Eight things you need to know about water, juice and milk drinks

1. Retailers are preparing for a bumper summer after the 2022 heatwave

2. Bottled water was the convenience channel’s fastest growing soft drink in 2022

3. Flavoured milk sales are up 14% in convenience

4. 38% of shoppers are looking to save money

5. Seven in 10 buyers tried to save money on fruit juice, juice drinks and smoothies last Autumn

6. Tight budgets and sustainability demands will put pressure on plastic bottled water

7. The flavoured water market has grown 10% YOY

8. Pairing water, juice and dairy drinks with food can pay off… if you have the space

1. Retailers are preparing for a bumper summer after the 2022 heatwave

Memories of 2022’s scorching summer and resulting boom in bottled water and other soft drinks are still fresh in c-store operators’ minds. And forward-thinking retailers are taking steps to avoid the shortages that hit many at the height of last year’s heatwave.

“We were affected by the bottled water shortages last summer but to be honest there were shortages on everything really – juice drinks, dairy drinks, cola – the hot weather drove huge sales of all soft drinks,” says Justin Whittaker, owner of MJs Premier Store in Royton, Greater Manchester.

“Because of these shortages we have acquired a unit round the corner from our store and we are storing stock so that we can cope with demand when we get extremes in the weather, which we’re told are likely to become more common. We’re building up stock of bottled water and all soft drinks because they just sell so well.”

Mos Patel – who runs two stores in Lancashire, Premier Heyside in Oldham and Family Shopper in Ashton-Under-Lyne – was also hit by the shortages last summer. But he has adopted a different strategy to Justin to avoid being caught short this year.

“We couldn’t get hold of many bottled water products at all during the really extreme weather last summer. The Volvic flavoured waters and the Highland Spring Sports Cap bottles – the 500ml and 750ml ones – were particularly difficult to get hold of,” he recalls.

“But it was a bit surprising how hit and miss supply was. One Booker might be completely out of bottled water, but you would drive across town to another and they would have it. So, rather than tying up our money in building up stock we have spread out the suppliers we use. We’re now using more local suppliers and smaller cash & carries.”

This helps build relationships with a wider range of suppliers who are more likely to help in times when demand is high and stocks are low, suggests Mos. “We’re using the reps from the big suppliers like Coca-Cola and PepsiCo and wholesalers like Bestway more,” he adds.

“To be honest we always used to view these reps as more of a hindrance than anything else but now we have built relationships with them and are able to utilise their services more. We are helping them hit their targets and they are keeping us sweet and in stock at times when demand hits the roof.”

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2. Bottled water was the convenience channel’s fastest growing soft drink in 2022

It didn’t just hit the roof last summer – it blew it off. “With unprecedented temperatures recorded, sales were bigger than ever before in soft drinks, with flavoured carbonates and water seeing the biggest uplifts,” says Barr Soft Drinks marketing director Adrian Troy.

“During the peak of the heatwave, an additional £75m in soft drinks sales were recorded in just one week versus the year before [IRI]. Summer is the key period for soft drinks sales and there is a huge opportunity for retailers to build on the success of last year.”

This is particularly the case if this summer is a scorcher. Looking across the full year, plain water was the fastest growing soft drinks category in convenience retail, with sales growing by 39.2% to £250.1m. Flavoured and fortified water grew by a further 26.4% to £121.1m, according to IRI data published in the 2023 Britvic Soft Drinks Review.

But just because bottled water is a top seller doesn’t mean it needs to take up vital extra space in your chiller. “50% of people are happy to drink water ambient essentially,” states Britvic head of channel development Reena Bilakhia. “When the weather’s hot you end up seeing chillers full of water, but actually it’s the lowest value category. Can you put a range in the chiller, but also keep some ambient, which then helps your stock pressure, but also enables choice.”

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3. Flavoured milk sales are up 14% in convenience

Sales of milkshakes and other dairy drinks also heat up in the summer months. “As we move into summer, we typically see increases of around 50% to 100% in sales of our 330ml on-the-go milkshake range, which are easier to carry and consume while out and about,” says Alex Makin, trade marketing manager and milkshake brand Shaken Udder.

“Our Strawberry Dream milkshake flavour is particularly popular in the summer months while ‘Chocolush’ remains our bestselling flavour all year round,” he continues, adding that the 2022 launch of a duo of ambient shakes offers a longer shelf life without the need for chilled storage.

Indeed, the total flavoured milk category is now worth £585m, with £262m (44%) of that going through the convenience retail channel, a year-on-year rise of 14% (IRI). Coffee flavoured milk is the largest subcategory in the overall market, worth £212m and growing by 16% year-on-year.

“You can see the growth visibly as the ready to drink (RTD) coffee section has expanded in retailers’ fridges,” says David Abrahamovitch, CEO of ethical coffee business Grind. “We’ve seen this too at Grind. We’re selling 10 times the number of our RTD coffee cans than we could have achieved a year ago.

“Consumers are looking for delicious canned iced coffee, which a few years ago they didn’t know existed - with limited choices that tasted too much like a Starbucks Frappuccino and not enough like a proper cup of coffee. Much of our social feed is taken over with our customers telling us how long they’ve been waiting for this.”

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4. 38% of shoppers are looking to save money

In the current climate, however, promotions are key to driving impulse sales. “When Booker is offering products on promotion that really helps shift products, particularly because of everything that’s going on with the economy,” says Mos.

“But I suppose if demand gets like what it was last summer, wholesalers will need to strike a balance and put a cap on how much of certain products people can buy. I think the shortages we saw last summer were partly caused by people just loading up their trolleys like how we saw during Covid.”

Troy at Barr Soft Drinks agrees on the paramount importance of hitting the right price point. “As cost-of-living concerns mount, shoppers are increasingly seeking value to make their money go further, with 38% of people focusing on saving money in 2023,” he says, citing the IGD Shopper Sentiment Monthly Update from March.

“Larger pack formats and multipacks will continue to play an important role, as people look for more opportunities to socialise with family and friends around key calendar events. Retailers have an opportunity to pick up these sales by looking at exciting flavours, bigger formats and multipacks from trusted brands.”

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5. Seven in 10 buyers tried to save money on fruit juice, juice drinks and smoothies last Autumn

Mintel notes that consumers are keen to spend less where juices and smoothies are concerned. ”Intensifying pressures on real incomes have taken their toll on the market, with 72% of buyers having taken at least one measure to try to save money on fruit juice, juice drinks and smoothies in the three months to November 2022,” states its UK Fruit Juice, Juice Drinks and Smoothies Market Report 2023. 

Britvic highlights that the ambient juice category has seen sustained growth since the pandemic and is now worth £907m and growing 2.4 x faster than the chilled juice category (Nielsen). Among many factors, cost-of-living pressures have led to a change in consumer shopping habits, with customers turning to bulk buying and opting for shelf stable options to help with budgeting, claims the firm, which has just released an ambient Tropicana  range.

“76.2% of chilled not-from-concentrate shoppers already purchase ambient juice (Kantar), so this launch is a game changer for retailers with their shoppers now able to choose a value-add ambient range from the UK’s leading juice brand (Nielsen),” claims the firm.

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6. Tight budgets and sustainability demands will put pressure on plastic bottled water

It’s not just the prospect of squeezed budgets and extreme summer temperatures that are driving shifts in soft drink consumption, however. “As the focus on health and no sugar drinks increases, still and sparkling bottled water is increasing in demand,” says Ben Richardson, co-founder of resealable aluminium-bottled British spring water brand Re:Water.

“ There is a growing demand from consumers that the products they purchase do not have a detrimental effect on the environment and Re:Water ticks all of these boxes and more, through reuse, refill and recycle.”

In its UK Bottled Water 2022 report, Mintel claims that the bottled water market will face challenges as consumers demand more sustainable alternatives. “ The income squeeze and the accelerated sustainability movement will further ingrain the use of refillable bottles and severely test the resilience of the bottled water market,” says Emma Clifford, associate director – food and drink.

Mandy Glew, commercial VP at the packaging giant Ball Corporation, suggests switching to aluminum-packaged water would help retailers cater for these environmentally minded consumers. “Growing environmental concerns has resulted in an increasing number of eco-conscious consumers who are turning to cans both in the UK and across Europe,” she says.

“A Ball survey last year found that eight in 10 consumers across Europe continued to pick beverages in recyclable packaging during the cost-of-living crisis. Once recycled, canned soft drinks can be back on shelves in shop floors within 60 days. Aluminium can also be recycled over and over without losing quality and regardless of colour.”

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7. The flavoured water market has grown 10% YOY

IRI  

For some, however a plain old bottle (or can) of water just doesn’t cut the mustard. “Taste remains the top consideration in soft drinks purchases, and flavour innovations are becoming more complex as consumers look for new and interesting tastes, so we expect to see more unique products on shelf,” says Barr’s Troy.

He points to the continued growth in sales of flavoured water even as the mercury fell following last summer’s heat – IRI data suggests the market grew 10% year-on-year in the 52 weeks to 25 March – as proof of this. “Post-pandemic, health continues to be an important factor influencing purchasing decisions,” continues Troy.

“We’re still seeing increased demand for lower calorie products and a significant reduction in alcohol consumption. Flavoured water is growing in popularity as a result. Retailers should offer a good choice of low-calorie products that don’t compromise on flavour, taste or value, such as Rubicon Spring, to tap into incremental category sales.”

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8. Pairing water, juice and dairy drinks with food can pay off… if you have the space

In-store visibility and offering attractive deals are crucial to driving sales. “Visibility is key, and stores can convert more shoppers to buy into the supported brand and generate category growth if the brands are easy to find,” contends FrieslandCampina UK sales director Dan Chesbrough.

“Though Yazoo and Chocomel are ambient products, with longer shelf life than typical milk products, retailers should consider stocking the drinks in chiller aisles with more footfall than back of store sections. This allows the product to be seen more regularly by consumers and can lead to more frequent incremental sales opportunities.”

Britvic retail commercial director Ben Parker agrees. “The key for retailers to unlock in-home socialising sales for soft drinks is to use the right range and displays and connect the categories, highlighting what’s available to enhance different occasions and events through the year,” says Britvic retail commercial director Ben Parker.

“We calculate that the size of the total prize available by selling more soft drinks with food is £140m a year by 2025,” states the Britvic Soft Drinks Report. For the convenience channel, that equates to an £80m opportunity or £1672 per store, per year.

Says Parker: “Retailers should ensure there’s a sufficient range of reduced sugar drinks available, placed on gondola ends and fast lane checkout areas to attract attention and increase impulse sales. Ensuring there’s a variety of lunch and breakfast meal deals, snack and drink deals at different points of the day will nudge customers to buy soft drinks on more occasions.”

Doing so will increase average basket spend, or at least that’s the idea. How well meal deals and other linked promotions work in store largely depends on store size and location, says Justin in Royton. “Meal deals might work well in larger stores but in our store we only have 1,300 sq ft so we don’t have the space to put all the items together,” he says.

“The only sort of link deals that really work for us is on frozen food because that is all in one place. Putting bottles of water or Coca-Cola together with bags of crisps or snacks on promotions doesn’t work in smaller stores because often people just want to grab and go.”

Particularly if the sun is shining, as we’ve seen. Here’s to another busy summer!

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