Soft drinks in cans
Few would argue that the most significant challenge facing the soft drinks sector is the economy. For every positive headline about the welfare of the global economy there is a negative one; this has an impact on consumer spending, which in turn impacts impulse
purchases and the consumer value perception. What one consumer now deems ‘too premium’ to include in the weekly shop, another may consider a ‘must-have’ or ‘status’ purchase. The fact remains that for many soft drinks producers, packaging manufacturers and ingredients
suppliers, sales are being adversely affected by the
ongoing economic crisis.
The global soft drinks sector is a tough cookie, though, and market research company Canadean predicts a similar rate of increase (around four per cent) in 2013, as we saw last year. Euromonitor research confirms this four per cent rule: in 2011, global soft drinks sales reached 609 billion litres, up by four per cent on 2010.
“Clearly, it’s hard to ignore the current economic climate and this has had a large impact on the retail environment and brands themselves,” confirms marketing director Jon Evans at Purity Soft Drinks. “With an increase in switching between retailers and brands, promotions have become a key weapon in the battle for market share. One thing is certain, consumers have become very savvy in seeking out good value for money.”
Inevitably, there will be winners and losers this year and price will continue to be a major factor, but it’s also vital to stay on top of consumer trends and understand where the opportunities lie. In line with recent history, growth will be spurred by developing markets, where soft drinks are gaining ground faster than in saturated, highly competitive marketplaces such as the UK and US. However, soft drinks are, comparatively, lower priced in developing countries, which has a negative impact on global market values. There are also pressures from on-trade soft drinks sales, which are changing as consumer spending habits evolve. Refillable soft drinks sold by bars and pubs are proving popular, taking share of wallet away from the (typically more expensive by volume) bottles and cans sold from behind the bar. In the off-trade, retail giants are meeting demand for lower priced alternatives through private label offerings.
Energy drinks continue to impress
In spite of the plethora of bad headlines surrounding
energy drinks towards the end of 2012, the sector continues to be the golden child of the soft drinks market. Energy drink remains the fastest growing sub-category in soft drinks.
In the US, meteoric growth has been witnessed (60 per cent between 2008 and 2012 according to a new energy drinks report by Packaged Facts) and it’s now worth a whopping US$12.5 billion (£8 billion). The fact that this growth is not expected to slow is most interesting: by 2017 the report predicts the US market will reach US$21.5 billion.
According to The British Soft Drinks Association’s 2012 report, 495 million litres of energy drinks were consumed in 2011, up 12.5 per cent on the previous year, and reaching sales of £1,420 million. That works out to 7.9 litres per person and a 3.4 per cent share of the UK soft drinks market. Energy drinks remained the fastest growing sector of the soft drinks category in the UK in 2012: up 8.5 per cent in value [Nielsen 52 weeks to 13 October 2012].
The big name brands in energy drinks, such as Coca-Cola Enterprises, are investing in new product
development (NPD) and “reviewing all strategic options” (GlaxoSmithKline). At the start of 2013, Monster launched two new flavours of its low calorie, still energy drink, Monster Rehab, with a focus on boosting sales in the independent retail sector throughout the year. Green tea and orangeade are available in 500ml cans at an RRP of £1.59. Monster was the success story in the UK energy drinks market last year with sales up 46 per cent or £22.5 million to £70.9 million. It overtook Relentless and is now posing a genuine threat to the dominance of market leaders Lucozade and Red Bull.
According to Coca-Cola Enterprises (CCE), which manufactures and distributes the Monster brand in the UK, the energy tea variants saw sales of £2.6 million in the first six months of sale, which explains the NPD investment at the start of this year.
Sylvia Blömker, director public relations at Ball Packaging Europe, is not surprised that tea is a focus for CCE’s NPD. She believes tea will be a major trend in NPD across soft drinks categories over the next 12 months, as it fits with the rise in demand for adult soft drinks, as well as the health megatrends. Blömker says: “Tea is a beverage segment expected to grow above average in the near future. The combination of the health and individualisation trend will be a driving force behind the growing adult soft drinks market. The market of healthy drinks in beverage cans is also driven by the trend towards convenience and ready-to-drink (RTD) products”.
Meanwhile, GSK’s Lucozade and Ribena brands bucked the downward trend reported by the company in its full year 2012 results. Pre-tax profits fell four per cent to £7.6 billion in the 12 months to 31 December 2012, on sales down one per cent to £26.4 billion, while the consumer healthcare business (including Lucozade and Ribena) increased sales by five per cent in 2012. Lucozade Energy is the UK’s most valuable sports and energy drink, with sales up 6.5 per cent to £273 million [Nielsen 52 weeks to 13 October 2012). Ribena is the UK’s fourth biggest juice drink at £83.6 million sales.
Take-home market for cans
In a bid to “unlock new consumption occasions”, which is the ultimate goal for marketing teams in soft drinks powerhouses this year, Britvic has expanded its J2O range into slimline cans to be sold in six-packs. These take-home packs are available in the UK, from March, at an RRP of £4.39 for 5 x 250ml cans.
Positioned as enabling adults to “recreate the pub-feel at home for social get-togethers with friends and family”, the so-called ‘fridge packs’ are sold in cans to increase the perception of convenience and accessibility.
CCE announced in January 2013 that it is adding a take-home pack alongside new product lines to “both build on existing demand and bring new consumers into energy”.
The take-home pack is a four-pack of Monster Ripper (RRP £2.49) for grocery outlets and a £1.19 price-marked pack promotion was offered to independents for a month from February to March 2013 to attract impulse purchases.
Targeting the individual with unique packaging
Ball Corporation has been responsible for some original packaging creations that have tapped into the ‘individualisation’ megatrend influencing NPD in the soft drinks sector. They vary from luminescent overprints that glow in the dark under UV light that were used for Schweppes’ fluorescent “Night Cans” series designed to fit into the Parisian nightclub scene, to the svelte 58mm waistline and five per cent less weight can for the Thè San Benedetto. Acqua Minerale San Benedetto, a leading Italian drinks producer, was the first to use Ball’s light sleek can.
Blömker at Ball Packaging Europe adds: “Beverage
producers are launching more and more specialised products. This divides every beverage segment into ever-smaller categories. Health drinks are just one example, there are wellness drinks, functional drinks, drinks that help you lose weight, drinks with additional nutrients, drinks that improve concentration.
“There is a growing need to differentiate the various products and to customise better to meet these very specific target groups – and that can be best achieved through packaging. We, as can makers, focus our efforts to develop more sophisticated design tools and other functional features that add value to the product and provide distinctive appeal to the consumers.”
Beauty drinks are another example of a niche but growing sector within the soft drinks market, where the packaging design is vital to the appeal of the product. Kym Hamer, marketing manager NPD at Rexam, said: “One of our biggest growth areas recently is beauty drinks, which has seen a rapid rise in sales since 2011, especially in the German market. Brands in this sector are investing in innovative pack formats in order to reflect the new style of drink inside and we have seen significant interest in our Fusion bottle, which has a sleek look and feel that adds to the sophisticated nature of these drinks.”
Older and wiser soft drinks
Older and wiser, rather than ‘youthful’, will be the consumer trend of 2013 according to 59 per cent of respondents in the US, UK and China (Anthem Worldwide study, December 2012). Sales of adult soft drinks are growing at an unprecedented rate in the UK, as the ‘older and wiser’ among us shun alcohol for health, religious and financial reasons. In the 12 months to 30 September 2012, volume sales of adult soft drinks grew 14.8 per cent (Kantar Worldpanel). This is staggering when compared to the 5.4 per cent recorded the previous year. Now worth £157 million, the UK adult soft drinks market offers huge opportunities for NPD. As cans grow in popularity – and acceptance – in the alcoholic drinks sector, they are likely to appeal for adult soft drinks too. Companies such as Shloer and Bottlegreen are packaged in bottles that are made to look similar to wine bottles. These similarities help people feel comfortable within a group of people drinking alcohol.
Packaging technologies such as thermochromic inks on metal surfaces, indicating when a drink is at its optimum consumption temperature, matte and varnish finishes, bright colours and tactile surfaces can make a big impact for adult soft drinks. There are so many opportunities out there that there are feelings within the industry that we are on the cusp of a new dawn of NPD. Can manufacturers, packaging designers and technologists will be ready and waiting for this next
generation of soft drinks. q