The UK’s hot and soft drinks market is more innovative than most other countries in the developed world, according to a new report by Datamonitor. And with openness to innovation increasing across all age ranges, even among the over-65s, beverage manufacturers have never had it so good.
The report, Future Innovations in Beverages, suggests that 59 per cent of consumers aged 18- to 24 years old are prepared to try new drink brands compared with only 47 per cent a decade before. But this increasing willingness to experiment is a double-edged sword for marketers. Although it has led to a growth in repertoire drinking (changing brand choices according to time of day, location and who they are with) and expansion of consumers’ drinks portfolios, it has also reduced brand loyalty. This has forced manufacturers to defend existing brands with increasing vigour – and expense.
With competition already intense in the low-growth beverages markets, the trend towards greater brand promiscuity makes it even more important for manufacturers to get product offerings – new or old – right.
Consumers increasingly want products that comply exactly with their requirements at a particular time, so it is essential manufacturers identify and respond to these needs.
Datamonitor’s analysis of new product development (npd) activity in the European and US markets suggests the industry is responding, with 84.4 per cent of new hot drinks and 84.9 per cent of new soft drinks launches ditching generic positioning campaigns in favour of ones aimed at specific consumer groups.
While a variety of approaches are being used, targeting on the basis of age is the most favoured strategy, with 74.8 per cent of hot drinks and 42.7 per cent of soft drinks launches being aimed at specific age groups.
Children and teenagers are a key focus of drinks launches, accounting for 7.1 per cent of the Datamonitor sample – perhaps in part as a result of their lack of legal access to alcoholic drinks.
Children are increasing their consumption of soft drinks, often at exceptional rates, despite the potential damage to health. Research conducted in the US during 1999 indicated that many children are increasing their consumption of soft drinks and reducing their milk intake.
Whilst this trend may be more pronounced in the US than in other countries, it is being replicated to some extent across the developed world. US teenagers of both genders now consume twice as many carbonated drinks as milk in volume terms, whereas the opposite was true in the late Seventies.
About 70 per cent of children’s beverages remain aimed at parents as buyers, although it is notable that the majority of these products target children as brand choosers. Only 33 per cent of children’s brands target parents as complete decision makers.
Research in Western Europe and North America indicates that 70 per cent of mothers admit to being influenced by “pester power”. Consequently, a greater proportion of npd is likely to be focused on children over the next five years.
For many beverage manufacturers, the young adult market is perhaps the most important of all. Young adults are open to marketing messages, often have high levels of disposable income and devote much time to socialising.
It is also one of the most volatile markets for brand loyalty, as their tastes and values change quickly. But affinities made with brands in young adulthood can often be retained throughout later life.
In category terms, young adults are open to innovations in the majority of soft drinks sectors, in particular bottled water, new-age beverages, such as herbal and health-enhancing drinks, juices, and energy and sports drinks. The latter category is the most youth-oriented. Red Bull, for example, is now an almost iconic brand in youth marketing. It fits the perceived young adult lifestyle of working hard and playing hard, with connotations of club culture in its promotion and advertising.
Older age groups are also becoming a strong focus, particularly since the over-45s, who have major spending power, are the most rapidly expanding population segment.
While consumers across the age ranges have an interest in products which bring general health benefits, such as fruit juices, the over-45s market has been the target for a wave of innovative beverage brands aimed at relieving or preventing health problems specific to this age group.
Sales of cranberry juice, for example, have increased on the back of scientific proof that it helps to prevent urinary tract infection, an ailment which affects an estimated 25 per cent of women. Fruit juices with added calcium and vitamins are also becoming very popular.
And with Red Bull GmbH now targeting geriatric consumers – many Austrian rest homes now serve Red Bull as a tonic drink to elderly residents – we can expect to see significant innovation targeting these consumers in the near future.