Priyanka Jethwa discovers that increasingly health-conscious consumers and the forthcoming ‘sugar tax’ are leading to a rise in sales of low- and no-sugar soft drinks.
As April draws closer, soft-drinks manufacturers are feeling further pressure to reformulate their products in a bid to avoid the so-called ‘sugar tax’. While suppliers race to change their recipes while maintaining taste and texture, wholesalers will be looking for guidance and support as changes roll out.
Craig Brown, retail sales director at wholesaler JW Filshill, says he is expecting suppliers will be making more ‘no added sugar’ and ‘zero’ products available as a result. In combination with the healthy living trend that is seeing consumers increasingly gravitate to drinks that contain less added sugar, this is leading to some wholesalers wanting to offer space on their shelves to new low- and no-sugar products.
This category guide will help you learn what to stock, what is popular, and what trends you should be aware of when it comes to low- and no-sugar soft drinks.
The booming health agenda has led to growth in drinks that are ‘natural’ and free of preservatives. Amy Burgess, trade communications manager at Coca-Cola European Partners (CCEP), says that it is important for wholesalers to offer a wide choice of products, including a range of flavours and variants, as well as pack formats to meet the growing variety of environments including retail, on-premise and on-the-go.
Earlier this year, Coca-Cola Zero Sugar launched a vanilla variant to build on the brand’s reformulation. It will be available in 1.75l bottles, 500ml PET bottles and 330ml cans, as well as an 8x330ml can multipack. “This underlines our commitment to helping consumers enjoy as wide a choice as possible, while enabling wholesalers and retailers to increase their sales by offering more options to consumers,” Burgess explains.
Grace Foods is meeting demand for no- and low-sugar drinks with its Grace Say Aloe brand, tapping into an increasingly popular category in which its range commands a 79% share. “Our drinks are made with real aloe vera pieces, and meets shopper demand for something different and unique,” says Say Aloe brand manager Nancy Sadler. “Offering beverages with refreshing, distinctive flavours drives sales. The Say Aloe range includes both reduced-sugar and zero-sugar options to offer shoppers the choice they’re seeking.”
Data from research body Mintel shows that only one in four consumers drinks plain bottled water once a week. Therefore, there is an opportunity for wholesalers, retailers and foodservice vendors to increase purchases in this category even further.
The area of soft drinks that saw the most growth in the past year was mixers,
which was up 9% by volume, according to James Logan, commercial director at Refresco UK. However, water was second with 8% growth.
To support the growth in the category, Highland Spring launched a new PET bottle in April for its individual and multipack still 330ml flat cap and sports cap SKUs, its 500ml flat cap and sports cap SKUs, and its 750ml sports cap PET SKUs.
It’s not all about plain water, though. Adrian Troy, marketing director at AG Barr, says: “Flavoured water now accounts for nearly a third of impulse water sales and is growing strongly at 4%. However, many consumers are not prepared to compromise on taste.
“Therefore, it’s no surprise that branded flavoured sparkling water is currently one of the strongest performing areas in the soft drinks market, and Rubicon Spring has delivered nearly a third of this growth.”
Rubicon Spring comes in a range of four variants, combining sparkling spring water with fruit juice, but has only 15 calories or less per bottle. Troy recommends stocking the drink in the chiller cabinet between carbonates and water, to boost sales.
Caroline Juin, marketing director at Nestlé Waters, agrees that there has been a significant focus on the role of water and hydration in maintaining a healthy lifestyle, which has helped to drive sales and grow the bottled water market.
Nestlé has added Perrier Flavours to its bottled water portfolio, in what is set to be the biggest year for the brand in more than a decade. This premium range will be available in two flavours: Green Apple and Lemon.
Functional and protein
As people’s lifestyles have evolved, demand for adult functional and protein-based drinks has also increased.
“Dairy drinks such as Nurishment, which also acts as ‘gap filler’ in a convenient format, are ideal for consumers who lead busy lifestyles, or who are simply looking for added nutrients in a convenient format,” says Nyree Chambers, head of marketing at Grace Foods UK. “As such, they represent a major profit opportunity.”
Tapping into the health trend, Nurishment includes vitamins, minerals, calcium and up to 20g of protein per pack.
Boost, meanwhile, has its own flavoured milk protein drink that is exclusively available to independents. Protein Boost comes in 310ml individual plastic bottles, and is available in Chocolate and Strawberry flavours. Each bottle contains 20g of protein, no fat and no added sugar, is gluten-free, and has less than 150 calories.
Boost will be supporting the drink with a portfolio of point-of-sale material and other marketing support, including outdoor advertising and a dedicated consumer campaign called #MyNextSteps.
Isadora Toner, brand activation manager at Nomadic, claims that as the soft-drinks category looks to reformulate, dairy drinks for adults will increase in popularity, too: “Our yoghurt and oat drinks, lassis and chais offer an array of flavour and texture profiles that are fresh and naturally better for you than traditional soft and carbonated drinks,” she says. “Exotic flavours also continue to prove popular as consumers increasingly look for craft brands and products over more mainstream offerings.”
More consumers are ‘on the go’ than ever before, with 29% of shoppers drinking soft drinks immediately after they buy them.
Trystan Farnworth, commercial director for wholesale at Britvic, says that as urban and millennial demographics have become more significant, demand has grown for more alcohol-free alternatives that still promise a premium experience: “We think that within the no- and low-sugar category specifically, premium adult soft drinks will grow in popularity,” Farnworth reveals. “We’ve matched this by launching a premium, heritage version of R White’s Lemonade that comes in three flavours.
“Also, cold/hot soft drinks such as iced coffee and tea are seeing major growth. In particular, Lipton is a lead brand for us, which also falls under the sugar levy.”
Farnworth says that the Green Tea flavour of Lipton did well in Dhamecha branches in London in trials. The company now plans to roll it out exclusively to wholesale in Spring next year.
Low-sugar options play an important role in the adult soft-drinks market. Orangina Light, for example, offers adult drinkers a fresh and fruity flavour, but with fewer calories and less sugar. Stocking fruit carbonates such as Orangina is a great way for retailers to drive trade-up from cola and encourage shoppers to spend more money in their stores.
Mark Sterratt, strategy and planning director at Lucozade Ribena Suntory, says that low-sugar juice drinks are popular with consumers, too. Sales of the company’s Ribena Light product, for example, have grown almost 32% in the past year, which equates to an additional £5m annually.
Britvic’s Farnworth advises wholesalers to manage their ranges well, as many carry too many SKUs, he believes. Offering customers a smaller, more specific range in-depot enables wholesalers to easily point them towards core products, so they can successfully alter their ranges to avoid the sugar levy and tap into the health trend.
Rich Fisher, category development manager at Red Bull, says that with health, price and taste the top-three barriers to purchase, wholesalers should ensure that 50-60% of soft-drinks space is allocated to the top-five brands, if they are to stock the most efficient range.
The growth in popularity of low-calorie soft drinks means that wholesalers also need to be encouraging retailers to talk to their customers to find out what they want, he adds.
Danone Waters UK & Ireland category manager Tashinga Garwe, meanwhile, says that to achieve the biggest possible profit, wholesalers need to ensure they are offering a range fit for every occasion and all shopper missions.
She adds: “With this in mind, wholesalers should ideally offer both small and large formats to reach those shoppers that are on the go, as well as those buying water drinks to consume at home.”