Competition for the leisure pound isn’t going to get any easier in the year ahead due to economic uncertainty and the Soft Drinks Industry Levy, Britvic says.
'Inflation has risen by 2.3% and with uncertainty over Brexit, the expectation is for tougher times, with consumers of all age groups expecting to have to cut back on higher ticket and discretionary spend visits,' Paul Graham, Britvic GB general manager said at its annual soft drinks report.
'The impact on the channel of the Soft Drinks Industry Levy, which comes into effect in 2018, remains to be seen, but ultimately, it does provide an opportunity to nudge consumers towards lower sugar options.'
Despite economic uncertainty, the GM said the soft drinks channel has remained buoyant since the referendum. Last year, the total value of UK soft drink sales was estimated to have been around the £14bn mark.
In terms of the longer term outlook, growth is forecast in segments of the channel where soft drinks are of increasing importance, i.e. foodservice and licensed, where total value is around £6.8bn, and growing.
'With one in five adults in the UK now teetotal and many consumers consciously trying to reduce their alcohol intake, soft drinks are becoming increasingly important in the foodservice and licensed channel,' Graham said.
'The good news for operators is that if they get their soft drinks offering right, tailoring it to their specific customers and focusing on creating sensational experiences for them, they can unlock the category’s true potential and reap the rewards.'
There’s potential for non-alcoholic cocktails to grow further if operators make them as visually appealing as their alcoholic counterparts
Britvic bods think eating out will remain a key leisure activity but think the pace of change will remain challenging. It is also predicting 'on-the-go' lifestyles to continue impacting the channel.
A third trend that is often discussed and was spoken about at length at the briefing was healthy living. 'Positive lifestyle choices will see the trend for moderate alcohol consumption continue, meaning operators need to stock a wider choice of soft drinks in outlet,' the report said.
'There’s potential for non-alcoholic cocktails to grow further if operators make them as visually appealing as their alcoholic counterparts and the trend for "healthy" cocktails containing superfoods will likely continue.'
Synthetic alcohol, Alcosynth, designed to mimic the positive effects of alcohol without the negative side-effects is still in its infancy and Britvic thinks it is unlikely to impact the market in the year ahead.
A massive 64% of people surveyed said they would likely order a soft drink if recommended by staff
Low and no sugar
Britvic says it has been ahead of the game when it comes to low and no sugar soft drink offerings. 'We have been leading the way in reducing the calorie and sugar content in our drinks to ensure we provide consumers with a well-balanced portfolio of great tasting drinks and breadth of choice,' Graham said.
The report stated healthier soft drinks options shouldn’t be considered a nice-to-have, they should be an essential fixture on any outlet’s drinks menu in today’s world.
In terms of the on-trade, Britvic said the onus is on staff to help customers choose their drink. 'There’s a great opportunity to drive profits through a second drink with 6 in 10 customers saying they would order a second drink if asked by a waiter,' it said. A massive 64% of people surveyed said they would likely order a soft drink if recommended by staff.
Cola is still the out and out king in food service, with £1.1bn sales value and growth of 1.3%. Flavoured carbonates are some way behind at £445m (4.9%) and water is in third at £381m (4.9%).
The above findings were announced at the media launch of Britvic’s Soft Drinks Review on Friday.