonstrated its affection for soft drinks. It continues to be a very resilient category and time and again, consumers have shown that they aren’t willing to stop spending on being refreshed, hydrated or treated on something they consider to offer value for money and enjoyment.

“It is also extremely encouraging to see soft drinks sales grow to be behind only beer in the on-trade, highlighting the growing importance of soft drinks to this sector of the market.. Publicans that have focused on food and putting on a family offering have reaped the benefits of this strategy.”

Other key findings of the report include:

• Cash-strapped consumers had no difficulty in finding alternative soft drinks choices to suit their budgets. Shoppers switched loyalties in the search for best prices. They also bought fewer items more frequently
• The search for low prices in 2009 meant shopping around and retailer loyalty suffered as a result. Supermarkets performed strongest, with sales value up 4% driven by the exceptional performance of the Big Four in a tough market
• An increase in promotions, led by retailers, was evident in the soft drinks sector – 49% of sales for later consumption were on promotion, an increase of 3%
• Promotions helped growth, meaning Aldi and Lidl saw their market share grow more slowly than in 2008. 61% of the population bought from a discounter in 2009 – nearly the same as from Morrison’s
• There was a 3% drop in soft drinks sales in impulse outlets. Hardest hit were local and high street newsagents, with value down 20%, and multiple off-licenses down 11% by value due to the collapse of First Quench group, owner of Thresher and Wine Rack
• High street shops, independents and multiple forecourts also suffered a decline
• However stores of less than 280 sq m experienced a 2% increase in sales

TAKE-HOME STATISTICS

• In the Take-Home market (supermarkets and convenience stores), sales were up 2% by value in 2009 to £6.2n and increased by 1% in terms of volume
• Successful brands included Pepsi Max, which grew by 9% and Irn-Bru, up 4%. Robinsons also had a successful year, with sales up 6%, contributing a third of the squash sub-category’s growth
• Energy and stimulant drinks and squash enjoyed the fastest growth, while popular drinks such as cola also performed well
• Sales of plain water halted its two-year decline with sales remaining flat at £424m
• Tropicana was impacted by the trend of trading down from pure juice, with sales down 6%
• Britvic outperformed the market with 6% growth in value during the year, compared to the market’s 2% rise. This was driven by strong performances from Pepsi, Robinsons and juicy drench

LICENSED STATISTICS

• Conditions improved for the On-Premise market (pubs and bars) in 2009, with sales overtaking spirits for the first time to reach £2.4bn
• The soft drinks benefitted from the continued shift towards pub visits becoming destination establishments with a greater family and food focus
• Pepsi was big success story by overtaking Coca Cola to become the best-selling cola drink in the on-trade. In terms of performance, it was followed closely by R Whites Lemonade, Britvic J2O and Schweppes Lemonade
• Soft drinks sales increased most strongly in the managed chains, up 6%, reversing 2008’s 4% decline
• Cola, lemonade and squash performed well, pure juice remained a pub staple
• Energy drinks declined as consumers switched away from the ‘vodka and Redbull’ trend and cheaper brands came on to the market
• The hotels, restaurant and catering sector had a tougher time with sales down 3% on last year to £231m

The full report is available online (with charts and data extracts) at www.softdrinksreport.com