Red Bull has predicted that Soft Drink sales will exceed £8bn by 2020, with 97% of future growth driven by just three core sub-categories: Energy, Water and Cola.
The forecast came at the energy drink brand’s first-ever Category Summit, held recently at Anyhoe Park in Banbury. Customers from across the grocery, convenience, driving and foodservice channels were invited to a day of insights and trends to help offer solutions to propel their businesses.
Red Bull looked to the historical evolution of mature categories, as well as projections from Mintel, Canadean and Euromonitor to reach its conclusion.
With Soft Drinks continuing to grow, +6.3% (£453m) within the last six years and forecast to expand a further 6.4% to £8.1bn over the next three years, retailers and operators were advised to take learnings from the evolution of mature categories, such as Cola, to determine their optimum range. Although NPD has an important role in driving excitement into the category, a minimal 9.6% of total Soft Drink products drive 80% of category value sales. This is despite a total of 2,088 new launches in the last three years, of which just three remain in the current top 60 SKUs.
Gavin Lissimore, Head of Category Marketing at Red Bull UK, suggested: “Customers should focus on core brands and SKUs to really strengthen the category, and try not to be blinded by a dependence on NPD. Within Energy, specifically, core SKUs account for 50% of the market, with Diet and Sizes driving the growth (+60.4% and +14.7% respectively).”
To support the guidance around ranging, further sessions focused on the importance of the shopper and understanding how they think, feel and act, to help increase basket spend. Red Bull suggested that human behaviour is difficult to change, but by offering solutions to time-poor and habitual shoppers, retailers can increase their customer loyalty whilst also driving additional sales.
As well as looking at the role of the shopper and category fundamentals to range and merchandising, a key theme of the day was the use of innovation within online retailing and technology and how this impacts consumer behaviour and expectations of the ‘norm’. These sessions were proceeded by presentations from ACS Commercial Director, Paul Chamberlain on Convenience Trends, and Consumer and Shopper Behaviourist, Ken Hughes, looking at Positive Distribution.
“With a constantly changing landscape, due to technological developments and governmental policy, we have an ongoing challenge to grab shoppers’ attention and convert sales,” continued Lissimore. “Despite these challenges, Soft Drinks remains a buoyant category with consistent growth and opportunity for future expansion. This is particularly exciting for the Energy sector, which in a relatively short period, has expanded from the new kid on the block, to a driving force within total Soft Drinks.
“The first Category Summit was a great way to bring our customers together and share insight and combined learnings, from our partners and then deliver some solutions for them to take back to their business, to guarantee this category growth has a positive impact on their future too.’’