A recent report on the UK soft drinks market showed that growth in non-carbonates at the expense of traditional carbonated soft drinks is much less marked in the on-premise sector than in the take-home market. Ben Cooper reports.

Talk of a prevailing decline in carbonated soft drinks (CSD) sales in the UK as non-carbonates hold sway needs a degree of qualification, according to statistics contained within a report on the UK soft drinks market published by soft drinks group, Britvic. According to the report, there is a clear distinction between the on- and off-premise sectors regarding the relative performance of still and carbonated soft drinks.

In the on-premise sector, sales of carbonates grew by 6% to £1.7 billion in the Nielsen MAT to November 2004, accounting for 76% of total sales. However, non-carbonates only grew by 1% to £542m, representing 24% of the market. In volume terms, the relative performance was more in keeping with perceived current trends, with still drinks growing by 2%, against 1% growth for carbonates.

However, there is a clear indication that the trend of growth in non-carbonates at the expense of CSDs is taking place more slowly in the on-premise market than in the off-premise sector. According to the same report, in the off-premise market carbonates fell by 4% in value terms while still soft drinks rose by 5%. There was a corresponding 6% decline in CSD volumes, while non-carbonated volumes rose by 3%.

"Carbonated and still soft drinks performed very differently on-premise compared with the take-home market," the report said. "Carbonates accounted for over three quarters of total soft drinks within on-premise and drove growth at 6% while stills only saw 1% growth. Consumer demand for the healthier take-home option does not wholly translate into the on-premise, where indulgence is front of mind."

Further underlining the trend, the report stated that all still categories had declined in the on-premise sector, with the exception of juice drinks which had grown in value terms by 35%. A decline in mineral water sales, down 5% in volume and 3% in value, indicated that growth in 2003 had been due more to refreshment and re-hydration rather than health awareness.

Overall, soft drinks sales in the on-premise market rose by 5% in 2004 to £2.2 billion, according to the report, making soft drinks one of the fastest growing beverage categories in the sector. On-premise soft drinks volumes rose by 1% to 577m litres. "Soft drinks are becoming increasingly important to the on-premise as the industry widens its offering in response to a changing leisure environment," the report said. "Pubs have become more female friendly and more child-inclusive."

Within the on-premise sector, leased and tenanted pubs remained the largest sector, with 30% of soft drinks sales. This sub-sector of the market showed 6% growth in soft drinks sales in 2004, with growth being driven by juice drinks and energy drinks. Flavoured carbonates grew by as much as 89% in value terms in the leased and tenanted pubs sector, but declined by 11% in volume.

Soft drinks sales in the clubs sector grew by 3% in volume terms and by 8% in value, while the managed pub chains sub-category, which represents 24% of the total on-premise soft drinks market, registered a 3% value increase in soft drinks sales with volumes flat. The slowest soft drinks growth was seen in the independent pubs and wine bars sub-segment where sales grew by 2% in value and slipped by 1% in volume terms.

In terms of supplier market share, Britvic's sales increased by 9% in value terms to £987m, reaching a 44% share of the market, against a 33% share for Coca-Cola Enterprises (CCE), which recorded a value increase of 2% to £744m. The remaining players combined, the report said, registered growth of 3% to £500m.

In volume terms, Britvic's sales rose by 4% to 246m litres, giving it a share of 43%, against a 1% decline in CCE's volumes to 203m litres, representing a volume market share of 35%. The remaining suppliers accounted for 22% of the market in volume terms, showing a 2% decline in volume in 2004.

Once again, the report stated that CSD brands, notably Coca-Cola and Pepsi-Cola, had performed better in the on-premise sector than they had in the take-home market during 2004. Coca-Cola had grown by 5%, while Pepsi had increased by 7%. Also reflecting the more robust performance of carbonates, the lemonade brand, R Whites, showed 12% growth, as the lemonade sector within on-premise continued to hold up well.