The functional wellness drinks segment is presenting the convenience channel with a £27m opportunity this year, equating to an additional £812 per store, according to the latest Britvic Soft Drinks Review of the sector. At a time when the pandemic has shone a light on health and wellness for many, 37% of people surveyed for the study said they now positively interested in premium soft drinks with added benefits.
Owing to changing shopper behaviour during the pandemic, categories traditionally associated with food-to-go were heavily impacted – but a focus on wellness as restrictions continue to ease is expected to help retailers regain sales in this area of soft drinks. While overall the category experienced value and volume declines in total convenience last year, take home, larger format soft drinks were one of the channel’s outstanding performers. Reaching a third of soft drinks sales and growing 19% (+£117.9m), the performance cements 2020 as a year of two halves for the category.
While healthier alternatives such as low and no-sugar options have been gaining ground for some time, the pandemic has shone a light on health and wellness for many. 64% of consumers were found to be prioritising health and seeking to integrate wellbeing into nearly all aspects of their lives, including food and drink.
Phil Sanders, Out-of-Home Commercial Director at Britvic commented: “After the challenges retailers have faced in the past year, we’re dedicated to supporting our customers as they navigate changing shopper needs, and that includes looking ahead and making them aware of growing soft drink trends. The functional wellness market is currently worth an impressive £240.1m, and what’s more, shoppers are willing to pay more than double the average price for premium soft drinks with added benefits than a soft drink or 34% more than the average single-serve, which is already priced at a premium.
“It’s vital that retailers are adapting their ranges accordingly to take advantage of this shift in consumer demand.”
Meanwhile, the Britvic report examines how the pandemic has impacted shopping habits as millions switched to working from home. This created a change in dynamic for shopper missions, with planned top-up shops becoming more important at the expense of on-the-go food and drink.
Sanders continued: “As supermarkets and online adapted to increased demand in the first lockdown, discounters and local convenience stores all benefited. Shopping habits shifted sharply from little and often, to less frequent, bigger baskets, with planned top-up missions growing in importance from 18% in 2019, to 24% by October 2020 – indicating consistency of new shopper habits even after the initial period of lockdown. Good news for retailers who have adapted their stores and offerings to cater to the needs of local communities.”
The top-up mission accelerated its position as the number one reason to visit a convenience store and the share of planned top-ups grew. Unsurprisingly, as the pandemic set in, out-of-home soft drinks declined as fewer shoppers (-23%) bought less often (-12%).
Britvic highlights that three key soft drink needs emerged last year, with ‘energy boost’, ‘in-home refreshment and socialising’ and ‘a new stance of hydration’ heavily impacting category winners. The top five soft drink segments remained as cola, stimulants, fruit carbs, plain water and juice drinks – the former three added £80.3m growth alone – but stimulants were the star contributor by far.
Sanders commented: “As they adjusted to the ‘new normal’, consumers sought ‘pick me ups’ and stimulants, the leading soft drinks category in convenience were well placed to benefit. As the channel’s biggest success story, stimulants grew in both take home and on-the-go, bucking the single-serve trend and adding £57.2m in value. Outgrowing all other soft drinks combined, the segment attracted shoppers to buy more volume per trip at a higher price, performing especially well in symbols and forecourts.”
Carbonates and mixers also outperformed soft drinks overall, playing a key role in refreshment and socialising at home. Cola was the largest contributor to carbonates’ growth in convenience, adding £20.5m to channel sales. Traditional mixers were convenience’s fastest-growing category, up 47.8%, followed by lemonade (+26%). Squash was also a popular in-home drink, accelerating 21.1% (+£8.2m).
Plain water and flavoured hydration – such as juice drinks, ice tea and water plus – had a more difficult 2020, traditionally strong in on-the-go formats and transient channels and locations like high street and travel, both hit hard by the pandemic.
Within the Soft Drinks Review for Convenience & Impulse, Britvic outlines three steps retailers should take to drive success in soft drinks:
- Protect loyalty in take home – Take home soft drinks shoppers are hugely valuable to convenience versus an average shopper, spending £894 a year versus £446 on average, with spend growing by £58 in 2020. Retailers must work to retain long term loyalty, offering good value versus competitor channels on these formats.
- Recover and reset food to go sales – with soft drinks as the leading category bought on food to go missions, it is well placed to support retailers recover and reset sales by having the right range to meet new consumer needs.
- Hero functional wellness to drive more value per drink – provide a range of great tasting drinks for consumers to manage their health, whether that be sugar-free, low calorie or natural options, or through functional wellness drinks with added benefits that offer a chance for retailers to drive up the cost per drink.
Britvic has also published Soft Drinks Reviews for the Foodservice and Licensed sectors.
