UK: Consumers feel “ripped off” by high soft drinks prices
Consumers "dissatisfied" with soft drink pub prices
UK consumers are becoming more dissatisfied with the price of soft drinks currently served in pubs and bars, according to a survey by research firm Mintel.
The firm’s On Trade Soft Drinks Report shows that consumers are particularly critical of pubs, whose reliance on “poorer-quality” draught soft drinks at inflated prices leaves consumers feeling at best “confused” and at worst “ripped off”.
The report shows the average cost of soft drinks in pubs is GBP2.59 (US$4.04) a pint - compared to GBP0.50 for cola in shops.
And the price of soft drinks looks set to rise further. In current terms, Mintel says the price per litre of on-trade soft drinks will rise from GBP4.56 to GBP4.96 between 2009 and 2014. And with premium packaged soft drinks a growing market, soft drinks companies are more likely to be able to charge higher prices, the survey claims.
Mintel says that with Britvic and Coca-Cola Enterprise’s (CCE) dominance of market distribution and the nature of the pubco ties, it is becoming more difficult for smaller companies to compete.
“It is proving difficult for new drinks to break the distribution dominance of CCE and Britvic, which together account for 80% of the market value. Their wide portfolio and ability to provide competitive pricing through economy of scale means that many leased/managed pubs that are tied to pub companies are contractually obliged to buy, meaning that smaller operators are often restricted to targeting independently owned pubs,” Mintel claims.
UK soft drinks maker Britvic is the top supplier of on-trade soft drinks in the UK with a 46% market share by value.
A spokesperson for the firm told just-drinks that it invests a “significant amount” in innovation and marketing to help licensees “drive sales and deliver value” to consumers. But added that the pricing of its soft drinks is decided by the outlet and not Britvic itself.
“This year we will be investing GBP11m in the on-trade across a range of products and campaigns including an innovative quiz format from J2O to drive footfall and dwell time, and new Pepsi glassware to provide consumers with a more premium experience. We work closely with our customers to provide them with a great soft drinks offering to meet consumers’ needs, but they set the prices at which they retail products in line with their outlet’s overall pricing structure,” the spokesperson said.
The report by Mintel suggests that a maximum price on soft drinks is adapted, similar to the “apple juice law” in Germany, which sets a limit on how much can be charged for soft drinks.
However, a spokersperson for the British Beer & Pub Association (BBPA) told just drinks: “The price of soft drinks in pubs is higher than supermarkets because of greater costs and a higher level of service.”
- Is Diageo approaching its "Et tu, Brute" Moment?
- Diageo Q4 & FY - Preview
- SABMiller, Carlsberg, Heineken: Poland's beer itch
- SABMiller's Q1 Sales Performance by Region
- Are Big Spirits Companies Failing to Innovate?
- Diageo comm's director latest to leave
- Global business development head to quit Diageo
- Diageo hit by SEC investigation in US
- just the Winners - IWSC Spirits Trophy Winners
- Suntory sells Louis Royer Cognac for US$110m
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global liqueurs insights - market forecasts, product innovation and consumer trends research
- Global cachaca insights - market data, product innovation and consumer trends research
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global gin insights - market data, product innovation and consumer trends research