adult soft drinks

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Adult Soft Drinks - UK - January 2006 About the market: Since Mintel’s last report on adult soft drinks in January 2004, this sector remains one of the fastest-growing sectors of the soft drinks market. It has experienced growth of 84% in volume terms and 118% in value since 2000, taking sales volumes to 608 million litres in 2005. Although flavoured water remains the largest sector in volume terms, the market is being driven by a preference among consumers for healthier drinks with a higher juice content, a desire to consume a wider range of flavours, and a willingness to pay more for soft drinks. In addition, on-trade sales are benefiting from changing attitudes to alcohol consumption. With manufacturers succeeding in gaining custom through numerous new launches and range extensions, NPD has been a significant driver of growth. Mintel’s research indicates that further growth in adult soft drinks can be driven by further meeting consumer demand with premium brands with a healthy and natural image. Market Drivers The healthy proposition One of the key factors in the emergence of the adult soft drinks category has been the increasing attention paid to health issues by consumers. The media dedicates significant coverage to such issues, which include the problem of rising obesity and related conditions, such as heart disease and diabetes. The result of this has been that consumers are becoming increasingly health- conscious in their eating and drinking habits, as demonstrated in Figure 1. FIGURE 1:Agreement with selected lifestyle statements, 2001-05 Base: adults aged 15+ 2001 2003 2005 % point change % % % 2001-05 I always think of the calories in what I eat 19.0 21.1 23.1 +4.1 I use diet food and drinks products 18.8 17.6 21.1 +2.3 I avoid sugar 32.9 34.2 37.7 +4.8

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Page 1: Adult Soft Drinks

Adult Soft Drinks - UK - January 2006About the market:Since Mintel’s last report on adult soft drinks in January 2004, this sector remains one of the fastest-growing sectors of the soft drinks market. It has experienced growth of 84% in volume terms and 118% in value since 2000, taking sales volumes to 608 million litres in 2005. Although flavoured water remains the largest sector in volume terms, the market is being driven by a preference among consumers for healthier drinks with a higher juice content, a desire to consume a wider range of flavours, and a willingness to pay more for soft drinks. In addition, on-trade sales are benefiting from changing attitudes to alcohol consumption.

With manufacturers succeeding in gaining custom through numerous new launches and range extensions, NPD has been a significant driver of growth. Mintel’s research indicates that further growth in adult soft drinks can be driven by further meeting consumer demand with premium brands with a healthy and natural image.

Market Drivers

The healthy propositionOne of the key factors in the emergence of the adult soft drinks category has been the increasing attention paid to health issues by consumers. The media dedicates significant coverage to such issues, which include the problem of rising obesity and related conditions, such as heart disease and diabetes. The result of this has been that consumers are becoming increasingly health-conscious in their eating and drinking habits, as demonstrated in Figure 1.

FIGURE 1:Agreement with selected lifestyle statements, 2001-05

Base: adults aged 15+

2001 2003 2005 % point change

% % % 2001-05

I always think of the calories in what I eat 19.0 21.1 23.1 +4.1

I use diet food and drinks products 18.8 17.6 21.1 +2.3

I avoid sugar 32.9 34.2 37.7 +4.8

I always look for the light/diet versions of food and drink

- - 26.7

Taken from the TGI survey of around 25,000 adults

Source: GB TGI, BMRB Summer 2001 & 2003 & Quarter 3 2005/Mintel

Page 2: Adult Soft Drinks

With particular reference to soft drinks, concerns have been focused around the high sugar content in many products and the number of artificial additives used. Consumers are consequently seeking healthier or more natural alternatives and these desires are being catered for by many manufacturers of adult soft drinks. Drinks with a significant juice content such as J2O, Ocean Spray and Appletiser have become popular, while many manufacturers place an emphasis on the ‘naturalness’ of the ingredients used. NPD within adult soft drinks has seen manufacturers further respond to increasing health concerns by reducing the sugar content of their drinks, either by using alternative natural sweeteners such as fruit juices or by using artificial alternatives.

Market DevelopmentsData from the TGI survey of 25,000 adults clearly reflect the current trend towards healthier eating and drinking. While the proportion of adults drinking mainstream dilutables, carbonates, colas and mixers declined between 2002 and 2004, the propensity to consume healthier alternatives such as fruit juices, mineral and flavoured water increased. This shift in drinking habits has driven sales of adult softdrinks as a result of their (mostly) healthier positioning.

FIGURE 2: Penetration of soft drinks, 2002-04

Base: adults aged 18+

2002 2004 % point change

% % 2002-04

Fruit squashes & cordials

69.2 67.6 -1.6

Flavoured carbonates 67.6 64.6 -3.0

Cola 60.8 60.5 -0.3

Fruit & vegetable juice 58.6 59.2 +0.6

Bottled mineral water 49.1 53.3 +4.2

Mixers 37.3 36.1 -1.2

Flavoured water 23.1 24.4 +1.3

Page 3: Adult Soft Drinks

NPD maintains consumer interestAnother result of the trend towards healthier eating and greater nutritional knowledge among consumers has been an increased interest in the functionality of certain ingredients. Indeed, consumers are often demanding more than simply low-fat or low-calorie food and drink products and are looking for ingredients that actively improve their health. This has given rise, for example, to the increased use of ingredients high in anti-oxidants such as cranberries, pomegranates, blueberries and green tea, as well as a wide range of plant extracts including: aloe, chamomile, ginseng, guarana and rooibos. Such ingredients are increasingly being used as part of the proposition of adult soft drinks, presenting both a healthier image and an added-value benefit that can help to justify the premium charged and create a ‘sophisticated’ image.

NPD has also seen manufacturers experiment with the use of exotic flavours to cater for the ever-more experimental consumer palate, while the development of new packaging formats is meeting consumers’ demands for convenience and helping to increase consumption occasions.

An alternative to alcohol

Attitudes towards alcohol in the UK have had an ongoing influence on sales of adult soft drinks, particularly in the on-trade. While stories of binge drinking continue to hit the headlines and the licensing laws in England and Wales have recently been relaxed to allow pubs to open longer, consumer research indicates that the overall prevalence of alcohol consumption is actually in gradual decline. This trend could well intensify as social attitudes harden towards drink-driving in particular, but also towards excessive alcohol consumption in general.

As shown in Figure 3, the proportion of adults who consume alcohol has fallen since 2000, which is good news for providers of adult soft drinks as consumers will increasingly be looking for alternatives. In addition to these non-drinkers, a far greater proportion will avoid alcohol on particular occasions, especially when driving, but also when abstaining from alcohol for health reasons or simply because they do not feel like drinking. Manufacturers of adult soft drinks cater for such occasions, providing consumers with an increasing variety of alternatives to alcohol. This is especially important in the on-trade, wheresoft drinks with a more ‘sophisticated’ image may feel more in keeping with a social occasion than standard colas, carbonates or juices.

FIGURE 3: Consumption of alcoholic drinks, 2000-04

Base: adults aged 18+

2000 2002 2004

% % %

Any alcohol 90.3 89.7 89.2

Any lager (draught, canned, bottled) 52.8 50.7 51.7

Any beer & stout (draught, canned, bottled) 35.6 34.8 32.5

Page 4: Adult Soft Drinks

Any wine 66.8 67.0 66.7

Any spirit 70.4 68.6 66.5

Pre-mixed spirits & alcoholic carbonates 17.0 25.6 22.2

Taken from the TGI survey of around 25,000 adults

Source: GB TGI, BMRB 2000, Spring 2003 & Quarter 2 2005/Mintel

The demise of the ‘lunchtime pint’

Drinking alcohol at lunchtime is becoming increasingly frowned upon by employers, which is gradually resulting in increased sales of adult soft drinks via on-trade outlets on weekdays. Similarly, employers take a dim view of employees turning up for work with a hangover. Exclusive consumer research (conducted for Mintel’s On-trade Soft Drinks – UK, Market Intelligence, September 2005), found that 14% of adults drink soft drinks in an on-trade environment during the week, as a way of remaining fresh for work the next day, whilst around one in ten adults said that they liked to have one or two alcohol-free days during the week. This does not necessarily mean, however, that these consumers are not visiting the pub during the week, so the increasing variety of alternatives to alcohol available to them will continue to be popular.

The importance of imageMarket DevelopmentsAdult soft drinks are defined as any soft drinks that are targeted specifically at adults, rather than being classified according to their ingredients, and image is therefore, by definition, crucial in this market. These products are designed to appeal mainly to adults on the basis of being healthier or more sophisticated than other softdrinks. In certain sectors, such as iced coffee, it is the indulgence aspect that is emphasised – the drinks are designed to be perceived as a treat that justifies the premium charged over other soft drinks. The image aspect is particularly important in the on-trade, where drinks such as Deuce and J2O have proved successful. While these drinks tend to provide alternative flavours to the traditional pub soft drink offerings such as cola, lemonade and orange juice, part of their appeal also lies in their packaging. The packaging of such drinks in bottles that look like they were designed to be drunk in a pub may help consumers to feel more comfortable drinking soft drinks in the on-trade environment.

Seasonality and the weatherAs with the majority of soft drinks markets, the weather can exert an influence over the consumption of adult soft drinks, while sales also tend to vary seasonally.

FIGURE 4: UK average summer temperature and sunshine hours, 2002-05

Page 5: Adult Soft Drinks

Average summer temperature in degrees C*

Index Total no. hours of sunshine over summer months

Index

2002 15.3 100 507.9 96

2003 16.8 110 602.2 114

2004 14.9 97 485.1 91

2005 15.3 97 530.0 100

* Using the mean temperature between June to August

Source: Met Office/Mintel

Demand for water and soft drinks is closely associated with trends in the summer weather, and sales can vary from year to year accordingly. This was demonstrated in the summer of 2003, which was long, hot and sunny, and saw an overall rise in sales of soft drinks, particularly via impulse channels and in the on-trade. The influence of the weather therefore naturally leads to an element of seasonality in the soft drinks market, with sales lower during the winter months. Manufacturers of adultsoft drinks have begun to respond to this with the launch of cordials and pressés, such as Red Grape Elderberry & Clove Shloer and Belgravia & Tobago from Vimto, that are designed to be drunk hot during the winter.

Coffee shop culture encourages home consumptionUK consumers are becoming increasingly discerning when it comes to out-of-home coffee consumption. Both the total number of dedicated coffee outlets and the frequency with which consumers visit them has increased significantly since 2000. According to exclusive consumer research conducted for Mintel’s Coffee Shops – UK, Leisure Intelligence, February 2005, nearly a third of adults questioned in November 2004 had visited a major branded coffee shop chain within the previous three months, compared with just 15% who had done so within the last 12 months in 2000. The same 2004 survey found that more than a fifth of adults visit a coffee shop at least once a week, generating around 5 million regular users. This increase in out-of-home consumption contrasts with a decline in sales of standard instant coffee for in-home consumption, and is in line with a trend towards premium instant products and the use of ground coffee.

FIGURE 5: Number of coffee shops, by turnover, 2000-04

Major branded chains* Others*** Total outlets

Turnover

Average per outlet

Number Number £million £

2000 631 469 1,100 250 227,273

Page 6: Adult Soft Drinks

2002 940 560 1,500 374 249,333

2004 1,100** 504 1,604 449 279,925

* Starbucks, Costa Coffee, Coffee Republic, Caffè Nero and Puccino’s** figure excludes Coffee Republic, which is currently withdrawing from the coffee shop market*** smaller multiple branded coffee shops

Source: Mintel (Coffee Shops – UK, Leisure Intelligence, February 2005)

The rise in the number of branded coffee shops on our streets and in our shopping centres has increased awareness of both hot and chilled coffee, with the major branded chains promoting frappés and chilled lattés during the summer months. This appears in turn to have contributed to the increase in sales of iced coffee, although with only one RTD product, Kenco’s Ice Cappio, currently in widespread retail distribution, the potential may well exist for further development of this product sector if consumer interest

Rising disposable incomes mean consumers willing to pay moreFalling unemployment and a buoyant housing market fuelled by historically low interest rates ensured that growth in PDI outstripped expenditure between 1999 and 2004. While PDI does not have the same direct effect on food and drink markets as it does on big-ticket purchases, such as electrical goods, it has contributed to the ‘feel good factor’ amongst UK consumers, which has encouraged trading up to premium products. This sense of increased wealth or affluence has combined with a ‘spend now, save later’ culture that has encouraged consumers to treat themselves more to products that are priced at a premium because they are indulgent or because of an upmarket or trendy image.

Population trends and demographicsManufacturers of products targeted specifically at the adult market have benefited in recent years from the ageing of the UK population. Between 2000 and 2004, the total number of adults aged 20+ increased by 2.2% to reach 45 million.

FIGURE 7: Trends and projections in UK population, by age group, 2000-09

2000 % 2004 % 2009 % 2000-09 2004-09

000 000 000 % change % change

0-4 3,551 6.0 3,390 5.7 3,436 5.6 -3.2 +1.4

5-9 3,804 6.5 3,606 6.0 3,412 5.6 -10.3 -5.8

Page 7: Adult Soft Drinks

10-14 3,849 6.5 3,869 6.5 3,622 5.9 -5.9 -6.4

15-19 3,633 6.2 3,899 6.5 3,923 6.4 +8.0 +0.6

20-24 3,507 6.0 3,772 6.3 4,085 6.7 +16.5 +8.3

25-34 8,646 14.7 7,928 13.3 7,664 12.6 -11.4 -3.3

35-44 8,678 14.7 9,191 15.4 8,990 14.8 +3.6 -2.2

45-54 7,758 13.2 7,644 12.8 8,351 13.7 +7.6 +9.2

55-64 6,153 10.4 6,907 11.6 7,347 12.1 +3.8 +6.4

65+ 9,308 15.8 9,582 16.0 10,107 16.6 +8.6 +5.5

Total 58,886 100 59,787 100 60,934 100 +3.5 +1.9

Source: National Statistics/Mintel

The 15-34 age group, which according to TGI data has the highest overall consumption of adult soft drinks (see The Consumer section), actually experienced a decline in numbers between 2000 and 2004, but is expected to increase again between 2004 and 2009, adding an extra 73,000 consumers to the core market.

Between 2000 and 2004, the proportion of the UK population belonging to the ABC1 and C2 socio-economic groups increased from 71.5% to 74.5%. Consumer research conducted for this report indicates that, despite their premium positioning, C1s and C2s are actually the most likely to consume adult soft drinks. The upper end of this market (the C1 consumers) are expected to increase in numbers by nearly 5% between 2004 and 2009, although the greatest increase is forecast to occur in the AB population. The latter group have so far proved somewhat elusive to marketeers of adult soft drinks, although a large proportion of the significant budgets dedicated to NPD and marketing by the big players in particular are likely to be focused on targeting this group in the future.

FIGURE 8: Trends and projections in UK population, by socio-economic group, 2000-09

2000 2004 2009 2000-09 % 2004-09 %

Page 8: Adult Soft Drinks

change change

000 % 000 % 000 %

AB 10,696 22.4 12,127 24.8 13,296 26.3 +24.3 +9.6

C1 12,972 27.2 14,214 29.0 14,909 29.5 +14.9 +4.9

C2 10,451 21.9 10,214 20.9 10,288 20.3 -1.6 +0.7

D 8,438 17.7 7,930 16.2 7,275 14.4 -13.8 -8.3

E 5,125 10.7 4,437 9.1 4,697 9.3 -8.4 +5.6

Total

47,682 100.0 48,923 100.0 50,466 100.0 +5.8 +3.2

Source: National Statistics/Mintel

Market Size and Trendsbookmark | export

‘Healthy’ image driving healthy growthSales of adult soft drinks increased by 84% between 2000 and 2005 to reach more than 600 million litres. Despite a certain amount of discounting by the major multiples, value sales have outperformed volume sales, more than doubling to £709 million over the same period. Throughout the review period, soft drinks targeted specifically at adults have experienced stronger growth than the overall soft drinks market.

It should be noted that historical data have been revised in Figure 9 and thereafter, in light of new information received from trade.

FIGURE 9: UK retail sales of adult soft drinks, by volume and value, 2000-05

m litres

Index £m Index £m at Index €m Index

2000 prices

Page 9: Adult Soft Drinks

2000 331 100 325

100 325 100 533 100

2001 386 117 380

117 368 113 612 115

2002 444 134 467

144 449 138 743 139

2003 500 151 559

172 530 163 811 152

2004 547 165 619

190 584 180 910 171

2005 (est) 608 184 709

218 660 203 1,056 198

UK retail sales of adult soft drinks, by volume, 2000-05

UK retail sales of adult soft drinks, by value, 2000-05

Source: Mintel

Principal factors behind the strong performance of the market include high levels of NPD, which have come about in response to consumer interest in new flavours and types of drink. There is also a continuing willingness among adults to pay more for their drinks, particularly for those that are perceived as being ‘healthy’. The healthy credentials of many adult soft drinks tend to be based around their fruit content, a lower sugar content than standard carbonates, or the presence of functional ingredients.

Growth outstripping soft drinks marketThe factors mentioned above have contributed to faster growth in adult soft drinks than in the overall soft drinks market between 2001 and 2005, as demonstrated in Figure 10. However, despite this growth and the broad definition of adult softdrinks adopted by Mintel, they remain a niche sector, accounting for less than 5% of overall soft drinks sales by volume in 2005.

FIGURE 10: UK retail sales of adult soft drinks against total soft drinks, by volume and value, 2001-05

Page 10: Adult Soft Drinks

2001 2003 2005 (est) % change

m litres

% m litres

% m litres % 2001-05

Adult soft drinks 386 3.1 500 3.5 608 4.3 +57.5

Other soft drinks 12,172 96.9 13,590 96.5 13,512 95.7 +11.0

Total soft drinks

12,558 100 14,090 100 14,120 100 +12.4

2001 2003 2005 (est) % change

£m % £m % £m % 2001-05

Adult soft drinks 380 3.7 559 4.7 709 5.8 +86.6

Other soft drinks 9,938 96.3 11,422 95.3 11,557 94.2 +16.3

Total soft drinks

10,318 100 11,981 100 12,266 100 +18.9

Source: Mintel

Figure 10 demonstrates how adult soft drinks have helped to maintain growth in the overall soft drinks market, with volume sales of all other types of soft drinks having in fact fallen slightly between 2003 and 2005. This is largely reflective of the decline in volume sales of carbonates, which fell by 5% between 2003 and 2004, according to Mintel’s Carbonates – UK, Market Intelligence, February 2005.

Market Developments

The premium nature of many of the drinks targeted specifically at adults and the higher prices charged for brands sold via the on-trade give adult soft drinks a slightly higher share of the overall soft drinks market by value.See Also

Low-alcohol and Alcohol-free Drinks - UK

Smoothies - UK

Page 11: Adult Soft Drinks

Market Segmentation

The market for adult soft drinks can be broadly segmented into four distinct categories, which are defined as follows:

Premium adult soft drinks – includes drinks packaged in glass bottles and positioned at the top of the market, often as an alternative to alcohol (eg Amé, Aqua Libra, Shloer and J2O). Also included are cordials and pressés from the likes of Bottlegreen and Belvoir.

Fruit juice drinks – must contain a minimum of 2% comminuted fruit, although most have a much greater proportion, usually with a pure fruit juice content of up to about 30% (in some products this proportion could be higher) and are mixed either with still or carbonated water. Examples include Oasis, Snapple and World Fruits.

Iced tea and coffee (including flavoured iced teas) – consumed cold and contain coffee- or tea-based derivatives. Products in sachet form, which need water to be added, are excluded.

Market Developments

Flavoured waters – typically mineral or spring waters with a subtle flavour achieved by the addition to the water of fruit juice, essences or flavourings (sometimes also a sweetener). The sector can be divided into the still and sparkling (carbonated) sub-segments. Flavoured waters form a segment of the bottled water market but are also covered in this report.

bookmark | export

Flavoured water takes highest share of volumes, but loses out in valueAll sectors of the market for adult soft drinks enjoyed healthy rates of growth between 2003 and 2005, although rates have slowed a little in recent years. Flavoured water remains the largest sector in volume terms, but slower rates of growth and its relatively low price per litre (largely due to limited sales via the on-trade) mean that in value terms flavoured water now ranks second to premium adult soft drinks. The latter sector experienced the strongest growth in value sales between 2003 and 2005 and continues to be driven by the success of J2O and similar products such as J+ and Deuce.

FIGURE 11: UK retail sales of adult soft drinks, by type, volume and value, 2003 and 2005

2003 2005 (est) % change

m litres

% m litres % 2003-05

Flavoured waters 315 63.0 368 60.5 +16.8

Fruit drinks 109 21.8 133 21.9 +22.0

Premium adult soft drinks 64 12.8 90 14.8 +40.6

Page 12: Adult Soft Drinks

RTD tea and coffee 12 2.4 17 2.8 +41.7

Total 500 100 608 100 +21.6

2003 2005 (est) % change

£m % £m % 2003-05

Flavoured waters 189 33.8 212 29.9 +12.2

Fruit drinks 164 29.3 199 28.1 +21.3

Premium adult soft drinks 190 34.0 276 38.9 +45.3

RTD tea and coffee 16 2.9 22 3.1 +37.5

Total 559 100 709 100 +26.8

Data may not equal totals due to rounding

Source: Mintel

RTD tea and coffee experienced the second highest rate of growth in value terms and the highest when measured in volume, albeit from a very small base. Growth in sales of adult fruit drinks was modest when compared with other sectors, but still outperformed the overall market for juice-based drinks (not including 100% fruit juice), which according to the Mintel reportFruit Juice & Juice Drinks – UK, Market Intelligence, November 2004, was expected to see volume growth of 14% between 2003 and 2005.

Growth in sales of flavoured water slowsFollowing the launch of Strathmore Clear and Perfectly Clear in the early 1990s, which helped to firmly establish the flavoured water category, a host of other brands and own-labels have come to market, perpetuating growth in the sector. Many of the leading bottled water brands including Vittel and Volvic, now offer flavoured varieties. Danone launched Volvic Touch of Fruit in 2002, which has now become established as a leading brand in the sector, and Shape in 2004, following the unsuccessful extension of

Page 13: Adult Soft Drinks

calcium-enriched Danone Activ into flavoured waters. Vittel joined the sector in June 2005 with the launch of its first flavoured variants in the UK.

FIGURE 12: UK retail sales of flavoured water, by volume and value, 2000-05

m litres

Index £m Index £m at Index

2000 prices

2000 238 100 157

100 157 100

2001 262 110 168

107 163 104

2002 288 121 179

114 172 110

2003 315 132 189

120 179 114

2004 339 142 199

127 188 120

2005 (est) 368 155 212

135 197 126

Source: Mintel

Growth in the flavoured water market has slowed slightly since the start of the decade, but remains healthy, estimated at just under 9% in 2005. Volume growth has exceeded value growth, with the average price per litre having fallen from 66p in 2000 to an estimated 58p in 2005 as competition has increased, particularly as a result of the proliferation of own-label varieties.

Sugar vs sweetenersFlavoured waters have come in for some criticism in the media over their sugar content, with a report in the Sunday Times in December 2004 claiming that ‘Fruity water has more sugar than a Mars bar.’ The market appears however, to have been relatively undamaged by such claims. There are two sides to the issue to the sugar issue in this market. On the one hand, many manufacturers use artificial sweeteners in their drinks, or have diet variants that use them, in order to appeal to consumers who are looking to cut

Page 14: Adult Soft Drinks

down their sugar content, perhaps as a means of watching their weight. On the other, many consumers, particularly ABs, tend to avoid artificial ingredients in food and drink, and therefore find the use of sweeteners off-putting.

It would appear that the adult soft drinks market has prospered on the back of the mass-market appeal of drinks that have replaced sugar with sweetener, although manufacturers will not be happy at having missed out to a certain extent on the most valuable AB demographic. In addition, the backlash against processed food and artificial ingredients appears to be becoming more widespread, suggesting that natural ingredients will be the key to success in the future.

Fruit drinks offer a healthier alternativeDemand for adult fruit drinks has benefited from the trend towards healthier eating, with many consumers looking for more natural and varied ingredients and a less sweet taste. This sector has benefited from the trend away from mainstream carbonates, sales of which declined by 5% in volume terms in 2004, according to the Mintel report Carbonates – UK, Market Intelligence, February 2005. Sales of adult fruit drinks have doubled during the period under review and continue to experience healthy rates of growth.

FIGURE 13: UK retail sales of adult fruit drinks, volume and value, 2000-05

m litres

Index £m Index £m at Index

2000 prices

2000 65 100 97 100 97 100

2001 81 125 121

125 117 121

2002 97 149 142

146 137 141

2003 109 168 164

169 156 160

2004 118 182 174

179 164 169

2005 (est) 133 205 19 205 185 191

Page 15: Adult Soft Drinks

9

Source: Mintel

New product launches driving growthNPD has been an important factor in sector growth, both in terms of new brands coming to market and manufacturers’ responses to consumer interest in healthier ingredients, a wider range of flavours, lower sugar products and convenient packaging formats. One of the most prominent new brands to enter the market has been Robinsons Fruit Spring from BritvicSoft Drinks, which was launched in January 2004 and is targeted at the adult ‘on-the-go’ market. Fruit Spring was originally launched in three flavours: Raspberry and Lemon; Apple and Lime; and Apple and Cranberry, and the company reported sales of just under £6 million during its first year. The brand subsequently experienced a decline in sales in 2005, although the company hopes that the extension of the range to include three sugar-free variants will help to reverse this trend.

Consumers seeking additional benefitsHealthy eating and increased consumer awareness about the benefits of particular fruits has led to an increase in sales ofdrinks based on cranberries and more recently, the pomegranate, both of which contain high levels of antioxidants. Pomegreat, a drink based on pomegranate juice and fortified with vitamins A, C and E and folic acid is targeted specifically at women and was launched by RJA Foods in February 2003. Health was also the driver behind the 2004 launch of the Feel Good Spritz range which combines fruit juices (around 10%) with sparkling spring water, plus the RDA of vitamin C.

Exotic tastes ‘on the go’Consumers are also becoming increasingly experimental in their tastes with drinks based on exotic fruits becoming increasingly popular. Juice drink supplier Rubicon specialises in juice drinks based around tropical fruits and coconut milk and now offers a wide variety of exotic flavours, including coconut, mango, passionfruit, guava, guanabana and lychee. Adult fruit drinks hold a strong appeal for consumers wishing to quench their thirst while ‘on the go’. While many manufacturers in this sector package their products in glass bottles (which indeed contributes to the ‘premium’ image of the products), the majority have responded to the desire for convenience by also offering individual serve PET or carton formats, which can be stored in chiller cabinets in order to attract impulse purchasers.

Premium sector boosted by a willingness to pay moreSales of premium adult soft drinks more than trebled between 2000 and 2005 in volume terms, to reach an estimated 90 million litres. Growth in sector value has been even more impressive, with sales increasing more than four fold to £276 million. Similar rates of growth are expected to continue at least in the short term, with sales value predicted to increase by around 20% in 2006, slightly ahead of the rate of volume increase.

FIGURE 14: UK retail sales of premium adult drinks, volume and value, 2000-05

m litres

Index £m Index £m at Index

2000 prices

Page 16: Adult Soft Drinks

2000 28 100 63 100 63 100

2001 36 129 81 129 78 124

2002 50 179 135

214 130 206

2003 64 229 190

302 180 286

2004 76 271 228

362 215 341

2005 (est) 90 321 276

438 257 408

Source: Mintel

The premium adult soft drinks sector has benefited from consumers’ increasing willingness to spend more on food and drinkproducts that they perceive as being of higher quality than standard varieties. Increasingly, premium adult soft drinks that initially gained success in the on-trade as an alternative to alcohol, such as J2O, are being consumed in preference to mainstream carbonates or perhaps water. The success of the category has given rise to a number of similar products, such as Deuce, a premium juice-based drink from CCE, which is similar to J2O and was launched exclusively via the on-trade in March 2005; and J+ from Intercontinental brands, also launched in 2005, via retail channels. The successful extension of J2O out of the on-trade and into retail has accounted for a significant proportion of sector growth in the last year.

Premium dilutables performing wellA stronger performance has been seen in the premium dilutables category, which is currently growing at around over 10% per annum in both volume and value terms. Cordials such as those produced by Bottlegreen, Belvoir and Duchy have achieved this growth without the need to resort to the levels of discounting that have begun to affect some brands within the RTD sector, such as Amé and Shloer. Cordials have also benefited from growth in the on-trade, with bartenders in Style Bars using more unusually flavoured cordials as cocktail components and conference venues and hotels increasingly providing these types of cordials.

Health and convenience key to sector growthThe development of more convenient packaging formats of many premium adult soft drinks has been another important factor in precipitating the growth of the category. Shloer, for example, has moved to broaden its appeal by launching 250ml slim cans to cater for out-of-home consumers, following the launch in November 2004 of individual 275ml glass bottles for in-home consumption on occasions when a full 1-litre bottle may be too large.

Health concerns again feature prominently in the drivers behind the growth of this sector of the adult soft drinks market. The Feel Good Drinks Company, for example, recently decided to eliminate

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added sugar from across its range by using fruit extracts and more juice. In common with the fruit drinks sector manufacturers have also appealed to consumers’ increasing predilection for products that have added health benefits, which has had a positive effect on sales. In April 2004, for example, Merrydown introduced Sorelle, a range of two herbal infused sparkling fruit-juice based drinks, targeted at women aged 25+, which use health-giving herbal ingredients such as ginseng (a ‘memory booster’), gentian (to aid digestion) and damiana (a ‘natural tonic’).

Iced tea and coffee – an emerging segmentSales of iced tea and coffee remain small compared with other sectors in the adult soft drinks market, as demonstrated in Figure 11. Sales volumes have, however, almost trebled between 2000 and 2005 to reach an estimated 17 million litres, while value growth has been only marginally slower, reaching more than £20 million in 2005. High levels of investment in main media advertising have been key in driving this performance, with total expenditure in support of RTD tea and coffee brands totalling £5.5 million in 2004, according to Nielsen Media Research. This represented nearly a third of the value of sales in the sector.

FIGURE 15: UK retail sales of RTD tea and coffee, volume and value, 2000-05

m litres

Index £m Index £m at Index

2000 prices

2000 6 100 8 100 8 100

2001 7 117 10 125 10 121

2002 9 150 12 150 12 144

2003 12 200 16 200 15 190

2004 14 233 18 225 17 212

2005 (est) 17 283 22 275 20 256

Source: Mintel

Although iced tea is popular in the US and continental Europe, the product has yet to gain widespread acceptance among British consumers. Despite the presence of well-known brands such as Liptons, Twinings and Tetley’s, and heavy investment in advertising and promotion, iced tea remains a niche market. Manufacturers have, however, recently moved to make their products appeal on a health basis, with the Tetley T of Life and Lipton Iced Tea ranges having been extended to include low-calorie variants.

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Market Developments

Iced coffee accounts for just under a fifth of all RTD coffee and tea sales in 2005. Almost all sales in the sector are now of Kraft’s Kenco Ice Cappio, following the withdrawal of Nescafé Ice in 2002. Kraft has invested heavily in developing the sector, spending over £2 million on main media advertising for Ice Cappio in 2004. Nevertheless, consumers have been comparatively slow to turn on to the product. One reason for this could be the fact that the product’s image is far more one of indulgence than health. Kenco’s Ice Cappio contains 138 calories and 6g fat in a 200ml serving, compared with 62 calories and no fat in the same quantity of TwiningsIced Tea. Iced coffee also lacks the natural health-giving properties (eg antioxidants) of many iced teas, particularly the green tea varieties.

The Supply Structure

The diverse nature of the adult soft drinks market means that it brings together a number of large manufacturers, which while not necessarily competing directly against each other within product categories, are all trying to achieve a greater share of consumer spend on soft drinks. At the same time, the comparatively low barriers to entry have encouraged a number of new players to become involved in recent years. These have included both new business start-ups such as The Feel Good DrinksCompany and multinationals such as CCE and Nestlé, which have recently entered the iced tea sector with their joint venture Nestea.

Figure 16 shows examples of leading players and their brands, and whilst not exhaustive, serves as a useful guide to product categorisation.

FIGURE 16: Selected manufacturers/distributors and brands in the UK adult soft drinks market, 2005

Company Brands

Fruit drinks:

AG Barr Orangina

Boots Shapers

Britvic   Soft   Drinks Robinsons Fruit Spring

CCE Oasis, Rose's Lime Cordial

Del Monte World Fruits

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Gerber Foods Ocean Spray, Welch’s

Matthew Clark Brands Spring Fruits

Prince's Soft Drinks Capespan

Rubicon Rubicon

SHS Group* Snapple

Iced tea and coffee:

CCE Nestea

Kraft Kenco Ice Cappio

Tetley T of Life

Twinings Twinings Iced Teas

Unilever Lipton Iced Tea

Premium adult soft drinks:

AG Barr St Clements Squeeze

Belvoir Fruit Farms Belvoir cordials and pressés

Bottlegreen Drinks Bottlegreen pressés and cordials

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Britvic   Soft   Drinks Aqua Libra, Amé, J2O, Britvic 55

CCE Appletiser

The Feel Good   Drinks   Company The Feel Good Drinks Co

Merrydown Shloer

Stock Vital Carpe Diem

Thorncroft Thorncroft pressé and cordials

Flavoured water:

Beverage Brands Caledonian Clear

Danone Waters (UK) Volvic Touch of Fruit, Shape

Matthew Clark Brands Strathmore

Nestlé Vittel

Silver Spring Perfectly Clear

Villa   Soft   Drinks Hadrian Clear

*SHS’s contract to distribute Snapple expired at the end of 2005. Future distribution arrangements for the brand are unclear at time of writing.

Source: Mintel

Market Developments

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The market for adult soft drinks is becoming an increasingly competitive, well-branded, and high quality (in terms of product quality, variation and differentiation) sector, with the major players having invested significant amounts in NPD and marketing. As the environment becomes increasingly competitive and more products become available at lower prices, it is likely that more consumers will be attracted to the category. However, in a market where a ‘premium’ image is also a key part of the proposition and where AB consumers are not being engaged as well as they perhaps might be, many manufacturers will be wary of creating too much of a mass-market appeal for their brands.

Danone leads the market in volume termsMarket Developments

Danone is the leading supplier of flavoured water with its Volvic Touch of Fruit brand, and is also the largest supplier, in volume terms, to the adult soft drinks market. Manufacturer shares have remained relatively unchanged between 2003 and 2005, although in the case of BSD, a disappointing performance by its Amé and Aqua Libra brands has been masked by the success of J2O. Other brands have seen their share of the market increase, reflecting the willingness of consumers of adult soft drinks to try new brands and products when given the opportunity.

FIGURE 17: Estimated UK supplier shares of adult soft drinks, by volume, 2003 and 2005

2003 2005 % change

m litres

% m litres

% 2003-05

Danone 57 11 69 11 +21.1

BSD 44 9 56 9 +27.3

Gerber 43 9 52 9 +20.9

CCE 30 6 43 7 +43.3

Merrydown 13 3 15 2 +15.4

Sub-total (top 5) 187 37 235 39 +25.7

Others 102 20 153 25 +50.0

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Own-label 211 42 220 36 +4.3

Total 500 100 608 100 +21.6

Data may not equal totals due to rounding

Source: Mintel

BSD takes greatest value shareThe success of the premium adult soft drink brand J2O, and particularly the high proportion of sales of this brand via the on-trade (where average prices are significantly higher), has helped BSD to dominate the market for adult soft drinks in value terms, despite trailing Danone in terms of volume sales. The launch of Britvic 55 into the off-trade in 2005 has also contributed to BSD’s growth, although the performance of its other brands, including Amé, Aqua Libra and fruit drink Fruit Spring, has been less impressive.

FIGURE 18: Estimated UK supplier shares of adult soft drinks, by value, 2003 and 2005

2003 2005 (est) % change

£m % £m % 2003-05

BSD 153 27 228 32 +49.0

CCE 48 9 68 10 +41.7

Gerber 40 7 47 7 +17.5

Danone 42 8 49 7 +16.7

Merrydown 19 3 21 3 +10.5

Sub-total (top 5) 302 54 413 58 +36.8

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Others 145 26 151 21 +4.1

Own-label 112 20 145 20 +29.5

Total 559 100 709 100 +26.8

Data may not equal totals due to rounding

Source: Mintel

CCE’s strong performance has been driven by the continued growth of its Oasis brand in the fruit drink sector, while Appletiser has also performed well. Gerber’s Ocean Spray brand has continued to benefit from consumer interest in healthierdrinks, and in particular the popularity of ingredients such as cranberries, which contain antioxidants. Merrydown’s Shloer brand underperformed the market between 2003 and 2005, and, since the sale of Merrydown to consumer goods sales and marketing specialist SHS, recently introduced brands Sorelle (a herb-based health drink) and Posh Squash have been dropped in order to focus on the core brand.

Companies and brands

AG BarrAG Barr’s involvement in the adult soft drinks market is spread between the fruit-based sector, the premium adult soft drinkssector and the iced tea sector. In the fruit drinks sector, the company fields Orangina, produced under licence from Cadbury Schweppes, and is the official distributor of Snapple; in premium adult soft drinks it fields St Clements Squeeze; and in the iced tea sector, the company distributes Lipton Iced Tea on behalf of Unilever. In addition to adult soft drinks, AG Barr also produces the mainstream carbonates brands Irn-Bru and Tizer.

AG Barr has held the franchise to manufacture and distribute Orangina since 1995. The brand was owned by Cadbury Schweppes until Cadbury sold its European drinks business in November 2005 to Blackstone Group LP and Lion Capital LLP. Sales of Orangina have declined in recent years as AG Barr has given greater marketing support to its other brands.

Market Developments

In July 2005, the company introduced St Clements Squeeze, a premium adult softdrink comprising 50% fruit juice and 50% spring water, available in Orange and Apple variants. Advertising expenditure in support of the St Clements Squeeze brand totalled almost £100,000 between July and the end of September.

Belvoir Fruit FarmsBelvoir Fruit Farms is a family-run business, specialising in the production of premium quality cordials, pressés and other fruit-based drinks. The company prides itself on only using fresh fruit, flowers and spices to produce its range of drinks, none of which contain colours, flavours or artificial sweeteners. The

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company grows its own organically certified elderflowers, and produces both organic and non-organic cordials and pressés as well as a range of sparkling organic juice drinks for children.

Belvoir drinks are positioned firmly at the premium end of the adult soft drinks market. They are available in a range of flavours, many of which could be described as outside the mainstream, but are based around fruits and plants that are indigenous to the English garden and hedgerow. Ingredients such as apple, blackcurrant, cherry, damson, gooseberry, elderflower, mint, pear, plum, quince, redcurrant and rhubarb have all featured in the Belvoir range, together with non-indigenous ingredients such as cranberry, ginger, lemon, lemongrass, lime, mango and passion fruit.

In October 2004 Belvoir extended its product range to include Belvoir Crush, a blend of 50% fresh pressed natural fruit juice and still Belvoir spring water, sweetened with grape juice. More recent product development has focused on its cordials and pressés – the company presented its Mint & Lime cordial and presses at the International Food and Drink Exhibition in March 2005 and launched its Raspberry & Rose cordial in autumn of the same year.

With company turnover in the region of £5 million in 2004, advertising budgets are by necessity far smaller than those commanded by the larger players in the adult soft drinks market. According to Nielsen data, Belvoir spent around £38,000 on press advertising in support of its Elderflower Pressé in 2003, although this was subsequently reduced to £7,000 in 2004.

Market Developments

A limited number of pressés and cordials are available from multiple grocers Tesco,Sainsbury’s and Waitrose, while the fuller range of Belvoir drinks is distributed via independent retailers and the company’s own website.

Bottlegreen DrinksBottlegreen was established as a family business in 1989. Based in the Cotswolds, the company is a leading supplier of premium fruit/herbal cordials and pressés, with annual turnover in the region of £7 million. The company’s cordials business is experiencing year-on-year growth of around 30% in volume and value, and accounts for around 45% of Bottlegreen’s sales via the grocery multiples. The Bottlegreen range of cordials, which are offered in 50cl glass bottles, includes flavours such as Elderflower, English Summer, Ginger & Lemongrass, Spiced Berry and Aromatic Sweet Lime. The lightly sparkling pressé range is available in both 750ml and 250ml glass bottles, and comprises flavours such as Elderflower, Elder Light, Cranberry, Ginger & Lemongrass, Blueberry and Blackcurrant.

In February 2003, Bottlegreen launched a range of three cordials under the Wellbeing sub-brand. Developed in conjunction with a herbalist, these cordials were promoted on a more overtly healthy platform. The departure by Bottlegreen from its premium/indulgence pitch was not successful, however. The Wellbeing range has since been withdrawn, although two of the flavours, Raspberry & Loveage and Dandelion & Burdock were relaunched in October 2005 as part of the company’s standard cordial range.

Although positioned at the premium end of the adult soft drinks market, Bottlegreen cordials and pressés tend to undercutBelvoir on price, due to the premium charged by Belvoir for its organic status. According to Mintel’s report, Organics – UK, Market Intelligence, November 2005, penetration of organic soft drinks remains relatively low, with just 5% of consumers having purchased one in the last 12 months. While the organic proposition is one that is currently proving very popular amongst consumers, it therefore appears that, for the moment at least, this is likely to remain a niche sector of the softdrinks market, although this to a certain extent helps to maintain the air of sophistication that is part of the appeal of Bottlegreen’s products.

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Market Developments

The company has achieved widespread distribution via all the leading grocery multiples for its Elderflower cordial and pressé, although stocking of the rest of its range is less extensive. Bottlegreen cordials have also gained distribution via the on-trade, where they are increasingly being employed as mixers and cocktail components by bartenders in Style Bars.

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Britvic Soft DrinksBritvic   Soft   Drinks  is one of Europe’s leading soft drinks manufacturers, its portfolio including brands such as Pepsi, Robinsons, Tango and Britvic. Currently, the company’s leading shareholders are: the Inter Continental Hotels Group (47.5%);Allied Domecq and Whitbread, which each own 23.75%; and PepsiCo, which owns the remaining 5%. BSD was due to be floated in early 2005, but in January it was announced that its three main shareholders had decided to wait until after the summer to make any move towards the stock market. An announcement was duly made in mid-November that the flotation process would start in December, with the company expected to be valued at around £800 million, including £300 million of debt.

Britvic’s involvement in adult soft drinks is confined to its Amé, Aqua Libra, Britvic 55, J2O and Robinsons Fruit Spring brands. In terms of market segmentation, Fruit Spring is positioned within the adult fruit drinks sector, while the remaining brands are defined by Mintel as premium adult soft drinks.

AméThe Amé and Aqua Libra brands joined the Britvic portfolio when the company acquired Orchid Soft Drinks in 2000. Amé is a lightly sparkling blend of fruit juice, spring water and herbal extracts containing no sugar or artificial sweeteners and available in four flavours: Raspberry & Blackberry; Grape & Orange; Grape & Apricot; and Elderberry & Lemon. Previously available as Delicate White, Crisp Dry, Refreshing Rosé and Radiant Red, which were positioned as being reminiscent of wine or vermouth, the range was repackaged and reformulated in May 2005 to place emphasis on its fruit origins. The latest additions to the range, Grape & Apricot and Orange & Grape were added in June 2005.

Aqua LibraAqua Libra is also a lightly sparkling drink, made with spring water, fruit juices and aromatic plant extracts, and is free from added sugar or artificial sweeteners. Aqua Libra is available in three variants: Original, Berry and Dry, reminiscent of wine. Aqua Libra has received limited attention from Britvic since the re-styling of the bottle and the introduction of the Berry variant in 2002, and saw a decline in sales of around 50% in 2005.

J2OJ2O is undoubtedly the jewel in Britvic’s crown, with growth in sales credited as a significant factor in driving forward the development of the adult soft drinks market as a whole. J2O is a blend of 50% fruit juice with water, presented in 275ml glass bottles. Launched in 1998 into the on-trade, and targeted at both male and female 18-45-year-olds, J2O helped develop the adult soft drinks proposition in pubs and other licensed premises. At the time of its launch, there were few, if any similar products on the market, with the possible exception of Britvic 55, which is carbonated and had a much more traditional image. The variety of flavours on offer combined with a trendy image, which was, especially for younger consumers, more in keeping with the on-trade environment than, for example a glass of cola or cordial, generated a huge appeal for the brand. Indeed, the brand, which Britvic bills as “the perfect soft drink to consume whilst others are drinking alcohol” is now worth £190 million across the on- and off-trade, according to the company.

The product was not launched into the off-trade until 2002, but here it has quickly grown to establish itself as one of the biggest-selling premium adult soft drink brands. J2O is available in five flavours: Orange &

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Passionfruit; Apple & Mango; Apple & Melon; Orange & Cranberry; and Raspberry & Apple. The latter was the most recent addition, launched in May 2005.

Other brandsIn January 2004, Britvic launched Fruit Spring as a more natural replacement for its Fruit Break brand. Fruit Spring is clearly positioned as a fruit-based adult soft drink, and is described as being a “combination of two zesty fruit juices with spring water, free from artificial sweeteners, colours or flavourings”. After sales in the first year reaching just under £6 million, 2005 has witnessed a slight decline in sales. In July 2005, Britvic attempted to boost sales with the introduction of a no-added-sugar version.

In 2005, Britvic 55, a longstanding brand for the company in the on-trade, was launched into the off-trade for the first time. Similar to J2O in composition, Britvic 55 offers a sparkling alternative to J2O in the premium adult soft drinks category, and is available in Apple, Orange and Raspberry & Cranberry flavours.

Above-the-line investment across the boardAdvertising support for Britvic adult soft drink brands has been concentrated around J2O and Fruit Spring in recent years, according to Nielsen data, although Britvic was also reported to have invested £4 million in the 2005 relaunch of Amé. The first major push behind J2O was made in 2002, when main media expenditure exceeded £2.2 million, as shown in Figure 19. Further significant support followed in 2003 and 2005, with expenditure increasing each year as the company made greater use of TV, in preference to cheaper forms of advertising. In 2004, Britvic’s attention was turned to the launch of Robinsons Fruit Spring, which also received television exposure.

FIGURE 19: Britvic, advertising expenditure on selected brands, 2000-05

Source: Nielsen Media Research/Mintel

Cadbury SchweppesCadbury Schweppes no longer sells any soft drinks directly in the UK, although it owns a number of major soft drink brands around the world including Dr Pepper, Oasis, Snapple and Orangina. In the UK Oasis was acquired by CCE in 1999, while Orangina is produced under licence by AG Barr. Snapple is a fruit drink targeted at 18-44-year-olds, competing against brands such as Oasis and Fruit Spring. Snapple originated in the US and is available in numerous variants in that country, although the range available in the UK is far more limited. Snapple is distributed in the UK by SHS Group, although this arrangement is due to close at the end of 2005, with the future distribution of the brand unclear at the time of writing. Sales ofSnapple are worth around £400,000, and are concentrated in the off-trade.

Market Developments

In November 2005, Cadbury Schweppes sold its European soft drinks business to a consortium led by Blackstone Group International and Lion Capital LLP.

Coca-Cola EnterprisesCCE’s involvement in the UK adult soft drinks market focuses around the Oasis, Appletiser, Deuce, Nestea and Rose’s brands.

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OasisOasis is positioned in the fruit drinks sector of the adult soft drinks market. With a juice content of just 5% and containing artificial sweeteners, it is to be considered a mainstream rather than premium product. Oasis was originally presented in a 500ml format targeted at adults ‘on the go’. In 2004, however, CCE extended the Oasis range into a 1.5 litre take-home format for its popular Summer Fruits variant. The Oasis range includes five flavours: Summer Fruits, Citrus Punch, Berry Apple, Classic Lemon, and Summer Fruits Light. CCE plans to introduce a number of new flavours in 2006 with the aim of broadening the adult appeal of the brand.

Market Developments

The repositioning of Oasis in 2003, from an impulse treat to an everyday experience to be enjoyed at home as well as while out, was accompanied by an increase in main media adspend of more than 50% on the previous year to £1.2 million. This formed part of a total brand support of over £3 million for the year. In 2005, Oasis benefited from CCE’s first umbrella advertising campaign, entitled ‘A World of Refreshment’, which, as well as Oasis, also included the Coca-Cola, Diet Coke, Sprite, Fanta, Powerade, Minute Maid and Malvern brands.

AppletiserSparkling apple juice brand Appletiser, which is positioned in the premium adult soft drinks category, is owned by brewing giant SAB Miller, but is bottled and distributed by CCE in the UK. Originally named Appletise, the brand was relaunched as Appletiser in 2003. According to CCE, the Appletiser brand enjoys one of the highest rates of growth in the grocery trade. The brand’s 100% natural proposition has meant that it has benefited from current trends towards healthier eating and drinking. In 2004, CCE focused on the development of the brand in the on-trade, with the aim of making Appletiser the number one premium drink for women. In 2004, Appletiser received a packaging makeover to give it a sleeker, more stylish bottle, a new logo, and what CCE described as ‘more convenient’ pack sizes. This involved the replacement of the 300ml bottle with a 275ml version, and the downsizing of the one-litre format to 750ml. The 330ml can remained unchanged in terms of size. In 2005, CCE introduced a 4x275ml format aimed at boosting sales over the summer period.

Market Developments

Overall reported marketing support for the Appletiser brand stood in the region of £3 million in 2004, including £800,000 of cinema advertising and £700,000 worth of TV ads, as tracked by Nielsen. Advertising is clearly aimed at the brand’s target female consumers. In March 2005, CCE announced the signing of a deal with Channel 4 and sister channel E4 and E4+1, which gave Appletiser sponsorship rights for all the 2005 repeats of popular TV sitcom Friends. An on-pack promotion in the summer of 2005 gave consumers the chance to win £50,000 worth of designer diamond jewellery. A £1 million integrated campaign supported the giveaway, which was intended to raise brand awareness and boost summer sales.

Other brandsCCE’s Deuce brand is designed to compete directly with BSD’s J2O. It was launched into the on-trade in March 2005. Two variants are available: Cranberry & Raspberry and Orange & Guava. The launch was accompanied by a number of below the line incentives, including a three-month BOGOF offer for stockists, together with a reported £1.5 million advertising and PR spend.

In 2005, CCE entered the iced tea sector with the launch of Nestea, in a joint venture with Nestlé. Nestea is offered in two flavours, Red Fruits and Lemon, and was launched in 500ml and 1.5 litre PET bottles. The companies have invested almost £1 million in advertising in support of the launch, according to Nielsen, representing a significant commitment to growing the brand and the category as whole.

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The Rose’s brand of lime cordial, which was first introduced to the UK in the 1860s, received a facelift in 2001, which was accompanied by £13,000 of press support. The aim of the packaging update was to position Rose’s as a premium cordial, although this has proved difficult in the face of competition from brands such as Bottlegreen and Belvoir, which have a particularly strong ‘premium’ image.

In August 2005, CCE was reported to be on the verge of launching a new fruit-based drink, Ipsei, in the UK. However, the threat of legal action from Pepsi over the use of a name which Pepsi claims is too similar to its own, appears to have delayed the introduction. Ipsei is a still, fruit-flavoured drink that contains red-grape juice, extract of the African rooibos plant, antioxidants and vitamins. The product has already been introduced in Germany and the Netherlands, and is targeted at adults over the age of 30.

DanoneDanone is the leading supplier of bottled water to the UK market, with a portfolio of brands which includes Evian, Volvic, Badoit and Shape. The Volvic brand comprises both plain and flavoured variants, while Shape is a flavoured brand only. Evian and Badoit are respectively plain and naturally sparkling brands of pure mineral water.

Volvic Touch of FruitThe Volvic Touch of Fruit range was launched in early 2002 in Strawberry, Lemon & Lime and Orange & Peach flavours. A more recent line extension has seen the addition of Exotic Fruit flavour. Touch of Fruit distinguishes itself from many other flavoured waters by containing sugar, rather than an artificial sweetener. Volvic’s association with volcanic rock is promoted through the ‘volcanicity’ concept, while the flavoured sub-brand Touch of Fruit uses the strapline ‘It’s a taste eruption’. Above-the-line support was worth £560,000 in 2004 and £580,000 for the first nine months of 2005, according to Nielsen. In the latter period, over 90% of above-the-line investment went on television advertising, while outdoor executions accounted for more than a third of spending in 2004.

ShapeIn 2004, Danone extended its Shape yogurt brand into the water market with the introduction of Shape flavoured water, available in Raspberry & Strawberry, Pineapple, and Green Apple. The television presenter Cat Deeley signed a reported £250,000 advertising deal to promote the range. In 2005, Shape water received above-the-line support via the press and radio worth £1.1 million.

The introduction of Shape coincides with the withdrawal from sale of Danone Activ, the calcium-enriched brand, available latterly in both plain and flavoured variants, which failed to ignite consumer interest. Consumers, it would appear, were not prepared to pay the significant premium for the fortified water. The Shape brand’s strong low-calorie credentials from the yogurt market should stand it in good stead among consumers trying to watch their weight, although the use of artificial sweeteners is unlikely to appeal to consumers looking for more natural products, particularly among the AB socio-economic group.

Del Monte EuropeDel Monte is a leading producer of long-life fruit juices in the UK, and within the adult soft drinks sector has had success with its World Fruits range of premium exotic juice drinks, which was launched in 2002. In 2004, sales of World Fruit drinksperformed well as Del Monte targeted the more health conscious consumer by reducing the sugar levels of drinks within the range. 2005 saw a dip in sales, although the company moved to reinvigorate the brand towards the end of the year with the relaunch of the range to comprise four exotic blends from around the globe – Indian Mango & Papaya, New Zealand Gold Kiwi, Persian Pomegranate and Chinese Mandarin & Lychee. Whilst these flavours do not differ greatly from the original range, the association of each blend with a different country is designed to add authenticity to the drinks and enhance their premium image.

Support for the range has been intermittent – the 2002 launch was backed by nearly £300,000 worth of press advertising, according to Nielsen, although this fell to just £3,000 in 2003. 2004, however, saw Del

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Monte ramp up above-the-line investment in the brand to a total of nearly £1.3 million, the majority of which was invested in TV ads, coinciding with the reduction of sugar levels in the product. Below-the-line promotional activity in the same year included an on-pack instant-win promotion that offered consumers the chance to win one of five exotic holidays.

The Feel Good Drinks CompanyThe Feel Good   Drinks   Company  has enjoyed rapid growth since its inception in 2002, with turnover in 2005 expected to reach £5 million. The company was set up to produce natural, healthy juice drinks for adults, and the current range offers six Feel Good still drinks and four sparkling Feel Good Spritz drinks, all of which are made with no added sugar or artificial additives, and are fortified with vitamins.

The Spritz range was launched in April 2004, while in 2005 the whole Feel Good range was reformulated in order to remove any added sugar. The company has also recently extended its range beyond the 375ml glass bottle format into 750ml bottles in order to target the take home market.

Market Developments

By mid 2004, Feel Good had secured distribution in around 8,000 outlets in the UK and Ireland, including Boots, Texaco, Sainsbury’s, Budgens and Superdrug. The brand has continued to grow, and 12 months on, in mid 2005, products were available in over 12,000 outlets, across six countries.

FentimansMarket Developments

Fentimans is a niche supplier of premium carbonated adult soft drinks, with over a hundred years experience of supplying what the company describes as superior, botanically brewed ginger beer. Other drinks in the Fentimans range include: Victorian Lemonade; Seville Orange Jigger; Curiosity Cola; Dandelion & Burdock; and Shandy. Fentiman’s products are available from most leading grocers as well as foodservice outlets, pub chains and cafés in National Trust and English Heritageproperties. The launch of Dandelion & Burdock in July 2004 was supported by an on-pack promotion that gave purchasers a £5 voucher to spend at one of more than 114English Heritage sites. As a niche supplier, Fentimans has maintained fairly minimal levels of above-the-line investment across its range, with a peak spend of £4,000 in 2005, the highest registered over the review period.

GerberGerber is the largest supplier of private-label and branded fruit juice and juice drinks in the UK, with sales exceeding 800 million litres per year. Gerber markets Sunpride and Libby's C, but of greatest relevance to this report is its licensing agreement with the US co-operative Ocean Spray to manufacture, distribute and market juices and juice drinks under the Ocean Spray brand in the UK.

Ocean SprayOcean Spray has so far enjoyed great success in the UK and has been justifiably credited with pioneering and developing the cranberry segment. The Cranberry Classic range includes juices and juice drinks with cranberry as the core flavour, including a light juice drink as well as a high-juice cranberry cordial (although this product is produced under licence by Princes). In 2002, Cranberry Classic was launched in a slimline 250ml can to develop impulse sales in the convenience sector. The following year, Ocean Spray extended its range of ‘light’ fruit drinks with the introduction of Cranberry & Mango, Cranberry & Raspberry, and Cranberry & Blackcurrant drinks, which contain half the calories of its standard offerings. This was followed in 2004 with the launch of the White Cranberry Juice Drink, said to be sweeter and smoother than its red counterpart. The move into white cranberries was supported by a £4 million marketing spend with a campaign featuring TV gardener Charlie Dimmock and celebrity chef Anthony

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Worrall Thompson, the latter having devised summer cocktail recipes featured in leaflets which formed part of a sampling programme.

In September 2004, Ocean Spray introduced new 1.75 litre packaging for its Cranberry Select Premium Chilled Juice Drink, designed to give it greater prominence in the fast-growing chilled drinks sector. 2005 has seen the launch of Cranberry and Mandarin Juice Drink, as well as a packaging update for Cranberry Classic.

Overall expenditure on main media advertising in support of the Ocean Spray brand (including both juice and juice drinks) regularly exceeds £1 million, with £l.6 million of the 2004 total relating to the launch of the White Cranberry juice drink. Above-the-line investment tends to be TV-focused, with the 2005 summer campaign targeted at ‘educated’ women aged 30-45. The executions drew on the love-hate relationship many women have with health and beauty advertising, with a humorous voice-over provided by comic actress Kathy Burke.

FIGURE 20: Main media advertising expenditure in support of Ocean Spray, 2000-04

Source: Nielsen Media Research/Mintel

Welch’sIn addition to Ocean Spray, Gerber is also responsible for the Welch's brand of grape juice and drinks, which it launched in 2002 across both the chilled and ambient segments. Welch's is a long-standing mainstream brand in the US, available in a wide range of flavours, including Purple Grape Juice, Purple Grape and Raspberry, and White Grape and Pear. The UK launch of Welch’s was supported by a £1.1 million national TV campaign, as well as targeted PR and sampling. Further television support, valued at around £800,000 followed in 2004, although sales appear to have fallen off somewhat.

Kraft FoodsKraft is the sole player in the UK market for iced coffee, with its Kenco Ice Cappio range. Ice Cappio was first introduced in 2002, and has more recently been joined on the shelves by Kenco Ice Cappio Mocha. The product is an extension of Kraft’sCappio range of instant hot cappuccino drinks. Growth in retail sales has been strong in 2005, following heavy investment from Kraft in television advertising. Expenditure monitored by Nielsen stood at £2.1 million in 2004 and £1.5 million for the first nine months of 2005.

Matthew Clark BrandsMatthew Clark, one of the largest drinks distributors and brand owners in the UK, acquired the Strathmore brand of bottled water in 1992. The relaunch of the Strathmore bottled water range in 2002 gave the brand a bright contemporary image and introduced eight new flavours of still bottled spring water. Subsequent introductions have extended the range of sparkling flavoured water offered. There are currently 9 flavours in the Strathmore range – four still and five sparkling. They are all available in either 500ml or 1.5 litre plastic bottles. Strathmore is one of the best-selling brands of bottled water in the licensed trade, its on-trade offering including plain still and sparkling Strathmore spring water in 330ml, 750ml and 1 litre glass bottles, Blackberry, Peach & Apricot and Lemon & Elderflower flavoured water in 330ml glass bottles.

In March 2005, Matthew Clark extended the Strathmore brand beyond flavoured water into adult fruit drinks with the launch ofSpring Fruits, a cranberry and blackcurrant flavoured drink containing 5% fruit juice and artificial sweeteners. Spring Fruits is priced at 79p for 500ml and £1.29 for 1.5 litres, pitching it directly against Oasis and Fruit Spring.

Merrydown

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Cider producer Merrydown acquired the premium adult soft drink brand Shloer in the early 1990s. In February 2005, however, Merrydown was itself acquired by SHS Group for a reported £37 million. Shloer is a sparkling drink with a typical grape juice content of around 50%. Flavour variants include: Red Grape; White Grape; White Grape, Raspberry & Cranberry; White Grape & Peach; Apple & White Grape; White Grape & Blueberry; and Exotic. Limited seasonal editions such as White Grape, Rhubarb & Ginger in the summer and Red Grape, Elderberry & Clove for the winter have proved popular with consumers. In April 2003, Shloer was introduced in a 250ml slimline can to appeal to on-the-go consumers. The range of packaging formats was extended further in November 2004 with the launch of 275ml single glass bottles and 4x275ml multipacks.

Once the leading brand of premium adult soft drinks, Shloer has recently fallen behind BSD’s J2O brand in terms of sales. Sales values continued to advance in 2005, however, although discounting began to eat into margins. In 2002, Merrydown attempted to extend the Shloer brand into premium dilutables with the launch of Shloer Real Fruit Blend. When the sub-brand failed to live up to expectations, it was replaced in April 2004 by Posh Squash, which was positioned firmly at the premium end of the cordials market, where it had to compete with the already well-established Bottlegreen and Belvoir. The product has, however, also been withdrawn from distribution since the takeover of Merrydown by SHS. Another product that has been withdrawn since the takeover is Sorelle, a range of herb-infused sparkling fruit-juice based drinks that were aimed at women aged 25+.

Market Developments

Poster advertising was used for the first time in 2004, with advertisements appearing on over 1,250 sites in and around the London area over the Christmas period, tying in the promotion of Shloer with the annual anti-drink driving push. Press advertising as part of the same campaign appeared in the Daily Mail, Mail on Saturday and Mail on Sunday, and featured stylised drawings of Shloer's flamingo icon, together with the strapline "Never Shlurp a Shloer".

RubiconMarket Developments

Rubicon is the leading supplier of single-fruit exotic juice drinks with a range of flavours including Mango, Passion Fruit, Guava, Guanabana, Lychee and Coconut Water, most of which are available in both still and sparkling variants. Rubicon also produces the Sun Exotic range of blended drinks, which includes Pineapple & Coconut and Tropical Fruit. In 2004, Rubicon developed a new type of straw, which is said to heighten the taste experience. The ‘Sensory Straw’ has a flat top with four small holes that allow the juice to flow in multiple directions and drench the tongue, with the aim of stimulating the bitter tastebuds at the back of the mouth. Product development in 2005 has focused on a packaging makeover for the juice drink range and the development of the company’s 100% fruit juice offering.

The Silver Spring Mineral Water CompanySilver Spring is best known for its flavoured water range under the Perfectly Clear label, although own-label supply also accounts for a significant proportion of its business. The company also offers its own eponymously branded ranges of carbonates, mixers and other soft drinks. Within the Perfectly Clear range, Silver Spring offers well over 20 flavour combinations, although only five are produced using water from the company’s spring, which is located next to the factory, under the chalk downs of Kent. Perfectly Clear is available as both still and carbonated flavoured water, all variants of which are sugar-free and available in sizes ranging from 500ml to 2 litres. Clearly positioned at the cheaper end of the market, Perfectly Clear has gained widespread distribution.

Stock Vital

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Austrian company Stock Vital produces the Carpe Diem range of wellbeing drinks, which are distributed in the UK by Upperedge. The core Carpe Diem range comprises three drinks in 330ml and 750ml glass bottles; Ginkgo, Kombucha, and Kefir. In 2003, a sub-range of Refresh products was launched in 50cl PET bottles, aimed at the impulse trade and featuring the core flavours, but in a sparkling format.

TetleyTetley entered the iced tea sector in 2003 with the launch of T of Life into the convenience sector within the M25. It was not until March 2004, however, that the brand went nationwide and was listed by the leading multiples. T of Life was originally launched in a 500ml PET format in Raspberry & Cranberry and Lemon & Lime flavours. Peach & Orange was added in 2004, with Green Tea & Grapefruit and Green Tea & Apple following in 2005. Tetley claims that its iced tea is the fruitiest on the market, with 4% more fruit than any other product, and also claims to be the only brand made with pure spring water.

The latest development of the T of Life range has been the September 2005 launch of T of Life Light. This range of four iced teas contains less than 10 calories per 500ml and is offered in Raspberry & Cranberry, Lemon & Lime, Peach & Orange, and Tropical flavour.

Tetley claims that its T of Life range has experienced phenomenal growth since its launch, reporting a sales increase of 180% in the year to September 2005. Tetley is so far only a minor player, however, in a sector dominated by Liptons, and is also far smaller than the Twinings brand.

The nationwide launch of Tetley’s T of Life range received the backing of a sampling and advertising campaign worth around £1 million.

TwiningsIn May 2005, Twinings completely relaunched its iced tea offering. It replaced a range of four teas, which had been packaged in cardboard cylindrical tubes and positioned in the tea aisle, with a new range of six new blends presented in wide-necked 400ml PET bottles, for display in the chiller cabinet and on ambient drink shelves. The new Twinings range includes flavours such as Raspberry, Cherry, Peach, Lemon, Green Tea with Lemon and Green Tea with Peach. The close association ofTwinings iced tea with its dry counterpart, together with its rejection of artificial sweeteners and restriction to the 400ml format, positions Twinings towards the premium end of the iced tea sector.

Following considerable investment in main media advertising in 2002 of nearly £400,000, according to Nielsen data, expenditure has been modest, with even the switch into PET bottles and the move into the chiller cabinet in 2005 failing to merit significant above-the-line support. The relaunch was, however, supported by a reported £2 million marketing campaign, which included national sampling.

UnileverUnilever owns the Lipton Iced Tea brand, which is one of the world’s biggest selling soft drinks brands, although it has only recently become familiar to British consumers. Unilever was a pioneer of the UK iced tea sector, with the launch of Lipton in 2002, and remains by far the largest brand, with reported retail sales worth more than £5 million in 2005. Lipton Iced Tea is available in Mango, Peach and Lemon variants, offered in both 500ml and 1.5 litre PET bottles, thus targeting both the impulse and the take home consumer. Two low-calorie Light variants were added to the range in 2004.

Unilever has demonstrated considerable commitment to the development of the iced tea sector, and has invested heavily in main media advertising each year following the launch of the Lipton range. The cinema has been prominent in Lipton’s advertising strategy, while 2003 and 2004 also witnessed significant investment in television executions. According toUnilever, an overall marketing support package worth £2 million is planned for 2006.

FIGURE 21: Main media advertising expenditure in support of Lipton Iced Tea (£000), 2002-05

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*Jan-Sep

Source: Nielsen Media Research/Mintel

Market Developments

Despite this heavy investment from Unilever, there are signs that the Lipton brand has been slow to respond following the initial post-launch boom, with sales struggling to find growth in 2005 and the introduction of light variants proving less successful than expected.

Own labelThe adult soft drinks market has largely been developed by the leading brands in each category, and in overall terms, retailer own labels play only a minor role. Own labels have gained their strongest foothold within the flavoured water sector, where all the leading grocers, together with retailers such as Boots and Superdrug have developed their own ranges. Within the premium sector, the Tesco Finest range includes a number of pressés, while Sainsbury’s with Taste The Difference, Waitroseand Marks & Spencer have all established limited involvement. The majority of these retailers also offer fruit-based drinks, although here the boundaries are blurred between adult and mainstream products, since the careful targeting of adult drinkerscomes with the manufacturers’ investment in advertising and marketing support, which is lacking in the case of own-label brands.

On The Shelves From Mintel GNPD

OthersMarket Developments

Other manufacturers involved in the adult soft drinks market include organic suppliers such as Duchy, which has a range of sparkling refreshers and cordials, and Kallo, with its Whole Earth range of canned carbonated fruit drinks. Mangajo offers a range of tea-based health drinks, while Pomegreat from RJA Foods has benefited from consumer interest in the health benefits offered by the pomegranate. Pomegreat is also the only juice drink to be endorsed by the charity Heart-UK. Since its launch, the Pomegreat range has been extended to include combinations of pomegranate juice with blueberry and raspberry.

New Product Trends

Market Developments

NPD has been a significant driver of growth within the adult soft drinks market, and has also contributed to growth of the overall soft drinks market, as consumers have in many cases extended their drinking repertoires rather than switching from an alternative. Mintel’s GNPD database recorded just over 60 new product launches between May and October 2005 that could be classified as

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adult soft drinks under the definitions used in this report. A summary of some of the key themes to emerge over that period are detailed below:

Fruit-based drinks dominateMore than a third of the new adult soft drinks launched between May and October were fruit-juice based, and many combined fruit juices with mineral/spring water. Examples of the latter include GI Fruitades, launched by mineral water company Radnor Hills, Aromatic Sweet Lime Cordial from Bottle Green and the Spritz range from Feel Good Drinks. J+ was launched by Intercontinental brands in February 2005 as a challenger to Britvic’s J2O, and extended into multipacks in June. J+ has a 40% juice content, compared with the 50% in J2O.

Blackcurrant and cranberry are leading flavoursBlackcurrant and cranberry stand out as being some of the most frequently used dominant fruit flavours, although well over 30 different flavour combinations were launched during the six months under review. The most notable characteristic of the fruits and flavours used is their variety. All the traditional citrus, berry, stone and tropical fruits were used, together with more unusual flavours and ingredients such as dandelion, mint, blueberry, elderflower, rooibos, aloe, chamomile and guarana.

RTD tea – an expanding categoryMarket Developments

In September 2005, Tetley extended its T of Life range with T of Life Light, a range of four low-calorie tea-based drinks aimed at 18-35-year-old women. This followed the launch in August of Tetley’s T of Life Green Tea & Apple Iced Tea. Other tea launches included the Nestea iced tea range, developed as a joint venture betweenNestlé and Coca-Cola and introduced in May 2005, and Cice Swiss Cannabis tea, which is positioned as a healthy drink for everyone, including children.

Flavoured waters less prominent than juice drinksMarket Developments

Slightly fewer than one in eight launches of adult soft drinks during the period under review were flavoured mineral or spring waters. Marks & Spencer introduced two flavoured sparkling waters, Cranberry & Raspberry and Elderflower & Lemon, both of which contained artificial sweeteners, while other introductions included Hadrian Clear from Villa Soft Drinks, and Orange & Apple flavoured water under the Benecol brand.

Functionality and wellbeing are key featuresJust over one in five of the adult soft drinks introduced between May and October 2005 promised the consumer a functional benefit or a sense of greater wellbeing. Functional claims included cholesterol reduction, from Benecol’s Orange & Apple Flavoured Mineral Water and the Pomegreat pomegranate and raspberry flavoured drink from RJA Foods. Salus launched Aperino Rosso, a herbal aperitif that the company claims supports the digestion of fatty foods, while Shannon Minerals’Coolwater Trim Cranberry Flavoured Spring Water claims to suppress the appetite. Escchol and Alcohol Killer, two drinks that were displayed at the Anuga 2005 trade show, claim to reduce levels of alcohol in the body and help avoid a hangover.

Several drinks launched in mid 2005 offered the consumer an improved sense of wellbeing. Cice Swiss Cannabis Iced Tea is said to promote a feeling of peace and relaxation, although it must be noted that this product does not contain the same type of cannabis that can be smoked. Vimto’s Unwind is a still drink said to be calming after a stressful day, due to its use of chamomile and passiflora, while Uplift, also from Vimto, is a sparkling drink with guarana and ginseng, which is said to give a natural high.

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Winter warmersTwo adult soft drinks launched in the autumn of 2005 are recommended for drinking either chilled or hot. Both Red Grape Elderberry & Clove Shloer and Belgravia & Tobago from Vimto are recommended by their manufacturers as being ideal for creating winter punches or hot toddies. Their launches coincide with the television promotion of alcoholic brand Pimms as a winter warmer, reflecting the attempts of the many brands within the drinks industry to compensate for lower consumption during the cooler weather by encouraging the consumption of both alcoholic and soft hot drinks.

Convenience and packagingThe increased availability of premium adult soft drinks via a wider range of outlets has seen many companies launch smaller, more convenient formats of their products. Shloer sparkling fruit drinks were introduced in 250ml slim cans in April 2005 to cater for out-of-home consumers. This came shortly after November 2004 saw the launch of the same product in individual 275ml glass bottles and 4x275ml multi-packs for in-home consumption on occasions when a full 1-litre bottle may be too large. The Bottlegreen range of pressés is also now available in 25cl bottles, while Appletiser multipacks were introduced in April 2005.

The Twinings range of iced tea relaunched in April 2005, taking the product out of cartons displayed in the hot beverage aisle and into 400ml wide-necked bottles for display in the chiller cabinet, reflecting the company’s desire to capture a greater share of the impulse market.

New product briefsMarket Developments

The following new product briefs are taken directly from the GNPD database of new products. These are provided as an indication of new product activity and may not represent major changes in the overall market. It is also worth noting that some products illustrated here may not appear elsewhere in the report, as this section of the report may feature very niche products that are not mainstream or have a large brand share but that are innovative in some way.

Teisseire – Blackcurrant Syrup

Sirop de Cassis is a blackcurrant syrup which rich in fruits and free from preservatives and additives. This product is now available in a 330ml bottle, said to be ideal for people who live on their own. This product was on display at the Anuga 2005 trade show held in Cologne.

Bottlegreen – Cordial Drink Range

Two new flavours have been added to this cordial range of dilutable drinks: Raspberry & Loveage; and Dandelion & Burdock. They are available in 500ml bottles.

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Steiners – Cranberry Fresh Drink

Steiners is set to launch Cranberry Fresh, a drink made from fresh cranberries and not from concentrate. It is carbonated and contains 17% cranberry juice. This product was on display at the Anuga 2005 (8. – 12. October 2005 in Cologne).

Belvoir – Mint & Lime Pressé Drink

Mint & Lime Pressé is a sparkling blend of natural ingredients and Belvoir spring water and available in a 250ml glass bottle. It is said to be 100% natural. This product was on display at the Anuga 2005 (8. – 12. October 2005 in Cologne).

Belmont – Ready to Drink Iced Coffees

Belmont have introduced a new range of iced coffees, comprising: Café Schoko (chocolate flavoured coffee); Café Classico; and Café Latte. They are UHT coffee flavoured drinks, which are gluten-free and suitable for vegetarians. They are available in 250ml plastic bottles.

GI Fruits – Still Fruit Drink Range

A range of still fruit drinks with a low glycemic index (a value of 55 or less on the GI scale), made from Welsh mineral water, these are said to provide a longer lasting energy source, keeping blood sugar levels stable. They contain no artificial colours or sweeteners, have natural fruit flavours and are sweetened with fruit. Available in this range: Blueberry; Orange; Apple; and Lemon & Lime. These products were on display at the Anuga 2005 trade show held in Cologne.

Ribena - Blackcurrant & Cranberry Drink

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A repackaged version of Ribena’s blackcurrant and cranberry juice drink, this product is rich in vitamin C and contains no added preservatives, artificial colours or sweeteners. It is claimed to be 'seriously good'.

Feel Good Drinks Co. – Spritz Sparkling Drinks Range

A range of gently sparkling blends of juice and spring water with natural ingredients and added vitamins. Available in this range: Cranberry & Lime; Pink Citrus; Orange & Passionfruit; and Lemon.

Asda – Italian White Grape Still Drink

An Italian white grape drink with lychee and strawberry. This product contains no added sugar or artificial flavourings and is suitable for vegetarians.

Marks & Spencer – Cranberry & Raspberry Sparkling Water

A new carbonated mineral water subtly blended with natural flavours of cranberry and raspberry, with sweeteners. It comes in a 1 litre plastic bottle. According to the manufacturer, the product is best served chilled.

Nestea – Iced Tea Drink Range

An iced tea drink launched in two flavours, Lemon and Red Fruits, available in a 500ml or 1.5 litre bottles. Nestea is a joint venture between Nestlé and Coca-Cola Enterprises.

J+ – Juice Drink Multipack

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An orange and berry juice drink, available in a 4 x 275ml multipack. Also available in this range is Apple & Blackcurrant variant.

Firefly – Chill Out Juice Drink

A 330ml bottle of blackcurrant, apple and lemon balm juice spiced with herbal extracts. It is said to contain an all natural 'Chill out' formula and is caffeine-free. It is claimed to contain no added sugar and no artificial ingredients.

Distribution

All channels benefiting from strong demandMarket Developments

Strong overall demand for adult soft drinks means that each of the main retail channels is currently experiencing rising sales. Strongest growth has been experienced in the on-trade as adult soft drinks have been welcomed by drinkerslooking for a non-alcoholic alternative to the standard carbonates and juices. Growth via the impulse channel has been below the average, although the availability of adultsoft drinks has improved as outlets such as CTNs and garage forecourts have realised the opportunities that such brands can offer.

NPD encouraging growth in both impulse and take-home sectorsMarket Developments

Manufacturers have developed their ranges in order to appeal to the widest range of consumption occasions. In the case of premium adult soft drink brands such as J2O, Shloer and Appletiser, this has meant the introduction of four-packs in order to encourage take-home consumption, which the brand owners have been keen to achieve without devaluing the brand by moving into larger bottle formats. By contrast, in the lower-priced fruit drink sector, the Oasis brand has been extended beyond impulse and into take-home by the introduction of larger bottles. The Lipton brand of iced tea has always adopted a blanket approach, offering both impulse and take-home formats. Likewise Nestea has been launched in both 500ml and 1.5 litre bottles, although Tetley’s T of Life andTwinings iced tea are now more firmly positioned as impulse brands.FIGURE 22: UK retail sales of adult soft drinks, by value and type of outlet, 2003 and 2005

2003 2005 (est) % change

£m % £m % 2003-05

Multiples & co-ops 337 60 416 59 +23.4

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Impulse* 68 12 78 11 +14.7

Total off-trade 405 72 494 70 +22.0

On-trade** 154 28 215 30 +39.6

Grand total 559 100 709 100 +26.8

* includes independents, CTNs and garage forecourts

** includes unlicensed on-trade and travel

Source: Mintel

On-trade looks to non-alcoholic revenueAlthough the primary business of pubs and clubs is the sale of alcoholic beverages, these establishments are increasingly deriving a greater share of revenue from alternative sources such as food and soft drinks. The general trend in public opinion against drinking and driving in any quantities, as well as the fact that it is becoming less acceptable or common to drinkalcohol at lunchtimes, has contributed to growth in sales of all soft drinks via the on-trade. In particular, it has driven above-average growth in the value of adult soft drinks sold in pubs and other licensed premises. The launch and development of the premium adult soft drink J2O initially led the way in developing the adult soft drinks sector via the on-trade, with brands such as Appletiser, Ocean Spray and Deuce having experienced growth in 2005.

On a more limited scale, suppliers of premium cordials such as Bottlegreen are experiencing growing demand from the on-trade, since their products are increasingly being used as mixers and cocktail components in style bars to target consumers looking for new and more adventurous flavours.

Catering outlets also offer opportunities for growth in sales of adult soft drinks. J2O is offered in chains such as Pizza Hut andFrankie & Bennies, while Appletiser is available from outlets belonging to The Restaurant Group, which include Frankie & Benny’s, Caffè Uno , Chiquito’s, Garfunkel’s and Ask. Adult soft drinks are also increasingly being stocked by self-service outlets such as motorway service stations which want to premiumise their offer.

The Consumer

This section of the report examines the adult soft drinks consumer, drawing on exclusive research commissioned by Mintel for this report as well as data from the annual BMRB TGI survey of approximately 25,000 adults. The objective of this section is to assess patterns in the types of

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adult soft drinks purchased by consumers and weight of consumption. Key findings are presented here, with full demographics in The Consumer – Detailed Demographics section.

Purchasing of adult soft drinksFor the purpose of this report, Mintel commissioned exclusive consumer research from BMRB among a nationally representative sample of 997 adults in August 2005, who were asked:

“Thinking about adult soft drinks but excluding fruit juice or bottled unflavoured water, which, if any, of these adult soft drinkshave you bought in the last six months?”

FIGURE 23: Adult soft drinks bought in the last six months, 2001-05

2001 2003 2005

Base: adults aged 15+ 1,045 1,016 997

% % %

Still fruit drink – eg Oasis, Snapple 29 27 31

Flavoured water – eg Caledonian Clear 25 23 26

Fizzy fruit drink – eg Rio 16 11 15

Soft drink with added health/wellbeing benefits – eg Feel Good juice drinks*

- - 10

Diet fruit drink – eg Diet Snapple 9 7 9

Still herbal drink – eg Elderflower 6 8 8

Plain/unflavoured iced Tea – eg Twinings 4 7 8

Flavoured iced tea – eg peach, lemon 3 5 7

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Iced coffee – eg Ice Cappio* - - 6

Fizzy herbal drink – eg Aqua Libra, Amé 4 5 4

None of these 44 44 40

* Not asked in 2001 and 2003

Source: BMRB/Mintel

Consumption on the riseMintel’s exclusive consumer research found that in 2005, 60% of consumers questioned had purchased adult soft drinks in the last six months. This represents a 4 percentage-point increase on 2001 and 2003, reflecting the growing interest in the category. Still fruit drinks such as Oasis remain the most popular choice, an indication of their mainstream positioning and broad appeal, with almost a third of respondents having purchased one within the last six months. The penetration of flavoured water and fizzy fruit drinks, which follow in terms of popularity, also increased between 2003 and 2005.

Niche sectors grow in popularityThe growth of the emerging iced tea and coffee market is reflected in the penetration of plain and flavoured iced tea, both of which have risen since 2001, while 6% of consumers had purchased iced coffee in 2005, although previous data for this sector are not available.

The addition of health/wellbeing drinks and iced coffee to the survey in 2005 has established that these are consumed by one in ten adults. The functional drinks market is one that has grown, with functional juice, juice drinks and dilutables having increased by 13.4% in value between 2001 and 2003 and functional bottled water having grown by nearly a third in value over the same period. This is an area in which manufacturers have been particularly active in new product development, which is helping to stimulate interest in the market.

Consumption highest amongst middle socio-economic groupsPart of the adult soft drink proposition is their premium, or sophisticated image, which might be expected to appeal mostly to AB consumers. However, the highest overall consumption actually occurs amongst C1 and C2 consumers. This may largely be explained by the fact that, according to TGI data, AB consumers are significantly more likely than average to drinkunflavoured bottled water – 66% do so, compared with an average of 54% of all consumers. Indeed, although the sample size involved was small, consumer research for this report suggests a bias towards ABs in consumption of iced teas, which have a more natural image than other soft drinks and tend to be naturally high in beneficial antioxidants. According to Mintel’sAttitudes Towards Processed Foods – UK, Market Intelligence, May 2005, ABs are the most likely to say that they try to avoid processed foods, reinforcing the idea that they are likely to be put off by artificial sweeteners. Therefore, products with a more natural image are likely to be key in attracting more ABs, who have so far proved somewhat elusive targets, to the category.

Londoners and those living in the south of England are the most likely to consume adult soft drinks, which reflects higher availability in the capital, higher income levels and a general tendency of consumers in the South to be more experimental in their food and drink choices. Londoners are also among the most likely to be actively looking after their health, being the most likely to respond that they drink low-sugar fizzy drinks because they are on a diet when questioned for Mintel’sCarbonates – UK, Market Intelligence, February 2005.

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A young consumer baseOverall, the highest consumption of adult soft drinks occurs amongst the youngest adults, with around three-quarters of 15-24-year-olds having purchased one of the drinks listed in Figure 23 in the last six months, while consumption declines with age to stand at less than half of over-65s. This reflects the trendy image of many of these products and their popularity in the on-trade, while the unusual and exotic flavours used make them more appealing to younger, more experimental palates. It also reflects the increased awareness of the concept of ‘hydration’ in soft drinks that is now much more prominent than has been the case in the past. Younger consumers are much more likely than their older counterparts to be aware of the fact that certain types of soft drinks, such as colas and other standard carbonates, do not actually rehydrate effectively, and therefore to be seeking alternatives that do so. While adult soft drink brands may not specifically claim to rehydrate the body more effectively than other soft drinks in the same way as sports drinks, the healthy positioning of many of them may at least help to promote the impression that they do.

FIGURE 24: Consumption of adult soft drinks, by age, August 2005

Base: 997 adults aged 15+

* low sub-sample (75-100)

Source: BRMB/Mintel

While the overall trend is for higher consumption of adult soft drinks among younger age groups, there are some noticeable variations for different types of drinks. For example:

Flavoured water, in contrast to other types of beverage enjoys a slightly older age profile, with 25-34s the most likely purchasers, whereas 15-24s are more likely consumers of all other types of adult soft drink. It is also as popular with 45-54-year-olds as it is with the youngest age group, suggesting that image may not exert as much of an influence in this market.

Although the sample questioned was small, and data must therefore be treated with caution, the popularity of still herbal drinks, such as elderflower cordial, appears to rise to a peak of 13% of 55-64-year-old consumers. Such products tend to use flavours that are not ‘mainstream’ as such, but have a traditional ‘English’ appeal, such as elderflower, gooseberry & mint or plum & damson, which tend to appeal more to older palates than the exotic flavours used by some of the more youth-orientated brands. Additionally, elderflower was a popular drink in the 1960s and ’70s, making it highly familiar amongst this group.

The family factorStill and fizzy fruit drinks, as well as those with added health or wellbeing benefits are all more likely to be purchased by consumers in the pre-/no family lifestage than other groups, reflecting the overall youth appeal of the category. Consumption of flavoured water is, however, higher among families, while consumption of still herbal drinks is biased towards the third age and retired lifestages, for the reasons discussed above.

The popularity of flavoured water among families reflects efforts by some manufacturers to broaden the appeal of the category to encompass the children’s market with brands such as Volvic Splash and The Simpsons. The trend may well also represent a compromise by parents who are trying to encourage their

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children to drink less sugary drinks, but are unable to convince them to replace colas and other fizzy drinks with unflavoured mineral water.

Opportunities to increase volumesOver half of all households of five or more people consume still fruit drinks, suggesting that there are opportunities to expand the take-home offering – an opportunity that is indeed beginning to be exploited by manufacturers. Oasis, for example, has progressed beyond the 500ml PET format into 1.5 litre bottles, while multipacks of single-serve 330ml or 500ml bottles are also likely to prove equally popular.

Targeting by mediaWhen responses to Mintel’s exclusive consumer research are analysed by media usage, a number of patterns emerge that suggest ways in which manufacturers could effectively isolate and target the key consumers of different types of soft drinks:

Consumers of flavoured water are most likely to be readers of mid-market tabloids. Popular tabloid readers are the most enthusiastic purchasers of fizzy fruit drinks and those with

added health/wellbeing benefits. 15% of broadsheet readers buy still herbal drinks, compared with an average of just 8%. Consumers of still fruit drinks are likely to be Internet users, read popular tabloid newspapers and

have access to satellite and cable TV.

The mass market appeal of still fruit drinks such as Oasis and Snapple, which is the most popular type of adult soft drink, is reflected in the variety of media used by consumers of these products. Integrated cross-media campaigns are therefore more likely to be effective here than for other products, which may require more targeted promotions.

Media usage reflects socio-economic profileThe upmarket, sophisticated image of still herbal drinks is reflected in their consumers’ readership of broadsheet newspapers, while it is interesting to note the contrast with functional or wellbeing drinks, whose bias towards popular tabloid readers is surprising given their added-value, premium proposition. This is also reflected in a bias towards consumers in the D socio-economic group, which may be a result of the fact that ABC1 consumers are more likely to be looking after their health by keeping fit and eating a generally healthy, balanced diet. According to Mintel’s Dieting – UK, Market Intelligence, January 2005, ABs are the most likely to agree with the statement “It is important to me to keep my body in shape by eating properly and doing exercise”. This suggests that they may be less likely to feel the need to turn to functional food and drink products to help them become more healthy.

Consumers of adult soft drinks watch more televisionBroadly speaking, consumers of adult soft drinks are keen television viewers. With the exception of still herbal drinks, the greatest concentration of adult soft drinks consumers is to be found among heavy viewers of commercial television (ie those who watch five or more hours of television per day). This highlights the suitability of television as a means for manufacturers of adult soft drinks to reach their core consumers, either through standard commercials or through programme sponsorship and idents. This opportunity has already been seized upon by Coca-Cola Enterprises, which in early 2005 signed a £1 million deal for its Appletiser brand to sponsor all repeats of the TV series Friends on Channel 4.

Weight of consumptionMintel then drew upon BMRB's TGI annual survey to ascertain patterns in the weight of consumption of flavoured waters, herbal and premium soft drinks by users of these types of products. Readers should be aware that data in Figure 25 do not take into account all of those products defined by Mintel as an adult soft drink, and are therefore not directly comparable with the findings from Mintel’s exclusive consumer research shown in Figure 23. However, for convenience the term adult softdrinks is used. It should also be noted that figures are expressed as a percentage of users of flavoured water, herbal & premium soft drinks, not as a percentage of all consumers. TGI defines user groups as follows:

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Heavy users drink more than once a week

Medium users drink more than once a month and up to once a week

Light users drink once a month or less

FIGURE 25: Weight of consumption of flavoured water, herbal and premium soft drinks, 2001-05

Base: all users of flavoured water, herbal & premium soft drinks

2001 2003 2005

% % %

Frequency:

Heavy users 28.0 28.4 31.8

Medium users

30.7 28.8 27.8

Light users 34.3 32.9 30.9

Please note that some respondents did not state frequency of usageTaken from the TGI survey of around 25,000 adults

Source: GB TGI, BMRB Summer 2001 & 2003 & Quarter 3 2005/Mintel

Heavy usage on the riseFigure 25 illustrates that there has been an increase in the proportion of consumers of adult soft drinks who are heavy users of these products. Whereas in 2001, the majority of users tended towards light or medium usage, suggesting that they were experimenting with such products from time to time, many of these have now been converted into regular purchasers. This reflects the successful marketing of existing and new products in the market that has both encouraged drinkers to broaden their repertoires and generated loyalty to established brands.

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Mintel’s exclusive consumer research indicates, however, that overall consumption has increased by just 4 percentage points since 2001. The challenge facing manufacturers now is therefore to further broaden the appeal of the category, bringing more new consumers into the light usage category.

Light vs heavy usage – the demographic profileThere are distinct demographic differences between light and heavy users of adult soft drinks, which reflect differing attitudes towards these products and occasions on which they may be consumed.

Heavy users of adult soft drinks are likely to be:

Aged 45-64 In the C2D socio-economic group Living on their own Living in the North West and Scotland

Light users are more likely to be:

ABC1s In the 25-44 age group Have children aged under 4 Live in London and the South

Older consumers welcome alternatives to carbonatesRegular consumption of adult soft drinks in fact appears to increase with age, with the heaviest consumption occurring in the 45-64 age group. While younger consumers are the most likely to consume adult soft drinks overall (according to Mintel’s exclusive consumer research), these older consumers are unenthusiastic users of standard carbonates, being much less likely than average to consume colas and fizzy drinks (according to Mintel’s Carbonates – UK, Market Intelligence, February 2005). They are therefore likely to turn to adult soft drinks as a regular alternative.

Younger consumers are, however, more likely to be light-medium than heavy users, suggesting that they are consuming these types of drinks occasionally, perhaps as a replacement for alcohol on social occasions.

ABC1s – the social drinkersThe socio-economic bias of heavy consumption towards C2Ds and light-medium consumption towards ABC1s reflects the preference the latter group has for drinking unflavoured bottled water, in contrast with the preference for colas and other fizzydrinks amongst C2Ds. Consumers in the lower socio-economic groups are likely to use adult soft drinks as a regular healthier replacement for standard carbonates, and therefore more likely to be purchasing for consumption in the home as well as on impulse. ABC1 consumers, however, are more likely to consume unflavoured bottled water as their staple soft drink, perhaps treating themselves to adult soft drinks from time to time or on social occasions.

The influence of childrenHeavy consumption of adult soft drinks is understandably highest in households when there are no children present. Although, overall, consumers without children are less likely to drink adult soft drinks, for those that do there is no reason not to purchase soft drinks that are aimed specifically at adults. Although still below average, heavy consumption does rise as the age of the children present increases. This suggests that adult soft drinks also appeal to children to a certain extent as they get older. Indeed, consumers may well be purchasing them for themselves, and finding that their children also enjoy them.

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Certainly, ‘adult’ fruit drinks such as Oasis and Snapple have a fairly broad appeal when compared to certain other drinks on the market, such as elderflower cordial, and consumption of these is by no means confined to the adult population. There is perhaps, therefore, an opportunity to target younger children with youth-orientated sub-brands of certain adult soft drinks, from which they can then ‘graduate’ to the standard version when they get older.

Mintel is able to offer further analysis of its exclusive research, tailored to individual clients’ needs. It is possible, for example, to net and/or combine codes to create new attitudinal, usage or demographic groups, and cross-analysis can show how the answers to any questions or categories are related. For further details and a quote, please call our statisticians on 020 7606 4533.