The great health debate has managed to make its mark on the soft drinks category in both positive and negative ways over the past year.
It's been bad news again for carbonates but good for fruit juices and energy drinks as consumers continue to demand less sugar and fewer additives but more
functionality and variety from their refreshments.
According to the annual Britvic Soft Drinks Report, soft drinks grew 8 per cent in value in the take-home channel to reach £5.9 billion in 2006 - which is growth that outperforms all the other top 10 grocery categories except toilet paper.
And the independent retail market holds a 13 per cent share (£752 million) of that, with growth of 4.7 per cent (Nielsen Dec 06).
Andrew Richards, sales director at Britvic, says: "The past five years have been an immensely significant time for the soft drinks category, and 2006 was no exception. The escalating trend towards health and wellbeing and the introduction of new legislation continued to shape the category.
"However, despite these rapidly changing conditions, the industry grew a remarkable 7 per cent. This exceptional performance is testament to manufacturers' innovation and understanding of changing consumer needs."
The real push has been behind the "better-for-you" trend, and diet and no-added sugar-varieties continued to drive the leading sub-category of colas.
Richards continues: "The take-home market saw a continuation of trends driving the growth of stills and better-for-you categories with manufacturers responding with innovation to cater for a range of changing consumer preferences. Looking ahead there will be a continued focus on health and wellbeing and natural ingredients, particularly as product labelling further refines the way consumers choose their soft drinks."
According to the report, wellbeing drinks are defined as offering health benefits "beyond basic nutrition", for example sports energy, probiotics and juice. And Britvic says this sub-category is the third-fastest growing and has reached £841 million in value.
The report adds: "We are becoming increasingly aware of looking good. As a consequence of this, nutraceutical drinks may provide part of the solution to weight management and maintenance and improved appearance. It is likely, therefore, that we will see a boom in ingredients such as goji berry, green tea and ginger."
GlaxoSmithKline's category planning controller Helen Tomlinson agrees: "Consumers are looking for products with functional benefits and, as a result, brands with added vitamins, low calorie variants and those that provide additional health benefits are in demand."
The GSK stable includes the Lucozade brand, the latest variant of which is Lucozade Sport with Caffeine Boost, said to contain "a thirst-quenching combination of carbohydrates, electrolytes and caffeine to fuel muscles, hydrate the body, improve mental focus and give an extra edge to adults participating in active sport".
Tomlinson adds: "We are increasingly finding that consumers demand soft drinks which offer more than simply refreshment. They want drinks which offer functional benefits, such as an energy boost."
Simon Gray, managing director of energy drinks company Boost Drinks, says: "Energy drinks were first launched as very niche products, but the 24-hour lifestyle we all now experience means functional products are just part of everyday life."
Musgrave Budgens Londis trading manager for soft drinks Lyana Doyle has seen a lot of activity in the sector. She says: "These functional drinks have certainly become big in the chilled soft drinks sector, but consumers are looking for taste and flavour above all else.
"They are becoming more health conscious but are tending to opt more for the 'superfruit' juices with their natural benefits rather than drinks with added dietary supplements."
There is also, says Doyle, a marked move towards "healthy alternatives to alcohol" which, according to the Britvic report, is also being reflected in the on-trade. Andrew Richards says: "With soft drinks growing faster than total alcoholic beverages, it is clear the category is growing in importance in the pub environment." He also thinks the smoking ban, which comes into effect on July 1, will see soft drinks becoming even more important as pub clientele changes.
Water, too, is seeing some interesting developments, although the category in the UK - which accounts for some 20 per cent of total soft drinks volume - still lags significantly behind other European countries where volume is more than 50 per cent.
But, according to MBL's Doyle, water is the fastest growing sector. It has also just acquired its own industry expert banner under the Bottled Water Information Office, a joint venture between leading bottled water producers and the British Soft Drinks Association (www.bottledwaterinformation.co.uk).
The body's public affairs manager, Richard Laming, says: "The rise in popularity of water over the past few years has been phenomenal, so there is a real need to ensure that everyone has the opportunity to know as much about bottled water as possible."
Hancocks purchasing director Richard Brittle has seen water going from strength to strength and predicts it will continue to be a "hugely profitable" sector, with much of the attention focused on the "drink now" arena. He says this goes for all soft drinks, and urges independents to emphasise their chilled offerings.
Red Bull, one of the most visible players in the energy drinks category, says more than 70 per cent of soft drinks are sold for immediate consumption.
It says sports and energy drinks should have at least 18 per cent of soft drinks space because that is their market share; have a clear offering on shelf and a secondary chilled impulse purchase point by the tills; and make it as easy as possible for consumers to find a soft drink by using POS and signposting key brands.
Responding to the trend for ready-to-drink products, Vimto has been rolling out a portfolio which includes carbonates, a sector as a whole that is down 0.9 per cent to £543 million (TNS, year to Jan 28). In March, a redesigned, curvier bottle was launched for the 50cl fizzy variant in both Original and No Added Sugar flavours.
The company says that offering products which have no added sugar also provides shoppers with a healthier option, and Vimto has created NAS variants throughout its portfolio.
Infuzions has launched Zipp, a range of premium, better-for-you natural fruit juices. They are described as "a fusion of natural juices with optimum level of anti-oxidants, essential vitamins and minerals and a unique combination of herbal extracts". They are available in Slenderize and Vitalize varieties.
New variants in the MangaJo range of chilled tea and herbal drinks include Gojiberry & Green Tea and Acai & Green Tea.
Shloer has introduced to wholesalers and cash and carries a 6x1-litre pack, which it says is ideal for independent retailers. It will also be available in White Grape, Mango and Passionfruit flavours. The company says it gives retailers the chance stock a variety of flavours and give consumers greater choice.
GlaxoSmithKline has launched a 1.25-litre ready-to-drink share size for its Ribena Blackcurrant and Really Light Blackcurrant. The launch is being backed by a £7 million media campaign to boost the brand's appeal to a young adult audience.