Soft Drinks: Squash and water

If energy drinks are the brash new kids on the soft drinks block then squashes and cordials are the category’s thrifty but dependable aunts and uncles.

Once associated in the consumer consciousness with long, hazy childhood summers, today they’re drunk by an impressive 64% of adults, according to Mintel - mainly parents with kids in tow.

Princes category manager Graham Breed says that their appeal is largely down to dilutable’s family-friendly, value-for-money positioning. “Sales of squash are experiencing strong value growth as consumers look to it as a cost-effective way to keep their family hydrated throughout the week,” says Breed.

“As shoppers continue to cut back on their household spend over the next 12 months, we expect sales of squash to benefit.”

Over the past year Mintel says that the biggest news has been in double-strength products. According to its figures, NPD involving double-strength variants quadrupled in a single year.

Breed says this move has definitely affected market volume sales (since longer-lasting drinks mean fewer purchases) and that single strength is still the biggest-seller in convenience.

“Many consumers still prefer to have control over dilution,” he says. “This is especially true when purchasing for children who make their own drinks, but who may struggle with the concept of double strength.”

Brands have been busy underlining the more-for-less philosophy behind these products with other price initiatives, such as pricemarked packs (PMPs).

“Interestingly, as a brand we’ve seen the PMP part of our sales jump quite considerably,” says Vimto brand manager Clare Pritchard.

She says that the PMP proportion of their sales rose from 33% in 2011 to 45% in 2012. It’s been a key element of the brand’s growth, coupled with the success of its no-added sugar variant, which has grown 30% in two years.

However, it’s not all value for money austerity in the squash category. Nigel Paine from Britvic, home of the market-leading Robinsons brand, is keen to remind retailers that squash consumers are looking for a bit of excitement, too.

“We’re underlining that again this year with our support for Wimbledon,” he says.

There’s also evidence that, with the kids already covered by reassuringly wholesome family favourites, adults looking to cut back on alcohol are growing the market by choosing sophisticated cordials.

“The total dilutables category is worth £37.6m a year to impulse retailers,” explains Bottlegreen Drinks managing director Simon Speers. “Although cordials currently account for just over £750,000 of these sales, this is where the growth is actually coming from - so it’s a sector impulse retailers can’t afford to ignore.”

Bottlegreen’s range of cordials is a very adult affair, with variants such as elderflower and ginger & lemongrass, plus seasonal limited-edition flavours to add excitement.

While colas and other sugary categories continue to attract attack by campaigners who claim they’re too calorific, water has emerged as one of the more ‘virtuous’ drink options on offer. And, luckily for the big brands, today’s thirsty shoppers don’t need to be sold on the various health benefits.

“British consumers largely understand the benefits of drinking water, whether it comes from a tap or a bottle,” says Christina Medford, Danone Waters UK head of category development.

“A Danone Waters-commissioned study found that 43% of the UK population consume exclusively bottled water when they are out of their home and on the go. In fact, 54% of participants in the study stated hydration on the go was their main motivation for buying bottled water.”

“In 2013, we expect to see still waters continue to hold the lion’s share of the category,” adds Claire Wilson, marketing and sponsorship manager at Highland Spring. “If recent trends are anything to go by, sparkling waters will also benefit.

“Sparkling bottled water has been performing very well, driven in part by consumers using sparkling water to mix with squashes and cordials as a good value alternative to more expensive drinks when entertaining at home.”

The experts agree the most exciting innovation in the category has come from flavoured water. Medford says that half of the value growth in bottled water has been driven by the flavoured and juicy water segment, which is growing 9.6% in value year on year.

To capture this burgeoning market for summer, Volvic has released a new Citrus Burst variant for its Volvic Juiced brand.

Although traditional orange and apple juice continues to score well with children, today’s consumers have a taste for something more exotic, as illustrated by the success of the Rubicon brand.

“Rubicon is a very exciting brand for us which has grown 7% in the past year,” says Adrian Troy, head of marketing at AG Barr.

“It continues to be very popular with British Asian and black communities and it’s grown into the mainstream market as people seek out more exciting tastes.”

Meanwhile, health-giving ‘super-fruits’ are fortifying the exotic trend in brands such as Sunmagic, which is offering new passionfruit, mango, pineapple & coconut and pomegranate variants for summer 2013.

“Mangoes are renowned for their protective nutrients, while passionfruit is also high in potassium and anti-oxidants,” says Sunmagic brand manager Razin Ali.

“The popularity of pomegranates has risen sharply over the past couple of years, with many referring to the tropical fruit as a super-fruit, thanks to it being a fantastic natural source of vitamins including folic acid.”

Meanwhile, when it comes to making the most of the category, retailers will be up against a big challenge for summer 2013: there’s no Olympic Games to boost sales or to provide a focus for merchandising.

“With no big sporting events going on this year, retailers are going to have to get creative,” says Pritchard.

“One idea is to get really savvy with cross-merchandising - for instance, mixing soft drinks with snacks to provide everything customers need for a big night in.”

Britvic’s Paine says that extending traditional meal deals into other eating occasions can be a winner for retailers who want to get their promotions right. “More and more we’re seeing that the meal deal is moving to other times of day - so you’re getting ‘drink and a snack solutions’,” he says. “We’ve found that two-thirds of soft drinks are consumed with a snack - but only 13% are sold together. So there’s definitely an opportunity there.”

Of course, a bit of sun is the real x-factor that gets soft drinks sales moving during the summer months. But Paine is adamant that even if the sun fails to come out to play, the category will still be a solid seller, even in the rain.

“Last year we had a very poor summer and really low consumer confidence, but soft drinks tended to be resilient,” he says. “I believe that this time round we’re in a good place to build growth.”