Brits are trying to be fitter and healthier this year and the sports and energy drinks category is going to play a big part in that. This guide identifies the best ways to profit from the category.
January’s healthy living vibes, which potentially will lead to ongoing fitness and sporting regimes for some Brits, and a recent cold snap that has led to an outbreak of colds in offices across the UK mean sports and energy drinks have an important role to play in wholesalers’ and retailers’ soft drinks ranges.
Whether it is the bottle of sports drink that the five-a-side footballer grabs from the shop on the way to the pitch, or the energy drink the groggy commuter sips on the delayed train, perhaps with packs of tissues and throat lozenges close to hand, wholesalers need to know which products to include in their sports and energy drinks range to boost sales and up profits.
Rich Fisher, category development manager at Red Bull UK, says: “As a key footfall-driver for retailers, soft drinks are hugely important to the wholesale channel, especially energy drinks. Red Bull is a must-stock for convenience stores, and consequently, it is an important category for wholesalers, too.”
For Mark Sterratt, commercial marketing director at Lucozade Ribena Suntory, one of the chief focuses for wholesalers should be giving additional space on-shelf to bestsellers, in an effort to “make these products unmissable, to avoid missed sales and out-of-stocks”.
He says: “Typically, within the convenience channel, there are five products that represent the top 20% of category value. It is imperative for the category’s strength that these five products are therefore placed in stand-out positions in-depot and in-store.
“The best-selling products are Coca Cola 500ml, Diet Coke 500ml, Lucozade Energy Orange 500ml, Red Bull Original 250ml, and Monster Energy Original 500ml. Wholesalers can support their customers by educating them and encouraging them to stock these best-sellers.”
Red Bull’s Fisher echoes this advice. “Wholesalers are already ahead – convenience is the shopping channel of choice, and is forecast to perform ahead of the market this year,” he says. “Having greater freedom with their range is important for wholesalers, to ensure that they focus on the core items. Wholesalers can also educate retailers about the importance of keeping a tight range that will drive their sales and their physical cash profit.”
In with the new
Nevertheless, new products and ‘better for you’ items have a part to play, especially for consumers who are using their weekly run-out on the sports court to burn calories: low and no-sugar products are growing ahead of the wider category, up by 1.2%.
Lucozade Zero launched in May last year, and has already generated more than £19m of value sales. Lucozade Ribena Suntory is capitalising on the popularity of this product by launching Lucozade Zero in Original flavour, which will be available in 380ml pricemarked packs (PMPs) and 500ml and 1l bottles from this month. On top of that, Lucozade Energy will get two new flavours: Blackcurrant Burst and Pineapple Punch. These will be available exclusively to wholesale and on offer in 380ml PMPs from April.
Adrian Troy, marketing director for AG Barr, says: “Sugar is an important component of energy delivery for most consumers, but a growing number are looking for a lower-calorie or even sugar-free option. The low-calorie energy market is worth £31m and is estimated to grow to £200m over the next five years.
“Rockstar Pure Zero was launched to meet this need, fulfilling the demand for a low-calorie option and a great-tasting flavoured energy drink. It is important that wholesalers and retailers cater for this need and opportunity by offering choice to their shoppers.”
In the past year, small-sided football operators Powerleague and Goals both reported boosted revenues. There has also been a proliferation of gyms across the UK. It is no surprise, therefore, that half of shoppers say it is important to stock healthy options.
Revenues at low-cost gyms in the UK, meanwhile, have risen at a 62% compound annual growth rate since 2011, compared with an average 1.3% growth rate for other public and private gym operators, analyst Numis notes, suggesting the value market is important.
This is good news for Boost, as January saw the national rollout of Protein Boost. Boost MD Simon Gray says: “This signifies the importance of the independent brand’s diversification into an exciting new category that is growing at 26% year on year. The initiative comes in response to increasing consumer demand for health and wellbeing products, and provides a protein drink brand focused on the independent convenience channel.
“We have invested in new product development in particular, enabling independent retailers to offer their consumers competitively priced, unique energy drinks that also yield great margins.
“Following consistent investment and solid, steady expansion, we now provide a fantastic range across sports and energy drinks – stimulation energy and sports/isotonic.”
Size matters
What else attracts shoppers and so needs to be noted by wholesalers to ensure they get their range right?
Red Bull’s Fisher insists that size matters. He says: “As the leading driver of energy growth, size is the perfect choice, with benefits for the shopper, category and the retailer. Red Bull Original is available in 250ml, 355ml and 473ml.
“For the shopper, size creates loyalty – Red Bull consumers know what they like and stick to it. For example, Red Bull Original 250ml has a broad target group of 18-35-year-old professionals, Red Bull Original 355ml has an older, largely male consumer aged 25 to 35, and Red Bull Original 473ml has a younger, less affluent, predominantly male shopper. By delivering a range, retailers can attract different shoppers.
“In terms of the category, product size is the first or second most important decision for a consumer, behind which brand to choose. Both size and diet are driving the category.”
AG Barr’s Troy, adds: “Worth £1.2bn, the energy category is one of the biggest categories in soft drinks, making it hugely important for wholesalers and retailers.
“Within this, big-can formats are driving this growth at 4%, with 55% of big-can sales now coming from flavours. Rockstar is currently the largest big-can flavoured energy drink in the UK convenience market, delivering more than half of flavoured sales. Rockstar’s wide range of 11 flavours is the biggest in the energy drinks category and is a key reason shoppers and consumers choose Rockstar, as it does not define how an energy drink should taste.”
What’s your flavour?
Orange is the number-one soft drinks flavour in the UK, and accounts for more than 40% of flavoured drinks sold in the sports and energy category. Red Bull says its Orange Edition offers significant stand-out on shelf, helping deliver increased sales for the brand, the category and wholesalers.
Fisher says: “Clearly, taste and refreshment are always going to be key drivers in the soft drinks market. Busier lifestyles and increasingly time-poor consumers mean, however, that shoppers continue to seek added value where possible.
“As the number one sub-category in independents, symbols and forecourts, the sports and energy sector has continued to drive growth. Functional products that help us get through the day are becoming ever more popular. This is reflected across the soft drinks category and this trend is set to continue, with the category expected to grow 8.2% to £1.38bn by 2020.”
Disruptive elements
Lucozade’s Sterratt notes that retailers normally shop from a list when they are in-depot. Thus, encouraging incremental sales is a “significant challenge” for wholesalers. He says: “To gain a boost in profits, the retail journey must be disrupted with unexpected theatre and in-store branded events.”
Boost, meanwhile, is putting in the work to help its wholesale customers. Gray says: “In 2017, we are keen to build on the momentum and success achieved to date, and to take the brand to the next level. Our ‘Champion of the Independents’ commitment will remain at the core of the business, while we will also invest significantly in extending our distribution geographically – nationally and internationally.
“There will also be a greatly upweighted consumer marketing programme under the ‘Release the Boost’ campaign. In addition, we will be undertaking a programme of trade days at wholesalers.”
