BRITVIC SOFT DRINKS REPORT 2009
The Britvic Soft Drinks Report provides a comprehensive view of the industry in 2008. It is based on independent data and insight from leading market researcher Nielsen. This year’s report includes a review of industry issues, the take-home and on-premise channels and a selection of international markets. It also provides insights into the way consumers have been responding to the credit crunch and initial stages of the economic downturn. Go online to access the 2009 Britvic Soft Drinks Report and get even more content such as audio, image and data extracts. www.softdrinksreport.com Look for these icons below throughout this report as a guide for further content online. M 9 Audio Data
Britvic Soft Drinks Report 2009 | 01 Contents Introduction and summary 02 Intro Paul Moody, Britvic Chief Executive reviews a challenging year for the soft drinks industry. The 2008 story 04 The 2008 story Highlights of the year including sales figures, details of the industry’s marketing spend and regulatory developments. The credit crunch consumer 10 Consumer behaviour Research insights into how the credit crunch is affecting consumers’ soft drink choices, the impact of the continental discounters and the competition between brands and own label. Take-Home review 18 Take-Home review Despite fading consumer confidence, sales value increased by 1% in a year when energy and sports drinks, cola and squash fared particularly well. On-Premise review 30 On-Premise review In a challenging year, soft drinks fitted with the trend towards food and families. Although sales value was down 4%, they outperformed total alcoholic drinks. Global trends 40 Global trends A round-up of major overseas markets shows generally resilient soft drink sales despite the mounting economic crisis. And the pursuit of health and wellbeing is everywhere. Data 44 Data More detailed data on soft drinks performance in 2008 across all channels. Definitions and glossary 53
02 | Britvic Soft Drinks Report 2009 INTRODUCTION AND SUMMARY The soft drinks industry UK soft drinks sales totalled £8.4bn in 2008 across all channels, just 1% lower than the previous year’s record proved remarkably resilient in figure; soft drinks remains one of the most important categories in the take-home and on-premise sectors. 2008 despite tough trading During a year when both the weather and the economy conditions, writes Paul Moody. were against us, and the impact of regulation continued, this was quite an achievement. It acknowledges the industry’s ability to adapt and respond to change. As the economic climate continues to deteriorate, the most difficult questions to answer are: how much will consumer demand be affected, and in what way? Our analysis of consumer behaviour in 2008, as the impact of the credit crunch began, gives some clues. As you might expect, shoppers are looking to reduce their grocery bills, watching out for promotions and taking more opportunity to buy on promotion. Perhaps this is one critical key to soft drinks’ resilience: promotions are a staple part of our industry’s marketing, accounting for 61% of total branded sales. The price difference between branded products and own label alternatives is relatively narrow, and if shoppers want to trim their spend, they are showing little inclination to start with soft drinks brands they know and trust. They do appear to be planning their shopping more consciously, cutting back on both top-up visits and ‘monster shops’. But the good news for our industry is that branded soft drinks are a staple of the mid-sized shopping basket. As a result, take-home sales, which account for almost three-quarters of the UK soft drinks market, have held up well: they grew by 1% in value in 2008 despite a 2% volume decline. This growth was driven largely by glucose and stimulant (energy) drinks and sports Paul Moody drinks – both of which offer consumers unique Chief Executive, Britvic Soft Drinks functional benefits that they are willing to pay for. and President of The British Soft As economic conditions have worsened, traditional Drinks Association favourites such as cola, squash and juice drinks have benefited. Smoothies faltered significantly after several years of strong growth, as consumers were clearly not willing to pay the price premium when they could get their fruit fix elsewhere. Bottled water also suffered as the poor summer and economic climate contributed to its second year of declining sales. However, evidence from international markets similar to the UK suggests it may have more room for growth in the medium to long term. The gradual trends we noted in previous years – from carbonated to still, and from regular to diet or no-added-sugar have continued.
Britvic Soft Drinks Report 2009 | 03 The licensed trade had a more difficult year than The Take-Home Soft Drinks Market In FMCG Context Intro the grocery retailers. The economy, the continued £ % challenge of the smoking ban and a disappointing millions Change summer added up to a perfect storm of challenges, 1 Soft Drinks 6,085 1 and Euro 2008 failed to provide the hoped-for relief. 2 Total Wine 4,821 4 But the growing emphasis on food and families has 3 Total Beer 3,907 1 favoured soft drinks. They outperformed total alcoholic 4 Chocolate Confectionery 3,347 1 drinks, with sales down just 4% by value and 6% by 5 Total Spirits 2,978 7 volume at £2.3bn. Cola and lemonade remained pub 6 Total Snacks 1,879 8 staples while food and family-friendly fruit juice and 7 Yogurt 1,366 11 8 Sugar Confectionery 1,209 -1 juice drinks performed the most strongly. In contrast 9 Butter and Margarine 1,161 15 to take-home, energy drinks saw their third consecutive 10 Toilet Tissues 1,031 2 year of decline – while bottled water suffered in both channels. Source: ACNielsen Scantrack, MAT 27 Dec 2008 Our review of international trends shows a similar picture to the UK across Europe and the United States. The On-Premise Soft Drinks Market in Context While volumes may be down, value is holding up well. £ % Health and wellbeing continued to shape consumer Total Brewers millions Change behaviour in these countries and beyond, as our 1 Beer 9,968 -5 snapshot of India shows, although there are significant 2 Spirits 2,414 -3 differences in local interpretation. 3 Soft Drinks 2,31 1 -4 4 Wine 1,264 -4 Soft drinks continue to be a staple purchase on which 5 Cider 1,022 2 consumers are reluctant to compromise. And as a soft 6 FABS 318 -14 drink is a small-ticket, cash item offering affordable 7 Fortified Wine 57 -7 everyday enjoyment, they have little reason to. In the 8 Champagne and Sparkling Wine 88 4 downturn so far, it’s the big brands and traditionally 9 Perry 2 2 popular sub-categories like cola, squash and juice Source: ACNielsen Total Brewers, MAT November 2008 drinks that consumers seem particularly unwilling to do without. The Soft Drinks Market The soft drinks industry’s close understanding of % % consumer and shopper behaviour has enabled it Value and volume Change Share to continue satisfying the huge diversity of consumer T ake-Home 1.0 72.5 6,085 needs, whether for hydration, health, enjoyment, 6,877 -2.0 93 convenience, value or – particularly nowadays – On-Premise 2,31 1 -4.0 27.5 all of those at once. With another tough year in 519 -6.0 7.0 prospect, the challenge for the industry is to keep Total 8,396 -1.0 100 delivering the combination of value and quality that 7 ,396 -2.0 100 consumers expect, and to stay alert to every shift in their daily purchasing decisions. Value (£m) Volume (in litres) Source: Nielsen Scantrack, MAT 27 Dec 2008, On-Premise Audit, MAT Nov 2008 To extract the audio Q&A with Paul Moody go to: M www.softdrinksreport.com/audio09
04 | Britvic Soft Drinks Report 2009 THE 2008 STORY
Britvic Soft Drinks Report 2009 | 05 04_09 The 2008 story
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