Irelands economy has bounced back stronger than many other Western, similarly-developed countries

Ireland's economy has bounced back stronger than many other Western, similarly-developed countries

Ray Rowlands, of Drinksinfo Ltd, turns his attention to the oft-overlooked Irish soft drinks market and considers its potential, relative to its larger neighbour, the UK.

Home to just under 5m people, the Irish Republic is one of the smaller countries of Western Europe. It is situated west of the UK, from which it gained independence in the early part of the 20th Century. Meanwhile, the province of Northern Ireland, which shares a border with the Republic in the south and, with a population of a further 2m, remains part of the UK.

But, enough of the background lesson.

When it comes to soft drinks and bottled water, one of the first outstanding features that separates Ireland from the UK is that per-capita consumption of total soft drinks is decidedly lower in the former. This applies to almost all categories. There is no clear reason for such stark differences between the two islands. Before you ask, it is not because of all the Guinness the Irish allegedly drink. Per capita consumption of alcohol is also higher in the UK. The main exception, however, is bottled water: Irish per capita consumption of this segment is very close to that in the UK.

The Irish have a definite fondness for bottled water and the category has a fairly long history in the country, extending over three decades, accompanied by exponential growth. Recent research claims that, while bottled water held a 1% share of the Irish soft drinks market in 1980, today it accounts for 20%.

But, whereas international water brands, such as Evian and Volvic, are firm favourites in the UK, it is local brands that top the chart in Ireland. Two brands, Ballygowan water, sourced in Limerick and owned by Britvic, plus Deep RiverRock, from Country Antrim and owned by Coca-Cola Hellenic, both vie for category leadership. The Tipperary brand, from County Tipperary and now part of the C&C Group portfolio, also features highly.

Last year, bottled water was a top performing category again, aided by a good summer and the impact of negative press surrounding sugary CSDs.

Although per-capita intake of CSDs is lower in Ireland than in the UK, it is still the number one soft drinks segment and the same fears - unfounded or otherwise - are attached to its consumption. According to the World Health Organisation, around 60% of Irish children drink a can of soft drink every day. This claim has given rise to serious concerns over obesity. As a result, the introduction of a sugar tax has been on the Irish Republic’s government agenda since at least 2012, but to date without implementation.

This has not prevented Irish consumers shying away from the CSD category, with a negative effect on overall consumption. At the same time, low-calorie CSDs have increased their following.

However, some consumers remain cautious of artificial sweeteners and this is seen to be holding back low-calorie penetration. Coca-Cola Ireland, which heads up the CSD category, has not ignored such concerns. Coke Life, sweetened with a blend of sugar and natural stevia extract, was launched in January. Despite this, PepsiCo has yet to release either of its stevia-based colas, Pepsi Next or Pepsi True, in the country.

As in the UK, squash is popular due to its affordability and wide range of flavours. The leading Miwadi range from Britvic, for example, offers ten flavours across its regular, double-concentrated, no-added sugar and new 0%-sugar squashes.

The category has also been quite innovative. Last year saw the introduction of liquid flavour enhancers to the Irish market, a concept that originated in the US in 2011. The Irish pioneer has been Robinsons Squash’d, again from Britvic, with each 6.6cl bottle providing 20 servings. However, like CSDs, the squash category suffered a poor performance last year, impacted by the media attention surrounding the level of sugar in some soft drinks.

Consequently, category leader Britvic announced at the beginning of this year, that it was withdrawing all full-sugar lines from its Robinson’s range, including Squash’d. Then, in March, we saw the introduction of Miwadi 0% sugar squashes.

As in the UK, Lucozade, recently bought by Suntory, is the traditional energy drink brand leader. But, unlike the UK, the Irish market struggled last year. Yet, although energy drinks generally have a high sugar content, the segment has not been subjected to the same level of hostile debate as other soft drinks. That is not to say that the category is without its opponents. In late-2014, the Irish food safety watchdog, Safefood, was asked to review research on the negative effects of energy drinks. Though, as yet, unconfirmed, this is expected to lead to a minimum consumption age recommendation.

Like the rest of Western Europe, Ireland has been in the grip of economic distress, but whilst the UK achieved only sluggish growth last year, the Irish Republic has bounced back strongly. Its economy grew by an impressive 4.8%, the fastest pace in Europe, according to the Irish Central Statistics Office. This obviously bodes well for the Irish market generally.

However, the sugar debate will continue to gather momentum in the country, with energy drinks also being pulled into the spotlight. As a result, limited growth across the soft drinks spectrum is predicted, but with bottled water continuing to shine through.