Britvic’s latest annual Soft Drinks Review reveals opportunities for the convenience channel to grow soft drinks sales by appealing to shoppers at both ends of the value spectrum in the wake of the pandemic.
The 2022 report found that consumers on average are £1,200 worse off this year compared to 2021, with one in five being financially squeezed due to factors such as rising inflation and energy costs. However, the easing of Covid-19 restrictions means overall consumer spend is expected to be noticeably higher in 2022 compared to the previous two years, with one in five consumers claiming they are better off financially following the pandemic.
Britvic believes this polarisation in personal finances presents new opportunities for convenience and independent retailers to maximise customer spend from soft drinks that cater to ‘premium’, ‘value’ and ‘treat’ shopping occasions.
Maximising Sales From Soft Drinks ‘Premiumisation’
With consumers looking for new ways to treat themselves during the lockdowns, the soft drinks category saw a move towards premiumisation, with a 6% price per litre growth in 2021. This was primarily driven by the resurgence of on-the-go drinks and the accelerated growth of the energy drinks segment – two trends that are predicted to continue throughout 2022.
After suffering an 11% decline in 2020, IRI data used for the report shows that on-the-go soft drinks bounced back with a 19% uplift last year as lockdown restrictions lifted and more people returned to pre-pandemic shopping habits. On-the-go soft drinks also fuelled the growth in the wider soft drinks category over the last year (+23%) and at a premium to take home drinks (+235%).
At the same time, energy became the fastest growing and biggest category in convenience, with sales growing 21% and increasing in value by £116m as shopper demand for ‘pick-me-ups’ increased during the pandemic.
Chris Newman, head of category management for convenience and impulse at Britvic, commented: “Stimulants energy was one of the real winners in 2021. This category also represents a strong trade-up opportunity for the convenience channel, with approximately two times higher average price per litre than the soft drinks average.
“We’re also seeing an evolution of immediate consumption missions and purchasing behaviours, opening up new opportunities to convert more shoppers into soft drinks buyers. Therefore, it’s vital that retailers stay on top of these trends by updating their soft drinks ranges and merchandising to cater for different need states and missions, such as on the go or food to go occasions, or top-up shops. Innovation also plays a key role, driving additional sales across occasions, particularly when it comes from big-name brands such as our Tango Berry Peachy Sugar Free, available in both on the go and take-home formats to maximise opportunities.”
Value Scrutiny On The Rise
At the other end of the scale, Britvic highlighted that larger numbers of consumers are feeling the pinch from rising living costs and inflation, and are looking to rein in their spend and make their money go further. IRI data shows that a total of 43.9% of sales in the convenience market now come from price marked packs (PMPs) – an increase from 38.1% in 2019 – as more shoppers seek out price reassurance and value for money options. Pressured shoppers are also expected to move toward smaller transactions and smaller pack sizes in a bid to make their money stretch further.
Newman said: “Convenience retailers must be alert to the budget pressures of these customers and adapt their soft drinks ranges accordingly to offer more value-friendly options. Retailers can meet these shopper needs by stocking market-leading brands in added-value pack formats. Pepsi MAX six-pack PMP, for example, will help give these shoppers an easier way to buy into the soft drinks category.
“We’re also seeing a ‘lipstick effect’ where shoppers are switching from expensive purchases to treating themselves with small indulgences. This presents opportunities for retailers to take advantage of shoppers on a treating mission, which are increasing by 9% on a total basis. Much of this growth is being driven by families, who on average spend 8% more, visit 4% more often, and spend 2% longer in store while on a treat mission compared to a typical convenience shopper.”
Health And New Flavours Top Category Drivers In 2021
Functional wellness, flavoured colas and carbonates, and ‘energy-giving’ drinks were some of the key growth areas in soft drinks in 2021, with growing numbers of shoppers looking for healthier options while also seeking out eye-catching new products. Stimulants continued its strong performance from 2020 to overtake cola as the number one soft drinks segment in the convenience sector. Stimulant brands are taking advantage of this opportunity by providing more choice and flavours to consumers.
Carbonates performed strongly, with cola sales up 4% and adding £23m in value to convenience stores. Sales through stores last year were largely driven by both sugar-free cola (+7%) and regular cola (+6%), demonstrating that shoppers in the channel value a choice of options for different occasions.
After taking advantage of the rise in in-home consumption during lockdowns in 2020, squash sales fell 19% as more people turned away from the tap.
Steps To Soft Drinks Success
Within the Soft Drinks Review, Britvic identifies three steps to soft drinks success:
- Capitalise on the booming health and wellness trend – Impulse stores can unlock a £33m opportunity by growing the value share of the functional wellness sector in convenience to the same size as that of grocery multiples.
- Preparing for HFSS – Soft drinks are the number one impulse category ranked on value and currently 77.3% of spend in the category is on HFSS compliant products. Retailers can minimise HFSS risk through ranging compliant products.
- Win in delivery and online – A total of 22% of delivery orders now contain a soft drink, yet only 17% of shoppers buy a soft drink for a meal occasion when delivered from a convenience store. Get the range right and ensure the bestselling brands and packs are featured in your delivery and online orders.
Download the Britvic Convenience & Impulse Soft Drinks Review
NAM Implications:
- NB. ‘consumers on average are £1,200 worse off this year compared to 2021’
- Think of this as ‘after-tax’ money!
- And no way feels like 5.9% ‘official’ inflation…
- ‘One in five consumers claiming they are better off financially following the pandemic’
- Meaning they have been able to spend less because of Lockdown restrictions
- i.e. they have some money accumulated, but possibly see it as a cushion against extra costs and job/earnings uncertainty?
- That said, there are obviously sales opportunities in the post-Lockdown sales category…
- …and this Britvic report provides useful guidelines.
