The soft drinks industry is flexible enough to thrive over the next decade, according to Britvic chief executive Paul Moody, despite consumer health concerns, and the looming threat of government legislation.
Launching the 2006 Britvic Soft Drinks Category Report, Moody said: “If manufacturers are willing to innovate with products, packaging and marketing, future soft drinks sales growth should at least be able to match the growth witnessed by the industry in 2005.”
The UK soft drinks market is valued at &£7.8bn, up 5% on last year. That doesn’t tally with recent media reports predicting doom and gloom following Asda’s decision to clear its shelves of Sunny D, and Northern Foods’ admission that consumers’ health concerns are giving it a headache. Industry experts, however, are warning manufacturers that they must change their ways to survive.
But, says Moody, in a year when health issues and childhood obesity consistently topped the news agenda, and the government revisited plans to ban junk food from school vending machines, the industry “reacted positively to shifting goalposts”, and prevailed. The “better for you” category is one of the fastest-growing areas in soft drinks, resulting in the smoothies sector boosting its advertising spend by a massive 1598%.
Innovative promotions – such as Robinsons’ “Love Wimbledon” and Coca-Cola’s “Summer of Love” campaigns – complemented rapid product development to meet consumer expectations: the juice drink sub-category alone launched over 60 products onto supermarket shelves, while fruit drinks, waters and energy drinks are seeing massive growth in the on-trade.
Britvic category director Andrew Marsden used the event to describe a vision of the future of pubs, where smoking legislation and the liberalisation of laws relating to the admission of children are viewed as “opportunities rather than threats and risks”.
Marsden explains: “Pubs in the UK are changing into venues for families spending quality time together. A focus on food will go hand in hand with new ranges of soft drinks for the on-trade. Increasing numbers of adult consumers enjoying evenings with friends has led to a 21% growth in the value of a relatively new category – premium adult soft drinks, such as AmÃ©.”
Mark Hastings, a spokesman for the British Beer and Pub Association, adds: “Non-alcohol revenue currently accounts for 50% of pub sales, and soft drinks have been the biggest growth category for two years running. Though it isn’t widely appreciated yet, pubs are evolving from smoke-filled bars where old men nurse their pints of bitter. There’s no doubt soft drinks will play a crucial role in their future.”
The challenge, says Moody, is to keep sub-categories alive with exciting products, packaging design and marketing, and to engage with retailers who need to understand the importance of shifting “purchasing and drinking occasions”.
Marsden adds: “Whether you’re discussing concerns about food labelling, marketing to children or vending in schools, the future presents many sectors within the food and drink industries with tough questions. But the soft drinks sector looks uniquely able to evolve and respond.”