Sales of soft drinks in the licensed trade have the potential to grow due to producers meeting demand for more grown-up and premium brands, healthier alternatives and occasions with food.
According to the new Britvic Soft Drinks Review, sales of soft drinks fell by 1.9% by value and 2.5% by volume in the licensed trade in 2017, blamed on a decline in the number of outlets in Britain.
However, this was against a backdrop of growth in other channels such as foodservice, leading to a 1.4% rise in total soft drinks sales to £15.2 billion, based on data from research groups CGA and Nielsen.
With the sugar levy arriving on April 6, producers including Britvic have been reformulating their recipes so that many more fall under the threshold of 5g of sugar per 100ml – reducing estimates of tax revenue from £500 million a year to around £300 million.
According to the Britvic Soft Drinks Review, sales of lower-calorie soft drinks grew by 7.6% last year, with the no-sugar cola market growing by 57%, led by Pepsi Max and Coke Zero.
Britvic pointed to the shift to lower-sugar products as an opportunity for the licensed trade through offering a choice of full-sugar and lower-sugar options to meet demand for both taste and healthier alternatives.
The report also highlighted an opportunity for increasing sales value through premiumisation in soft drinks, revealing that premium products account for only 7% of soft drinks in the licensed trade compared to 30% for spirits and 43% for beer.
With more people cutting back and giving up alcohol, another emerging trend is the zero-proof category with brands such as Seedlip delivering a credible non-alcoholic experience and a premium price point on a par with alcohol. “There is a growth opportunity to create business and trade up,” said Britvic GB managing director Paul Graham.
Stocking premium, healthier and more natural products will help to tap into the over-35 market who traditionally move away from soft drinks due to more appealing alternatives such as coffee and water.
To reach this premium, adult market, Britvic is planning the on-trade launch of two products created through its incubator business, Wisehead Productions, which previously developed The London Essence mixer range.
Launched by Wisehead in retail in 2016, Thomas & Evans No 1 is a crisp and complex sparkling drink made with over 20 ingredients including silver birch charcoal-filtered green fruit juices and steam-distilled botanicals such as apple, elderflower, citrus peel and oak tincture.
It taps into a trend for adults to seek out more natural ingredients, with more than half of adults finding “natural” and “real” attributes the most appealing factors when choosing a drink, according to the Britvic Soft Drinks Review.
The other new on-trade launch will be Monte Rosso, a lightly sparkling drink inspired by classic Italian aperitivos such as Spritzes and the Negroni. Launched by Wisehead in retail in 2017, it blends bitter-sweet notes of wild mountain cranberry and rowanberry, fragrant botanicals and extracts of summer fruits and citrus.
Overall in Britain, the report identifies continuing demand for hydration, including flavoured and infused water. Britvic is exploring how this segment could work in the licensed trade, especially after relaunching infused sparkling water brand Aqua Libra in cans in the off-trade last year.
The Britvic Soft Drinks Review also identifies an opportunity for more sales of soft drinks with food, with soft drinks already included in over half of all eating out occasions.
Russell Goldman, commercial director for foodservice and licensed at Britvic GB, said: “We know how competitive it is out there for outlets, particularly in the licensed channel, so focusing on getting their soft drinks offer right should be a big area of focus and at Britvic we are working hard to help our customers drive profit through their soft drinks sales.
“By getting their soft drinks range right, tailoring it to their customer’s specific needs and creating premium experiences with sensational drinks, operators can grow their profits through the soft drinks category.”
Paul at Britvic GB said the research indicated that the total soft drinks market was likely to rise by 1.5% to £89.2 billion in 2018 followed by a “return to accelerated growth as the economy stabilises” in 2019.