Sports & Energy remains a hugely important category in local retailing and a category that is still in growth despite its huge scale – so making sure you have the right range for today’s consumers is key to optimising sales and profits.
The size of the market
Despite many years of growth and having long ago evolved into a fully-fledged category in its own right, Sports & Energy shows no signs of losing momentum any time soon. In fact, the category grew by 5.6% in value and 5.8% in volume in the year to Jan 20, 2018 [IRI].
Energy is the biggest-selling soft drink segment within the category for independents with over £400m worth of sales in the channel [IRI, Jul 2018]. In Scotland, Energy is worth £135m [IRI, Jan 2018]. In other words, Sports & Energy should be a priority for all Scottish local retailers.
The brand which arguably launched the category – Red Bull – is also in the middle of something of a purple patch, growing faster than the category in terms of both volume and value. Its landmark moment arrived last year when Red Bull Energy 250ml was established as the number one UK single serve soft drink, surpassing Coca Cola Original 500ml.
Mark Bell, Strategy and Planning Manager at Red Bull UK, said: “Red Bull has exceeded the category growth as it up 8.4% in value and 12% in volume [IRI, Apr 2018], performing well across all channels within the UK, particularly in Symbols where it us up 7.0% by value [IRI, Jan 2018].
“As the number one single serve soft drink, worth £137.5m and growing at 2.7% [IRI, Jan 2018], Red Bull Energy 250ml is a must stock for retailers planning their energy drinks offering.”
Scott Meredith, UK Sales Director at Lucozade Ribena Suntory (LRS) also highlights the key role that the Lucozade brand plays in Scotland. He says: “As one of the leading brands, Lucozade Energy is a must-stock for Scottish retailers. In fact, an average store makes more than £2,000 a year from Lucozade Energy [IRI, Dec 2017].
“Additionally, Sports drinks are an important segment for retailers. Lucozade Sport is the best-selling brand in the segment and can generate over £1,000 a year, per store [IRI, Nov 2017].
The latest consumer trends
The most important current trend in Sports & Energy, as it is in Soft Drinks as a whole, is the growth of low- and no-sugar products.
This existing trend has been accelerated by the Soft Drinks Industry Levy which is steering more and more shoppers to low kcal products. The key lesson for retailers here is to ensure that this trend is reflected within their chillers.
Red Bull’s Bell comments: “Consumers are swaying more towards sugarfree options so it is imperative that retailers offer a low kcal alternative – meaning that a higher proportion of space is being dedicated to low kcal products. Diet is worth £144m, which equates to 11.3% of the Sports & Energy category, increasing by 1.7% from last year [IRI, Jan 2018]. Growing at 7.1% to £31.9m, Red Bull Sugarfree 250ml is the number one low kcal Sports & Energy drink.”
Barr Soft Drinks has also recognised the trend and has duly shifted some of its energy focus onto the sugarfree market. Adrian Troy, Marketing Director at Barr Soft Drinks, explains: “Sugar is an important component of energy delivery for the majority of consumers in the market, but a growing number of consumers are looking for a lower calorie or even sugar free option. The Scottish low calorie big can energy market is currently worth over £16m and growing at 26% [IRI, Nov 2017]. It is estimated to continue to grow significantly over the next five years.
“Barr Soft Drinks has accelerated demand for Rockstar with the launch of its latest category-boosting range, Rockstar Revolt, with sales of over £4m since it was launched in 2016. [IRI, Jan 2018].
LRS’s Meredith points out that the company stayed ahead of the curve by reformulating its range to ensure its key products were not affected by the Soft Drinks Levy. He says: “Our category-leading reformulation means that all our Lucozade, Ribena and Orangina drinks are not subject to the legislation. While some big-selling soft drinks have increased in price, our consumers won’t see changes to our brands as a result of the levy, and retailers can continue to offer our great-tasting drinks at great value for money prices.”
Meredith also advises retailers to keep a close eye on the related Functional Water category. He comments: “We launched Lucozade Sport Fitwater last year to help retailers grow their sales with a new functional water. This allows retailers to profit from the health and fitness trend and target consumers before or after exercise.”
As the UK’s number one low kcal functional energy brand, Red Bull announced the extension of its Sugarfree range earlier this year. Bell explains: “Whether it’s the UK’s bestselling single serve soft drink [IRI, Apr 2018] Red Bull Energy Drink 250ml can – which remains the bestseller – or a Red Bull Edition, shoppers can reach for any Red Bull drink and expect to see the sugarfree option sitting right beside it.”
In its commitment to become more relevant with current health and category trends, and drive market growth, Red Bull extended its portfolio with the addition of the first Red Bull Sugarfree 473ml can (PMP and plain), and the completion of its Red Bull Sugarfree 355ml offer with a PMP pack. The brand has also revisited its Editions range, adding Tropical and Orange variants as 250ml can sugarfree options (PMP and plain).
LRS has unveiled its latest innovation in the form of ‘Larazade’, as part of a deal with the game release of Shadow of the Tomb Raider, which features the iconic Lara Croft. The classic Lucozade Energy Orange and Original flavours have been transformed into Larazade for a limited time only.
“We wouldn’t change our name for just anyone – but following the huge success ahead with the Tomb Raider film partnership earlier this year and the anticipation for Shadow of the Tomb Raider, we knew it was time for Lucozade to become Larazade!” says Meredith. “We’re also launching a limited-edition new flavour Larazade Croft Apple which is available to independent retailers via wholesale now.”
Barr Soft Drinks is accelerating demand for the UK’s top selling big can flavoured energy brand [IRI, Jan 2018] with its new range of Rockstar First Start products. The range comprises two flavours – Mixed Berries and Orange Clementine – and is aimed at morning consumption occasions which are currently an untapped area for the energy drinks market.
The products – which contain no added sugar – offer a combination of fruit juice (5%) and caffeine from natural sources and less than 30 calories per can.
“We’ve identified a significant growth opportunity for energy drinks as part of the morning routine. There is also an opportunity to broaden the usage in the market beyond the young adult male base, to bring in both older consumers and female shoppers,” says Troy.
“Rockstar First Start meets these needs, delivering that sought-after energy boost in a great-tasting low-calorie soft drink. With low calorie variants driving growth three times faster than regular variants, we are confident that this new addition will drive incremental sales.”
With big can formats growing at 13% [IRI, Jan 2018], Rockstar is currently the largest big can flavoured energy drink in the Scottish convenience market. The top two flavoured big cans are Rockstar variants – Xdurance (No.1) and Punched Guava (No.2) [IRI, Nov 2017] – and its 11-strong range is the biggest in the energy drinks category.
The long-established Purdey’s brand has enjoyed a hugely successful rejuvenation recently as more and more health conscious shoppers buy into the brand.
Trystan Farnworth, Commercial Director, Convenience & Impulse at Britvic, says: “Last year, Purdey’s celebrated being the fastest-growing energy brand [Nielsen, Dec 2017], driving value into the category. Purdey’s also launched its 250ml can format in October. The sleek, modern can, which was launched with a £3m above- and below-the-line brand campaign, targets health-conscious consumers on-the-go, particularly those looking for an energy boost, without the high caffeine and added sugar levels.”
The Purdey’s range includes Purdey’s Rejuvenate and Purdey’s Edge variants, both of which are available in the new 250ml can format, as well as the original 330ml glass bottle format.
Farnworth says: “Consumers are increasingly avoiding high sugar and processed foods, traditionally found in soft and energy drinks. Due to this, there has been a 3.2% decrease in value sales of traditional full sugar energy drinks but a +33% rise in performance for energy drinks [Nielsen, Dec 2017] like Purdey’s. As a result of this increased demand, Purdey’s leads the way in the healthier energy drinks category, with 30.6% penetration growth last year alone [Kantar, Dec 2017].
“Consumers needing a pick-me-up have for a long time favoured the quick-fix high-energy solution. However, lately we’ve seen them increasingly reject the many existing products in the category because they are dissatisfied with a short-term boost followed by a ‘crash’ in energy.
“People are also increasingly worried about the long-term health impact of their choice of drinks, with six out of 10 believing energy drinks are bad for their health [Canadean, 2016]. Purdey’s offers a soft drink that tastes great and appeals to health-conscious consumers looking for an energy boost from vitamins as opposed to added sugar or taurine; making it a healthier alternative to the established energy drinks brands on offer.
“With its juice content, added vitamins and botanical extracts, Purdey’s is free from caffeine, artificial colours, flavourings, sweeteners & preservatives. With no added sugar, it is also exempt from the Sugar Levy.”