Cordials and Squashes - UK - July 2010

About this report

The squash/cordials market was in slow but steady decline until the economic downturn radically changed consumer purchasing habits, with value overriding the desire for premium and healthy soft drink products.

However, whether the market can sustain its current level of growth beyond the current economic downturn is largely down to whether it sufficiently develops its premium cordial segment, an area for growth that has so far been vastly under-realised.

* The squash sector has benefited from a consumer re-evaluation of what constitutes value for money, growing by 7% in 2009 to reach £463m. The niche cordials market, worth just £12m in 2009 faired less well due primarily to its upmarket positioning.
* A lack of investment by the major soft drinks players (i.e. Britvic, Coca Cola Enterprises) lies behind the cordials sector’s niche status however, as a product cordial remains on trend with many key drivers in the soft drinks market such as premiumisation, naturalness and health.
* Squash and cordials are still perceived as fundamentally unhealthy with purchases driven primarily by value and flavour. Only 30% (8.5m) of its buyers think squash/cordials are healthy compared to 68% (15.5m) for byers of fruit juice.
* Consumer interest in health credentials; seven in ten buyers of squash/cordials would prefer that they do not contain additives, is not translating into purchases as only a fifth purchase them because they think they consist of good quality ingredients.
* Four in five squash buyers appreciate the fact they can control the strength of squash/cordials and customise it to their palate. This is a USP that major brands are currently failing to push.
* More needs to be done to educate consumers about new innovations in the market. Currently, few understand the difference between a squash and cordial and why they should pay more for the latter. Also, many believe that double-concentrate squash, while a good idea in theory, may actually be a false economy.

Table of contents

Issues in the Market
Definitions
Abbreviations
Market in Brief
A rare example of a market benefiting from a recession
But without greater premiumisation the market will stagnate
Innovation can drive growth but needs to be managed carefully
Internal Market Environment
Key points
The increasing premiumisation of soft drinks…
…is cut short by the economic downturn
Figure 1: Agreement with attitude statements on shopping, 2005-09
Figure 2: Spend per capita on UK soft drinks, 2003-08
Prices of raw costs soar…
Figure 3: Month-on-month Retail prices Index (RPI) change for UK soft drinks, January 2009-May 2010
Double concentrates provides ‘more value’
Figure 4: Own-label double concentrates introduced, April 2008-April 2010
Bad summers affect some soft drinks more than others
Figure 5: How seasonality affects cordials compared to bottled water, 2006-09
Health takes a back seat – but diet is still key
Figure 6: Agreement with attitude statements on diet/health, 2005-09
Parents acting as gatekeepers
Calories versus health
Functionality is still important
Broader Market Environment
Key points
Legislating for calories…
… or should it be sweeteners?
Economy likely to get worse, not better
UK continues its shift to a ‘white collar’ dominated society
A steadily ageing population puts an emphasis on health benefits
Kids aged 5-9 to see a growth spurt
Competitive Context
Key points
Soft drinks prove robust despite economic conditions
Figure 7: Percentage yearly growth in 2008 UK household spend, by selected category, in real value (based on 2005)
From premium to value for money
Figure 8: Trends in penetration of soft drinks, by drink type, 2005-09
Squash is able to re-engage with its customer base
Figure 9: Usage and frequency of fruit squashes and cordials, 2005-09
‘Full-fat’ soft drinks are now comfortably in the minority
Figure 10: The proportion of soft drinks which are low-calorie/ no added sugar and ‘standard’
Strengths and Weaknesses in the Market
Strengths
Weaknesses
Market Value and Forecast
Key points
Market sees slow value growth
Figure 13: Volume and value sales forecast for the total squash/cordial market, 2005-15
Steadily accumulating value in take-home
Figure 14: Volume and value sales forecast for the total take-home squash/cordial market, 2005-15
A small uplift in on-premise but plenty of growth potential
Figure 15: Volume and value sales forecast for the total on-premise squash/cordial market, 2005-15
Segment Performance
Key points
Squash hits its peak in 2009
Figure 16: Forecast for take-home volume and value sales of the squash market, 2005-15
Cordials in arrested development
Figure 17: Forecast for take-home volume and value sales of the cordials market, 2005-15
Market Share
Key points
Robinsons increases its dominance
Own-label cashes in
Figure 18: Trends for value sales of squash/cordial brands in the take-home sector, 2007-09
Companies and Products
Key points
Britvic
Coca-Cola
GlaxoSmithKline
Nichols
Princes
Channels to Market
Key points
Size increasingly matters
Figure 31: Trends for values sales of the squash and cordial market, by off-trade retail channel, 2005-09
Growth opportunity in on-trade
Brand Communication and Promotion
Key points
Aiming to capitalise on recessionary window of opportunity
Figure 32: Spend per year on above-the-line advertising for cordials and squashes, 2005-09
Promotional activity for brand leaders
Cordials have to be very targeted
Figure 33: Media advertising expenditure on squashes and cordials, by brand, 2007-09
Figure 34: Media advertising expenditure on squashes and cordials, by advertiser, 2007-09
Consumer Usage of Cordials/Squash
Key points
Cordials/squash purchased by three quarters of the UK population
Figure 35: Types of soft drinks bought in the past 12 months, April 2010
Mothers are the key target
Consumption drops off post family lifestage
Preference among young consumers
Figure 36: Buyers of different soft drinks in the past 12 months, indexed by demographics, April 2010
That they last longer restricts frequency
Figure 37: Frequency of buying standard price/quality squash/cordials, compared to other soft drinks in the past 12 months, April 2010
Value soft drinks hugely out-selling premium
Figure 38: Types and Price/quality of soft drinks bought in the past 12 months, by demographics, April 2010
Cordials are not capitalising on the premium opportunity
Figure 39: Premium cordial/squash drinkers compared to other soft drink sub-categories, April 2010
Converting more buyers from standard squash to premium cordials
Figure 40: Purchasing of standard, value and premium squash/cordials, April 2010
Consumer Purchase Drivers of Cordials/Squash
Key points
About flavours and value, not branding
Figure 41: Main factors which influenced purchase of cordials/squash in the past 12 months, April 2010
Women are especially pragmatic
Figure 42: Net difference in attitudes towards cordials/squash, by gender, April 2010
Debate over whether own-label really is better value
Flavours and value are the key points of difference over competitors
Figure 43: Most influential benefit in buying each soft drink, by main soft drink types, April 2010
But consumers are choosing fruit juices/smoothies for health and quality
Stealing greater share from bottled water
Fizzy carbonates rely on style not substance
Consumers given little reason to pay a premium for cordials
Given tangible reasons to pay more, women like the idea of cordials
Quality ingredients are the biggest selling point for cordial buyers
Figure 44: What influences buyers of premium cordial/squash compared to all cordial/squash buyers, April 2010
Appendix
Consumer research
Advertising data
Focus groups
Appendix – Internal Market Environment
Figure 48: Attitudinal statements on shopping, by demographics, 2009
Figure 49: Attitudinal statements on diet/health, by demographics, 2009
Figure 50: Trends in personal concerns, June 2009-April 2010
Figure 51: Obesity and Overweight prevelance among children in England, 2001-08
Appendix – Broader Market Environment
Figure 52: GDP, PDI, consumer expenditure and savings, at constant 2005 prices, 2005-15
Figure 53: Trends and projections in the UK population (000s), by age group, 2005-15
Figure 54: Forecast adult population trends, by lifestage, 2005-15
Figure 55: Forecast adult population trends, by socio-economic group, 2005-15
Appendix – Brand Communication and Promotion
Figure 56: Above-the-line media advertising expenditure on squashes and cordials, by advertisers, 2007-09
Figure 57: Above-the-line media advertising expenditure on squashes and cordials, by brands, 2007-09
Appendix – Consumer Usage of Cordials/Squash
Figure 58: Any buyers of cordials/squash compared to other soft drinks in the past 12 months, by demographics, April 2010
Figure 59: Buyers of standard squash/cordials and other key competitors in the past 12 months, by demographics, April 2010
Figure 60: Buyers of value squash/cordials and other key competitors in the past 12 months, by demographics, April 2010
Figure 61: Buyers of premium squash/cordials and other key competitors in the past 12 months, by demographics, April 2010
Appendix – Consumer Purchase Drivers of Cordials/Squash
Figure 62: Key purchase drivers for buying squash/cordials in the past 12 months, by demographics, April 2010
Figure 63: Secondary purchase drivers for buying squash/cordials in the past 12 months, by demographics, April 2010

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