Soft Drinks Review - UK - June 2017


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Mintel

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The major focus of the soft drinks market in recent years has been on sugar reduction, in response to consumer concerns about sugar and more recently in preparation for the introduction of the Soft Drinks Industry Levy. Sugar is not the only health factor influencing the market though, with a decline in alcohol consumption boosting the relevance of soft drinks as an alternative to alcohol.

Table of Content

OVERVIEW
What you need to know
Products covered in this Report

EXECUTIVE SUMMARY
The market
Total soft drink sales increased by 4% in 2016
Bottled water sees strong growth
Carbonated soft drinks boosted by L/N/R sugar variants
Slowdown in sports and energy drinks
Brexit decision leads to fall in value of the Pound
Soft Drinks Industry Levy set to be introduced in April 2018
Push to improve health of UK population
Real incomes coming under pressure again
Companies and brands
Coca-Cola maintains big lead over Pepsi
Figure 1: Leading brands’ shares in the UK retail soft drinks market, by value, 2016/17*
Juice-based drinks see the most product launches
Big focus on new recipes to cut sugar
Focus on refreshment and hydration properties
More adult soft drinks and blurring of category boundaries
Increase in advertising spending on soft drinks
Coca-Cola and PepsiCo account for over half of advertising
Robinsons most trusted soft drinks brand
Innocent seen as most innovative brand
The consumer
Almost universal drinking of soft drinks
Figure 2: Usage of different types of soft drink and tap water in the last 6 months, April 2017
Squash and bottled water drunk most frequently
A quarter of fruit juice drinkers drink it once a day
Strong loyalty to one or a few favourite soft drinks
Figure 3: Loyalty to favourite soft drinks when drinking soft drinks at home or at restaurants/pubs/bars, April 2017
At-home drinks are more about hydration and health
Traditional flavours have the strongest appeal
Going well with meals most important in on-trade
Figure 4: What people look for in a soft drink when drinking a soft drink at home and in a restaurant/pub/bar, April 2017
Strong demand for wider choice of soft drinks in the on-trade
More prompts needed in restaurants and pubs/bars
Focusing on taste key to success for premium soft drinks
Figure 5: Behaviours and attitudes in relation to soft drinks, April 2017
What we think

ISSUES AND INSIGHTS
Scope for range development along with more prompts in the on-trade
The facts
The implications
Importance of different aspects of soft drinks varies by occasion
The facts
The implications
Soft drinks need a clear taste difference to justify a premium price
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Total soft drink sales increased by 4% in 2016
Bottled water sees strong growth
Fruit juice hit by sugar concerns
Carbonated soft drinks boosted by L/N/R sugar variants
Slowdown in sports and energy drinks
Downward trend in cordials and squashes continues
Brexit decision leads to fall in value of the Pound
Soft Drinks Industry Levy set to be introduced in April 2018
Push to improve health of UK population
Real incomes coming under pressure again

MARKET SIZE AND SEGMENTATION
Total soft drink sales increased by 4% in 2016
Figure 6: Total UK value sales of soft drinks, by segment, 2011-21
Bottled water growth continues
Value growth for juice-based drinks but volumes down
Carbonated soft drinks boosted by L/N/R sugar variants
Slowdown in sports and energy drinks
Downward sales trend for cordials and squashes

MARKET DRIVERS
Brexit decision leads to fall in value of the Pound
Soft Drinks Industry Levy set to be introduced in April 2018
Push to improve the health of UK population
Changing population dynamics provide an opportunity and challenge
Figure 7: Trends in the age structure of the UK population, 2011-21
Real incomes set to come under pressure again
Drinking of tap water influences soft drink sales

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Coca-Cola maintains big lead over Pepsi
Juice-based drinks see the most product launches
Big focus on new recipes to cut sugar
Focus on refreshment and hydration properties
More adult soft drinks and blurring of category boundaries
Increase in advertising spending on soft drinks
Coca-Cola and PepsiCo account for over half of advertising
Robinsons most trusted soft drinks brand
Innocent seen as most innovative brand

MARKET SHARE
Coca-Cola maintains big lead over Pepsi
Figure 8: Leading brands’ sales in the retail soft drinks market, by value, 2015/16 and 2016/17
Figure 9: Leading brand-owner sales in the retail soft drinks market, by value, 2015/16 and 2016/17

LAUNCH ACTIVITY AND INNOVATION
Juice-based drinks see the most product launches
Figure 10: New product launches in the UK soft drinks market, share by sub-category, January 2012-April 2017
Branded products dominate new launch activity
Figure 11: New product launches in the UK soft drinks market, share of branded vs own-label, January 2012-April 2017
Big focus on new recipes to cut sugar
Zero-sugar variants being added in energy drinks
No-added-sugar juice drinks look to avoid sugar levy
Reformulations in carbonated drinks and flavoured waters
Focusing on refreshment and hydration qualities
Packaging innovation looks to increase standout
Limited edition products
More visually appealing packaging
New packaging offers practical benefits
Juices and smoothies focus on functional benefits
Adult soft drinks target those cutting back on alcohol
Soft drinks for wine lovers
More sparkling drinks for grown-ups
Established family brands target the adult market
Blurring of category boundaries
Appealing to those with less sweet tastes

ADVERTISING AND MARKETING ACTIVITY
Advertising spending on soft drinks increases
Figure 12: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, 2013-17
Carbonated soft drinks take biggest share of advertising
Figure 13: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, by category, 2013-17
Coca-Cola and PepsiCo account for over half of advertising
Figure 14: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, by advertiser, 2013-17
Coca-Cola Zero Sugar receives heaviest advertising support
Pepsi continues to focus on Pepsi Max
Energy drinks among most heavily supported brands
Tropicana promotes healthy message for orange juice
Juice drinks shift focus to no-added-sugar variants
Innocent puts a bigger focus on ingredients other than fruit
Figure 15: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, top 30 by advertiser and brand, 2016
Nielsen Ad Intel coverage

BRAND RESEARCH
Brand map
Figure 16: Attitudes towards and usage of selected soft drinks brands, December 2015-April 2017
Key brand metrics
Figure 17: Key metrics for selected soft drinks brands, December 2015-April 2017
Brand attitudes: Robinsons has the best reputation
Figure 18: Attitudes, by brand, December 2015-April 2017
Brand personality: Innocent seen as most ethical brand
Figure 19: Brand personality – Macro image, December 2015-April 2017
Coca-Cola stands for authenticity
Figure 20: Brand personality – Micro image, December 2015-April 2017

THE CONSUMER – WHAT YOU NEED TO KNOW
Almost universal drinking of soft drinks
Squash and bottled water drunk most frequently
A quarter of fruit juice drinkers drink it once a day
Strong loyalty to a favourite or a few soft drinks
At-home drinks are more about hydration and health
Traditional flavours have the strongest appeal
Going well with meals most important in on-trade
Strong demand for wider choice of soft drinks in the on-trade
More prompts needed in restaurants and pubs/bars
Focusing on taste key to the success for premium soft drinks

USAGE AND WHERE PEOPLE DRINK DIFFERENT TYPES OF SOFT DRINKS
Drinking of soft drinks almost universal
Figure 21: Usage of different types of soft drink and tap water in the last 6 months, April 2017
Squash/cordials has biggest bias to in-home drinking
Figure 22: Usage of different types of soft drinks and tap water in the last 6 months, by location, April 2017
Bottled water most popular on-the-go option
Fruit juice drunk by seven in 10 people
Figure 23: 100% fruit juice, juice drinks and smoothies usage at home, by age, April 2017
Carbonated soft drinks top choice in pubs and restaurants
Out-of-home consumption important for sports and energy drinks
Room for restaurants and pubs/bars to encourage uptake of soft drinks

FREQUENCY OF DRINKING DIFFERENT SOFT DRINKS
Squash and bottled water drunk most frequently
Figure 24: Frequency of drinking different types of soft drinks and tap water, April 2017
A quarter of drinkers of fruit juice drink it once a day
Diet carbonated drinks drunk more often than non-diet versions

LOYALTY TO FAVOURITE SOFT DRINKS
Strong loyalty to a favourite or a few soft drinks at home
Figure 25: Loyalty to favourite soft drinks when drinking soft drinks at home or at restaurants/pubs/bars, April 2017
Out-of-home drinking habits also firmly established

WHAT PEOPLE LOOK FOR IN A SOFT DRINK
At-home drinks are more about hydration and health
Figure 26: What people look for in a soft drink when drinking a soft drink at home and in a restaurant/pub/bar, April 2017
Traditional flavours have the strongest appeal
Going well with meals most important in on-trade

BEHAVIOURS AND ATTITUDES IN RELATION TO SOFT DRINKS
Strong demand for wider choice of soft drinks in the on-trade
Figure 27: Behaviours and attitudes in relation to soft drinks, April 2017
Interest peaks among 16-34s
More prompts needed in restaurants and pubs/bars
Focusing on taste key to the success for premium soft drinks
Strong preference for drinks with all-natural ingredients

AMOUNT DRINKERS ARE PREPARED TO PAY FOR SOFT DRINKS IN ON-TRADE
Lack of willingness to pay more than £3 for soft drinks
Figure 28: The most people are prepared to pay for a soft drink at a restaurant/pub/bar, April 2017

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 29: New product launches in the UK soft drinks market, by flavour component group, January 2012-April 2017
Figure 30: New product launches in the UK soft drinks market, by claim, January 2012-April 2017

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