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United Kingdom Food and Drink Report Q4 2008
Business Monitor International, Oct 2008, Pages: 76
The United Kingdom Food Drink Report provides independent forecasts and competitive intelligence on United Kingdom's food and drink industry.
The UK soft drinks market is evolving and fragmenting. Consumers are now placing more demands on their soft drinks – for example that they be healthy or functional – and this is generally having a negative affect on the brands that have traditionally dominated the market. However, this evolution also creates opportunities, as discussed in BMI's newly-published Q408 UK Food & Drink Report, with consumers prepared to pay a premium price for products that meet their needs.
As evidence of this UK soft drinks firm Britvic reveals in its annual report on the British soft drinks industry that total value sales increased in 2007 despite one of the worst summers on record and a 2% decline in volume sales. Over the year, and into 2008, value sales have been boosted by growing demand for premium priced functional drinks and greater sales of high value juices and smoothies.
Britvic reports that the smoothie category recorded the greatest rate of growth in 2007, with sales increasing by over 30%. Smoothie maker Innocent has been one of the main beneficiaries of this trend. The firm controls over half of the take-home smoothie market and recorded revenue growth of over 50% in 2007. However, this rate of growth is slower than in 2006 and 2005 when the firm managed to double its sales. This slowdown is likely to be due to increased competiveness in the smoothie sector, with many more branded and private label alternatives now on the market.
Another key driver of sales has been the functional sector, with Austrian owned Red Bull continuing to lead the way. Sports drinks are also performing well with Lucozade, owned by GlaxoSmithKline, growing strongly thanks to its dominance of the sector.
After a long period of sustained growth, sales of bottled water in the UK have begun to fall following a concerted media campaign to encourage consumers to ask for tap water in restaurants and to avoid drinking environmentally unfriendly bottled water when possible. The performance of the once buoyant bottled water is perhaps the soft drink industries biggest disappointment with sales falling by over 4% in 2007 and continuing to decline in 2008.
Sales of carbonated soft drinks have been fairly flat for the last four years. Although carbonated sales registered modest growth in 2007, boosted by the resilient Cola category, the overall trend is one of long term decline. Carbonated sales have clearly been affected by the rise in health consciousness and
concerns about obesity. However, the rapid growth in the smoothie and functional categories clearly demonstrates that this decline is also creating opportunities in other sectors.
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