Comment - Are UK Soft Drinks About To Go Pop?
Last year's wet weather dampened fortunes for UK soft drinks
Last week was a challenging one, on top of a difficult year for UK soft drinks.
On Wednesday, the long-planned merger between AG Barr and Britvic dropped off the table after UK regulators raised competition concerns, while, six days earlier, GlaxoSmithKline confirmed it was launching a review of Lucozade and Ribena in a move most people assumed was a prelude to a sale.
It was tempting to trace both stories back to last year, when a dreadful summer weather-wise in the UK helped push Britvic into talks with Barr and left Lucozade and Ribena's domestic market floundering under the rain clouds.
Add to this increasing pressures on soft drinks companies over nutrition, exemplified by yesterday's call to introduce a 20% sugar tax, and you'd be forgiven for thinking that it couldn't get much worse for the soft drinks industry in the UK.
But, you'd be wrong. It turns out that it all depends on where you look.
“The soft drinks category hasn't declined,” Vasu Majumdar, a beverage specialist at Grant Thornton UK, told just-drinks. “There are various ways to cut the statistics, but the general feeling is that, yes, it's a tough market and, while certain categories are really suffering, it depends what category you are in.”
While Nichols and AG Barr are both growing, even Britvic, which has a far worse 12 months with the costly Fruit Shoot recall, is doing “fantastically well” in some sectors, according to Majumdar. CSDs continue to face slides, but there was optimism last week from the CEO of Coca-Cola Enterprises who, despite a 3.5% volumes drop in 2012 for the segment, said he expects the sparkling category to return to growth this year. Yesterday, figures from the UK beverage can industry showed that CSD can shipments in the country increased by 0.6%.
Problems still lie ahead, however, not least the continuing rise in the price of sugar that seems to have left beverage makers as eager to get it out of their products as the anti-obesity campaigners. PepsiCo head Indra Nooyi said last week that only a fifth of the company's North American volumes are full sugar, while in a webinar on sweeteners last week, Helen Munday, the director of scientific and regulatory affairs for The Coca-Cola Co in North West Europe and the Nordics, said about a third of Coca-Cola's offerings are either low or no sugar.
With sugar prices rising by 20% to 30% in the past three years, according to Majumdar, we can expect even more innovation in the low-sugar category for 2013. The only problem is that low- and no-sugar products still don't taste as good. Munday said humans have been programmed from birth to seek out the kind of nutritious sweetness that keeps us alive. That imprint gives us the sweet tooth that has made beverage companies their fortunes and now has them struggling to find the right blend of artificial sweeteners to mimic the taste of full-sugar products.
Will this year see the end of that search? On Thursday, PepsiCo boss Nooyi dropped intriguing hints about new sweeteners and flavourings that could "alter the trajectory of the cola business" in ways not seen since the launch of diet sodas in the 1960s.
Better days, then, may be just around the corner.
Although AG Barr was on its way to the church earlier this month, Britvic was still having second thoughts. The end of the affair leads Richard Corbett to ponder what went wrong for the two and what h...
MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organi...
The company is focused on following three main strategies in 2013 in order to maintain its presence as one of the leading soft drinks manufacturers in the UK. These are innovation, increased distribut...
Barr (AG) Plc is focused on joining forces with Britvic Soft Drinks Ltd to become a joint partner company in what is expected to be the largest European soft drinks company. The formulation of the mer...
- Comment - Diageo Spins the Guinness Wheel... Again
- Diageo's Labels Give Industry Something to Digest
- Comment - 'Craft' and the Danger of 'Romance Copy'
- Is A-B InBev/SABMiller 'Mega-Merger' Off?
- Pernod takes positives from China Cognac bounce
- Craft is an 'abused' term - Pernod Ricard exec
- Diageo lines up UK innovations push
- SPI Group 'disappointed' over Stolichnaya ruling
- Edrington names European Travel Retail head
- Kraft Foods agrees Heinz merger
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Champagne: Less Than Bubbly
- Beer Market Insights Africa 2014
- ALDI 2015: Radically transforming Anglo Saxon grocery markets