How to make money from reduced sugar soft drinks

The switch to no added sugar presents both an opportunity and a choice.

Back in September, mums and dads across the country rejoiced as Tesco took one more parental responsibility off their hands – the multiple retailer removed from its shelves the added-sugar versions of children’s juice drinks including Ribena and Capri-Sun.

A Tesco spokesperson explained the move, saying: “We want to help our customers make healthier choices and that’s why we have pledged to continue to cut sugar from the food and drink on our shelves.”

The decision is the latest development in Tesco’s health crusade. It has already said it is improving the ‘healthiness’ of its own-label range and at the end of 2014, it removed sweets and chocolates from its ­checkouts.

Despite its challenging results and negative press in the past couple of years, Tesco still stands as the UK’s biggest retailer, with 3,500 stores across the country. So while the drinks are available at other popular supermarkets for now, the fact the biggest of the supermarkets is delisting varieties of brands as well-known as these is a significant indicator of the nation’s attitude towards sugar. Wholesalers and retailers alike should consider their next moves carefully.

What in the soft drinks category currently works well for you and where do you need more support? Join our discussion in our exclusive LinkedIn group.

So what are the implications of Tesco’s decision for the rest of us? Will people start flocking to their local convenience stores for their soft-drink fix?

Convenience retailers and wholesalers now have an opportunity and a choice. If a store’s sole competition is a Tesco or Tesco Express, it could put the delisted products on outdoor point-of-sale material to entice customers inside, for example. Given how much of a footfall-driver soft drinks are, it’s certainly tempting.

Neil Heseltine, general manager for SOS Wholesale, says shoppers should be able to choose for themselves what to buy and what not to buy.

“If all the multiples stopped selling these brands then it would be good news for independents. I think with the new generation of shopper who uses at several stores, Tesco is probably shooting itself in the foot,” he says.

But retailers and wholesalers could also move to healthier choices, taking Tesco’s decision as a sign of change in consumer demand.

Retailer Serge Khunkhun, of Premier Woodcross in Wolverhampton, says that, more and more, he is seeing his younger customers buying alternative drinks.

“We tend to sell more Volvic flavoured waters to kids in the morning now, even more than energy drinks. I think that’s driven by education,” he says.

It’s not just retailers that are noticing the change in customers’ behaviour – suppliers are also adapting to changing demand: Robinsons announced last February that it will only produce drinks with no added sugar, removing 6.9bn calories from the soft drinks category, while Coca-Cola Enterprises is using Coke Zero, rather than Coca-Cola, to champion its Rugby World Cup activity.

Lucozade Ribena Suntory is also continuing to invest in its no added sugar portfolio. Ribena marketing director Hannah Norbury says: “We believe there is a significant opportunity for retailers to grow the no added sugar market through Ribena products, both in concentrate and ready to drink.”

While these moves may be good for our teeth and waistlines, they wouldn’t be done if it put profit at risk.

What’s the right choice? The answer to this dilemma can only be found in your EPoS data. But wholesalers and retailers alike need to choose: either become the last bastions of a full range of sugary drinks or gradually move with the times.

What in the soft drinks category currently works well for you and where do you need more support? Join our discussion in our exclusive LinkedIn group.


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