Low sugar keeps carbs market bubbling over

Carbonated drinks: glaceau smartwater

From cola to water, value to premium, and everything in between, the carbonated drinks sector continues to perform and it’s all about low or no sugar these days.

by Iain Hoey

Most local retailers in Scotland won’t need to be reminded that the country’s £830m soft drinks category [IRI Jan 2017] continues to be one of the most profitable in the business. But while the versatility and diversity of the category is one of its key strengths, there’s zero doubt about where the major manufacturers see the future of the category: zero or low sugar.

Carbonated drinks will be among the hardest hit following the sugar tax, and manufacturers have already made big progress with NPD and reformulations to meet evolving consumer tastes, but retailers need to be on board too if they are the continue to get the best out of a vital category.

“For retailers, offering a wide choice of different products, including a range of flavours and variants, as well as pack formats, is the key to making the most of soft drinks sales,” says Amy Burgess, Trade Communications Manager at Coca-Cola European Partners (CCEP).

“Especially important is keeping a wide selection of low or zero sugar drinks, and retailers should constantly review their soft drinks range as manufacturers innovate new lighter options to meet rising consumer demand for healthier options.”

Burgess also confirms that CCEP’s future strategy will be focused on innovation in the lower or zero calorie end of the market, following the huge relaunch of Coca-Cola Zero Sugar last year.

AG Barr seems to be in agreement, with Adrian Troy, Marketing Director, stating his belief that the industry should be “encouraging retailers to ensure that their soft drinks range includes a wide variety of low and zero sugar variants to cater for the needs of all Scottish shoppers”.

The trick with carbonated drinks, says Troy, is providing consumers with low and zero calorie alternatives but still retaining the full-flavour provided by their sugary counterparts. Barr’s response to this challenge was the launch around a year ago of Irn-Bru Xtra.

CCEP’s response was the launch of Coca-Cola Zero Sugar last summer, which “followed years of research and development to get the recipe even closer to the 130-year-old original to encourage more Coca-Cola Classic drinkers to give it a try”.

Burgess quotes data showing that this new sugar-free segment is actually driving incremental growth rather than just swapping consumers between categories.

“The launch of the [Zero] variant has attracted entirely new consumers to the cola sector,” she says. Since the launch of Coca-Cola Zero Sugar in July, 60% of its volume growth has been incremental to the Cola segment and 77% incremental to the Coke portfolio [Kantar, Oct 2016].

The launch of Coca-Cola Zero Sugar was supported by a £14.5m campaign followed by a £10m marketing investment to support the Share a Coke campaign, including sampling. CCEP is clearly taking the zero sugar issue seriously.

The company has also launched a new vanilla variant of Coca-Cola Zero Sugar and a reformulation of the popular Coke Zero Cherry variant will also launch later this summer with a new and improved Coca-Cola Zero Sugar taste.

Trystan Farnworth, Commercial Director, Convenience & Impulse at Britvic, is also on message: “The company has taken bold steps to help consumers make healthy choices through reformulating its drinks without compromising taste or quality.” One of the company’s most significant launches has been Pepsi Max Ginger, the first cola and ginger flavour to hit the UK market, designed to “appeal to health-conscious consumers who don’t want to sacrifice on taste but are looking to limit their sugar intake”.

But it’s not just colas and flavoured carbonates getting the ‘low or no’ treatment. The huge energy category is also very rapidly migrating towards zero sugar with key brands like Monster, Rockstar and Red Bull all offering an increasing number of sugar-reduced options.

It’s a similar story for flavoured carbonated water: a small but significant part of the market is being affected with low and no sugar options rapidly replacing full sugar variants.

The likelihood is that the majority of carbonated drinks NPD from most major manufacturers going forward will probably incorporate a calorie reduction or elimination element.

Having said all of that, Coca-Cola Classic remains the biggest-selling brand in the soft drinks category [Nielsen Mar 2017] so it’s not time yet to throw the baby out with the bath water. The trick here will be to keep a constant eye on your fixture and run your Epos data regularly to ensure that the range you have on display reflects your customers’ preferences.

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