Britvic soft drinks report

Soft drinks which offer added benefits such as vitamins, minerals and energy-boosting ingredients fuelled value growth in the soft drinks market in 2007, offsetting the impact of the worst summer on record. The market grew 2.4% in value to reach sales of £8.5bn, according to the 2008 Britvic Soft Drinks Report – an annual review of the industry .

The impact of the poor summer, which was exacerbated by the introduction of the smoking ban in England in pubs and bars, saw soft drinks volumes drop by 2%, compared with the previous calendar year.

The report, based on data from leading market researchers Nielsen, showed that cola, pure juice and juice drinks continued to lead the market in sales and volume. However the strongest performers in 2007 were soft drinks that offered consumers a ‘functional’ benefit (such as enhanced vitamins, minerals, electrolytes or energy) and command a price premium. These include glucose and stimulant drinks (+25%), smoothies (+ 35%) and sports drinks (+16%).

In the take-home channel (supermarkets and convenience stores), soft drinks remained the most valuable category with £6.07bn in sales. While cola led the market in value and volume size, the second largest sub-category, pure juice, grew 5% bringing it just behind cola in value terms.

In the on-premise channel (pubs and bars), soft drinks grew faster than beer and spirits to reach sales of £2.4bn. Cola again led the market while juice drinks and bottled water experienced the strongest growth, reflecting the trend towards better-for-you drinks. Within hotels, restaurants and catering outlets, soft drinks grew 12% demonstrating the growing importance of soft drinks consumption with food.

"2007 was a challenging year for the industry. However, soft drinks manufacturers are adept at anticipating and adapting to change and we gave ample proof of that in 2007, maintaining growth in sales value despite the difficult market conditions," said Paul Moody, Britvic Chief Executive and President of the British Soft Drinks Association.

"As an industry we face continuous and rapid change, driven by evolving consumer preferences, local and global trends, shifting regulatory pressures and the dynamics of a highly competitive and innovative marketplace. In 2007 we saw significant change on all these fronts, but in particular we saw consumer preferences and behaviour become increasingly complex."

Still drinks benefited from the better-for-you choices made by consumers in the five years to 2006, but in 2007 carbonates began to redress the balance with growth in both value and volume market share. This was driven primarily by the growth in glucose and stimulant drinks.

"The health and wellbeing trend is still a key market driver, however consumers appear to be taking a more balanced and holistic view of health. It is no longer just about diet or avoiding sugar, consumers are increasingly looking for more natural products as well as those which offer functional benefits," said Paul Moody.

Within the 83% of the GB population who say they want to live a healthier lifestyle, 41% claim to be concerned about diet (ie low sugar/fat/salt) while 33% now claim to be concerned about naturalness and 26% claim to be interested in functional benefits. The trend towards naturalness has grown significantly with 69% of consumers claiming they prefer natural foods in 2007 versus 50% in 2000.

"Aside from health and wellbeing, three other distinct market trends have also emerged in the food and drink market as consumers demand a range of benefits from products they consume: indulgence, ethical values and convenience. New product innovation that addresses consumers on more than one of these levels performed particularly well in 2007 – 70% of the top ten soft drink innovations in 2007 tapped into more than one of the four key trends," said Paul Moody.

The report also looked at international markets similar to the UK which showed health and wellbeing to be driving the market on a global scale. In particular, increased consumer demand for functional benefits boosted the growth of sports and energy drinks in the US, Australia, France, Germany and Ireland. In the US this translated to the bottled water market where ‘enhanced water’ (with added vitamins or electrolytes to aid hydration) doubled in size.

In terms of future trends in soft drinks, research that tracks buzz on the internet revealed growing interest in two key topics: new functional ingredients such as antioxidants, selenium and calcium; and sustainability. Forty-six per cent of consumers now say that they’re willing to pay more for products that are ethically produced or kinder to the environment.

"What’s clear from 2007 is the soft drinks industry is resilient even in tough market conditions. But the increasingly complexity of consumer preferences is a very real challenge and the need for continued insight into the consumer and appropriate innovation looks set to be even greater in 2008," said Paul Moody.

To view the full report please click here.