How low can you go?

Red Bull Project Pro cans

In a miraculously short period of time the soft drinks category has been revolutionised with the vast majority of the focus from the major manufacturers shifting onto low and no sugar products. What does it mean for retailers?


Like so many legislative changes that have turned categories on their head, the Soft Drinks Industry Levy has already become something of a non-issue. Just as they have they done with so many any other categories battered by change like tobacco and alcohol, retailers have simply rolled up their sleeves and done the best job they could with the New World Order.

Let’s not forget that many observers were predicting doom and gloom in the run up to the introduction of the soft drinks tax in April last year, yet it seems to have passed with more of a whimper than a bang. The impact of the introduction of the new tax was clearly softened considerably by last summer’s spectacular weather but it appears that, to all intents and purposes, both shoppers and retailers have coped with the shift away from sugar extremely well.

Yes, the soft drinks market remains challenging, but the last year or so has been marked most obviously by a huge programme of NPD and innovation from the category leaders.

Mark Bell, Strategy and Planning Manager at Red Bull UK, comments: “In a challenging year for the soft drinks category, Red Bull remains a genuine leader. Driving brand and sales success with range extensions, new shopper recruitment and all while remaining true to the core values that have made the brand one of the most recognised and successful in UK retail.”

Overall, Red Bull is growing 15.1% in value and +8.9% in volume [IRI, April 2019], and performing solidly across all channels within the UK. “We’ve performed particularly well in the Symbols where we’ve seen 21.9% growth by value,” says Bell, citing the same data. “In 2018, a total of 6.79 billion cans of Red Bull were sold worldwide, representing an increase of 7.7% against an already very successful 2017.”

In Scotland, Red Bull enjoys a 28.8% value share, making it the number one sports and energy brand. Scotland is also the fastest growing region in the UK for the brand, up 21.4% since last year. Additionally, Red Bull Sugarfree is the leading low calorie SKU in Scotland.

And it’s in this low and no calorie space that the future undoubtedly lies for more and more shoppers and retailers.

“We kicked off 2018 with the extension of our Sugarfree range, gearing up for the Soft Drinks Industry Levy,” says Bell. “Offering choice is at the centre of the Red Bull range with the portfolio expanded to include a Sugarfree variant for every Energy Drink pack regardless of size or flavour.

“Tapping into the growing market for flavoured energy, we also added Red Bull Coconut Berry Edition in February this year. This introduction aims to remove one of the key barriers of trial in energy drinks – taste. The launch offers the energy boost of Red Bull with the flavour of coconut and is available in both Energy and Sugarfree variants (250ml), priced respectively at £1.29 and £1.25 per can.”

Bell adds: “As an active lifestyle brand, this range extension demonstrates Red Bull’s understanding of consumer needs as well as current health and category trends. Red Bull aims to inspire consumers to trial its Sugarfree formats as they seek products that support their lifestyles and deliver functional benefits. During the last 12 months Red Bull Sugarfree has gained 423,000 shoppers compared to 805,000 total extra Red Bull shoppers [Kantar, Feb 2019] – the largest gain of any Sports & Energy brand. With this in mind, it is imperative that retailers offer a low calorie alternative and dedicate a higher proportion of shelf space to these products.”

Ranging and merchandising advice

Rich Fisher, Category Development Manager at Red Bull UK, offers the following three top tips:

Space:

  • Red Bull advises retailers to stock the most effective range to drive the greatest value
  • Category space should be aligned with share of value sales to maximise sales

Focus on top five brands:

  • 50-60% of Soft Drinks space should be allocated to the top five brands
  • Ensure 60-70% of space for Sports & Energy brands, in line with share of the category

Vertical blocking:

  • Shoppers only see products within a 1.3m breadth
  • Vertical blocking helps shoppers to easily find the product they are looking for improving their ease of shop

Amy Burgess, Senior Trade Communications Manager at Coca-Cola European Partners (CCEP), agrees that consumer tastes are shifting towards choices with less sugar: “Consumers have a greater awareness of health and wellness than ever before, and this is impacting the way they shop, with 40% of convenience store shoppers rating a range of healthy products as important [HIM, 2018]. As more consumers look to make positive changes in their lifestyles to be healthier, sugar content has become a major factor in their choices and they’re continuously on the lookout for more low-sugar options in their food and drink.

“We have seen an increasing love of low and no sugar products in their own right. Diet Coke remains the most popular light cola brand in GB [Nielsen, March 2019], with a value of over £472m, while Coca-Cola zero sugar is growing significantly, currently up 53.3% in value in GB.”

Burgess also points out that the same data shows CCEP’s range of flavoured carbonates, which includes zero sugar variants, is growing at 17% by value, highlighting the popularity of brands like Fanta Zero amongst consumers.

“To make the most of this, we evolved our portfolio even further earlier this year with a new grape-flavoured addition to our Fanta Zero range, Fanta Grape Zero,” she says.

“Within energy, our zero-sugar Monster Energy Ultra range has seen a huge growth of over £15m in convenience in the last year [Nielsen, Aug 2018], highlighting consumer demand. To give consumers more choice we introduced a new flavour variant earlier this year, Monster Ultra Blue; with its citrus and berry flavour and zero-sugar credentials it is designed to appeal to millennials looking for a sugar-free energy kick that tastes great.”

Burgess highlights how premium and artisan options are also helping to drive the growth of low and no sugar soft drinks, with products like Appletiser proving popular whether being enjoyed on their own, or as an ingredient for cocktail or mocktail making at home: “As well as delivering on taste and refreshment, Appletiser helps retailers offer a sophisticated alternative to alcohol that the growing number of teetotal consumers are happy to drink while others may be having beer, wine or cocktails.”

But while it’s important to ensure you have a wide range of low and zero sugar products in stock, Burgess urges retailers not to reduce space given to current best sellers. “Coca-Cola original taste remains the most loved and consumed cola in GB, showing that consumers still want choice when it comes to soft drinks.”

She also advises siting lower and zero sugar soft drinks next to the original variants and removing slower selling lines to make space for new lower and zero sugar variants such as Coca-Cola zero sugar Raspberry and Diet Coke Twisted Strawberry.

“Shoppers’ spending on zero and low-sugar drinks has increased by 33% and 29% respectively, showing just how important this segment of the market is,” says Matt Gouldsmith – Channel Director, Wholesale at Lucozade Ribena Suntory (LRS). “This is mirrored at the other end of the market with a decline in high-sugar drinks (with over 8g sugar per 100ml), which were down by 8% in the months following the sugar levy. These patterns of behaviour illustrate the relevance of our range to today’s consumer as they increasingly make healthier choices.

“Our category-leading reformulations mean Lucozade Energy and Ribena now contain less sugar, and our core brands are also available in very low or zero-sugar alternatives in the form of Lucozade Zero, Lucozade Sport Low Cal and Ribena Light to offer consumers a full range of choice. We advise retailers to take advantage of this range and to stock up on the various SKUs to capitalise on the ongoing health trend. Having the right range available to shoppers will drive sales from those looking for healthier soft drink options.”

Lucozade Zero, for example, is growing by 14% and Ribena Light is in growth of almost 8% in the symbols and independents channel highlighting its popularity with convenience shoppers.

The recent launch of Ribena Frusion will help retailers take advantage of the trend towards healthier choices even further. The brand’s latest innovation sees Ribena move into the enhanced and flavoured water category for the first time. Ribena Frusion is unique in the soft drink category as it uses blackcurrant water that has been naturally infused with real fruit, offering shoppers great-tasting hydration on the move.

Ribena has recently unveiled a £6.2m campaign to tap into the enjoyable wellness credentials of the brand and its heritage as the master crafter of blackcurrants. Launched with a brand-new TV advert, the Blackcurrant Artistry campaign playfully tells the story of the craft behind Ribena. It increases relevance of the brand, including Ribena Frusion, with shoppers of all ages across TV, video-on-demand, YouTube, out-of-home, social media, sampling and digital advertising channels.

Meanwhile, Barr Soft Drinks has also been doing its bit to help retailers satisfy changing shopper needs. Adrian Troy, Marketing Director, says: “The way people live is changing and health is becoming more important to them, with 75% of shoppers saying that they are trying to live a healthy lifestyle and 85% actively trying to improve their diet. [IGD, 2018]. Our research has highlighted that many carbonates shoppers in particular are looking to reduce their sugar and calorie intake, so it’s crucial that the convenience channel reacts accordingly to cater for shopper needs and maximise sales.”

Low calorie carbonates in Scotland are currently growing at +18%, faster than regular carbonates at +10%. This growth in low calorie is being delivered across all of the sub-categories – Cola +15%, Flavoured Carbs +15% and Energy +22%. [IRI, Apr 2019].

Barr Soft Drinks mid, low and no-sugar carbonates offer now includes: Irn-Bru sugar free and Xtra variants, the Barr Family with 14 variants which are all low or zero sugar, Barr Cola zero sugar Xtra variant and Rockstar with all variants now now sugar levy free.

Barr Soft Drinks is urging outlets to review their soft drinks in line with shopper trends for healthier lifestyles, to make the most of this significant profit opportunity.