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Carbonated Soft Drinks - UK - June 2016

Published By :

Mintel

Published Date : Jun 2016

Category :

Soft Drinks

No. of Pages : N/A

The sugar tax is likely to have a severe impact on CSD sales in 2018, and as such is the single biggest challenge facing the industry. However, drinkers’ inclinations to switch to low-sugar versions and the strength of consumer demand for action on the sugar issue suggest that companies seen as proactive on this matter stand in good stead of shoring up their reputation among consumers.

Table of Content

Overview

What you need to know
Products covered in this Report

Executive Summary

The market
On-premise grows faster than retail 2015
Sugar tax poses a threat going forward
Figure 1: Forecast of UK sales of carbonated soft drinks, by value, 2011-21
Cola continues to dominate market but mixers see strongest growth
Sugar tax is key challenge for industry to negotiate
Companies and brands
CCE loses sales and share while PepsiCo gains from Pepsi Max growth
Figure 2: Leading brands’ shares in the UK retail carbonated soft drinks market, by value, 2015/16*
Coca-Cola reformulates and L/N/R sugar claims increase
Advertising spend approaches 2013 high
Coca-Cola most likely to be seen as worth paying more for but Shloer is the most likely to be recommended
The consumer
Usage of non-diet CSDs remains higher, but diet CSDs more likely to be drunk daily
Figure 3: Usage of non-diet and diet carbonated soft drinks, April 2016
Figure 4: Usage of non-diet and diet carbonated soft drinks, by location, April 2016
Further promotion needed to build special-occasion associations
Opportunities for both established and new players to innovate, while fortified CSDs could help to retain users
Figure 5: Carbonated soft drink product enticements, April 2016
Consumer demand for action on sugar places onus on companies but potential pitfalls ahead
Figure 6: Attitudes towards carbonated soft drinks, April 2016
A price rise would prompt more than half of sugary CSD drinkers to cut back or stop, but switching creates opportunities to maintain sales
Figure 7: Consumers’ expected response to the sugar tax, April 2016
Figure 8: How those cutting back due to the sugar tax expect to change their behaviour, April 2016
What we think

Issues and Insights

Consumer call for sugar reduction presents companies with a challenge and an opportunity
The facts
The implications
Sparkling fruit juice with added vitamins could help to retain users
The facts
The implications
New and seasonal flavours could maintain interest in the category
The facts
The implications

The Market – What You Need to Know

On-premise grows faster than retail in 2015
Further decline estimated in 2016
Sugar tax poses a threat going forward
Cola continues to dominate market but mixers see strongest growth
Sugar tax is key challenge for industry to negotiate

Market Size and Forecast

On-premise grows ahead of retail in 2015
Figure 9: Forecast of UK sales of carbonated soft drinks, by volume, 2011-21
Figure 10: Forecast of UK sales of carbonated soft drinks, by value, 2011-21
Figure 11: Forecast of UK sales of carbonated soft drinks, by value and volume, 2011-21
Sugar tax to hit sales
Figure 12: Forecast of UK retail sales of carbonated soft drinks, by volume, 2011-21
Figure 13: Forecast of UK retail sales of carbonated soft drinks, by value, 2011-21
Figure 14: Forecast of UK retail sales of carbonated soft drinks, by value and volume, 2011-21
Improved disposable incomes should boost on-premise sales
Figure 15: Forecast of UK on-premise sales of carbonated soft drinks, by volume, 2011-21
Figure 16: Forecast of UK on-premise sales of carbonated soft drinks, by value, 2011-21
Figure 17: Forecast of UK sales of carbonated soft drinks, by value and volume, 2011-21
Forecast methodology

Market Segmentation

Growth for low-sugar options buoys up cola sales
Figure 18: Retail value and volume sales of carbonated soft drinks and adult and traditional soft drinks, by segment, 2013-15
Lack of focus on low-sugar options inhibits lemonade
Spirits’ rising popularity boosts mixers

Market Drivers

Sugar tax is key challenge for the carbonated soft drinks industry
Local government urges parents to switch away from CSDs
Ageing population could inhibit category growth
Improved incomes should facilitate trading up
Summer weather plays a crucial role
Figure 19: Sunshine hours in the UK, by month, 2011-16

Key Players – What You Need to Know

CCE loses sales and share while PepsiCo gains from Pepsi Max growth
Coca-Cola reformulates and L/N/R sugar claims increase
Advertising spend approaches 2013 high
Coca-Cola most likely to be seen as worth paying more for but Shloer is the most likely to be recommended

Market Share

Mixed fortunes for Coca-Cola brands
Coca-Cola and Diet Coke falter but Coca-Cola Life continues to grow
Schweppes fails to benefit from growth in mixers
Pepsi Max benefits from sole marketing focus
Increased distribution helps San Pellegrino to grow
Figure 20: Leading brands’ sales and shares in the UK retail carbonated soft drinks and adult and traditional soft drinks market, by value and volume, 2014/15 and 2015/16
Fever-Tree reaps benefits of growth in mixers as distribution increases
Figure 21: Leading manufacturers’ sales and shares in the UK retail carbonated soft drinks and adult and traditional soft drinks market, by value and volume, 2014/15 and 2015/16

Launch Activity and Innovation

Coca-Cola reformulates and relaunches
New flavoured waters blur boundaries with CSDs
Sparkling Ice enters the UK market
AG Barr extends into flavoured water
Companies continue to focus on calories, not sugar in promoting diet drinks
Figure 22: New product launches in the UK carbonated soft drinks market, by top 20 claims, 2011-15
Premium claims are on the up
Further growth in pressés
Taking inspiration from alcoholic drinks

Advertising and Marketing Activity

Adspend approaches 2013 peak
Figure 23: Above-the-line, online display and direct mail advertising in the UK carbonated soft drinks market, by top 10 advertisers (sorted by 2015), 2012-15
Coca-Cola evokes emotions in unified campaign
Diet Coke receives largest proportion of Coca-Cola’s spend
Forging links with sports and active lifestyles
PepsiCo focuses on Pepsi Max range
Suntory targets discerning adults with Orangina relaunch
AG Barr draws on its Scottish heritage
Fever-Tree unveils first ever television advert
Nielsen Media Research coverage

Brand Research

What you need to know
Brand map
Figure 24: Attitudes towards and usage of selected drinks brands, March 2016
Key brand metrics
Figure 25: Key metrics for selected drinks brands, March 2016
Brand attitudes: Coca-Cola and Shloer seen as most worth paying more for
Figure 26: Attitudes, by drinks brand, March 2016
Brand personality: Coca-Cola is seen as the most fun
Figure 27: Brand personality – Macro image, March 2016
Shloer seen as sophisticated and stylish
Figure 28: Brand personality – Micro image, March 2016
Brand analysis
Shloer is the most recommended brand
Figure 29: User profile of Shloer, March 2016
Coca-Cola seen most widely as worth paying more for
Figure 30: User profile of Coca-Cola, March 2016
Pepsi Max seen as fun and vibrant but less associated with health than Diet Coke
Figure 31: User profile of Pepsi Max, March 2016
Diet Coke remains more popular with women than men
Figure 32: User profile of Diet Coke, March 2016
7UP seen as refreshing but also as standing still
Figure 33: User profile of 7UP, March 2016
Orangina is seen as the most pure but has lost out from lower visibility
Figure 34: User profile of Orangina, March 2016
Coca-Cola Life favoured by parents with young children
Figure 35: User profile of Coca-Cola Life, March 2016
Irn-Bru remains more popular in Scotland than elsewhere in the UK
Figure 36: User profile of Irn-Bru, March 2016

The Consumer – What You Need to Know

Usage of non-diet CSDs remains higher, but diet CSDs more likely to be drunk daily
Further promotion needed to build special-occasion associations
Opportunities for both established and new players to innovate, while fortified CSDs could help to retain users
Consumer demand for action on sugar places onus on companies but potential pitfalls ahead
A price rise would prompt more than half of sugary CSD drinkers to cut back or stop, but switching creates opportunities to maintain sales

Usage of Carbonated Soft Drinks

Carbonated soft drinks usage undiminished by sugar concerns
Figure 37: Usage of non-diet and diet carbonated soft drinks, April 2016
Youth bias in usage limits market growth potential
Rising incomes could encourage trading up
Diet CSDs more likely to be drunk daily
Figure 38: Usage frequency for non-diet and diet carbonated soft drinks, April 2016
Range of potential uses boosts at-home drinking
Scope for pubs and restaurants to expand their selection of diet CSDs
Figure 39: Usage of non-diet and diet carbonated soft drinks, by location, April 2016

Usage Occasions for Selected Types of Carbonated Soft Drinks

Majority do not see carbonated soft drinks as suitable for formal occasions
Role of CSDs in enhancing an everyday meal could be promoted further
Pressés still unfamiliar to many consumers
Smaller formats could encourage on-the-go usage
Treat aspect of pressés and sparkling juice can be mined further
Figure 40: Usage occasions for selected types of carbonated soft drinks and other sparkling drinks, April 2016
Few acknowledge flavoured sparkling water as offering hydration

Product Enticements

Opportunity for established and new players to innovate with flavours
Introductory offers and sample size packs could help to drive trial
Figure 41: Carbonated soft drink product enticements, April 2016
Carbonated soft drinks with added benefits interest a third of users
Expansion of seasonal flavours could encourage all-year-round usage

Attitudes towards Carbonated Soft Drinks

Consumer demand for action on sugar places onus on companies but multiple issues to negotiate
Figure 42: Attitudes towards carbonated soft drinks, April 2016
Brands and retailers take different approaches to reducing sugar
Plant-derived sweeteners not the ‘magic bullet’ solution
Potential for other sugar alternatives
Meal deals and strategic positioning could harness associations of glass bottles with special occasions
Stronger emphasis on fruit content could help fruit juice-based CSDs to differentiate themselves
More than half of drinkers are interested in CSDs with a charity donation

Consumers’ Expected Response to the Sugar Tax

More than half of users of sugary CSDs would stop or cut back
Figure 43: Consumers’ expected response to the sugar tax, April 2016
Reports of unchanged behaviour more common among infrequent users
Higher earners more likely to cut back
Consumer switching provides opportunities for brands to diversify
Figure 44: How those cutting back due to the sugar tax expect to change their behaviour, April 2016
Opportunities for both premium and own-label

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology

Appendix – Market Size and Forecast

Total market
Figure 45: Forecast of UK sales of carbonated soft drinks, by value, best- and worst-case, 2011-21
Figure 46: Forecast of UK sales of carbonated soft drinks, by volume, best- and worst-case, 2011-21
Retail
Figure 47: Forecast of UK retail sales of carbonated soft drinks, by value, best- and worst-case, 2011-21
Figure 48: Forecast of UK retail sales of carbonated soft drinks, by volume, best- and worst-case, 2011-21
On-premise
Figure 49: Forecast of UK on-premise sales of carbonated soft drinks, by value, best- and worst-case, 2011-21
Figure 50: Forecast of UK on-premise sales of carbonated soft drinks, by volume, best- and worst-case, 2011-21
Forecast methodology

Appendix – Advertising and Marketing Activity

Figure 51: Above-the-line, online display and direct mail advertising in the UK carbonated soft drinks market, by parent company and brand (sorted by top five advertisers in 2015), 2012-15

List of Table

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