SOFT DRINKS IN THE UNITED KINGDOM - ANALYSIS

Country Report | Mar 2018

EXECUTIVE SUMMARY Market Sizes

The changing landscape of soft drinks in the UK Sales of Soft Drinks
Off-trade Volume - million litres - 2003-2022
Even though large soft drinks categories such as carbonates and juice are in decline due
to concerns about their sugar content, soft drinks performed well in the UK in 2017.
Containing no sugar and no calories, bottled water recorded strong growth throughout 9,320 Forecast
the year, as Britons increasingly looked for healthier soft drinks variants. Whilst 12,000
traditional soft drinks categories are becoming less popular in the UK, relatively new
categories, such as RTD coffee, RTD tea and coconut and other plant waters, are
recording rapid growth. As the health and wellness trend in the UK will persist and 10,000
even intensify over the forecast period, it is expected that growth will be generated by
healthy soft drinks that are low in sugar and/or have health benefits, and by premium 8,000
and indulgent options. As a consequence, it can be argued that the soft drinks
landscape is notably changing from a market dominated by high sugar carbonates to a
market in which health is taking centre stage. 6,000

Britons increasingly seek healthy and premium soft drinks 4,000

As consumers in the UK become increasingly aware of the possible adverse impacts of

sugar consumption on general wellbeing, an increasing number of Britons are opting 2,000
for low sugar soft drinks. In addition, a significant proportion of the off-trade value
growth in soft drinks has been driven by an increase in the popularity of more 0
premium, indulgent and expensive soft drinks. This can be explained by consumers’ 2003 2017 2022
search for drinks with (added) health benefits, such as coconut and other plant waters,
with typically higher average unit prices. In addition, as Britons increasingly view sugary
soft drinks as an occasional treat, there is a tendency to move towards more premium Sales Performance of Soft Drinks
and indulgent variants. % Y-O-Y Off-trade Volume Growth 2003-2022

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Brands are reformulated as a sugar tax looms
In 2016, the British government announced plans for the introduction a new law that
1.7% Forecast
will tax soft drinks with a high sugar content: covering drinks with 5g of sugar per 100ml 6%
or more, excluding 100% juices and dairy-based drinks. As the tax will be introduced in
April 2018, a noteworthy number of brands reformulated their drinks to sugar levels 5%
below 5g per 100ml in order to circumvent the levy. Soft drinks market leader Coca-Cola
Enterprises, for instance, reduced the sugar level in Fanta in 2017, whilst Lucozade 4%
Ribena Suntory reformulated the Lucozade brand.
3%
Low sugar is the main driver for new product development
2%
Due to the forthcoming sugar tax and an increase in consumer demand for healthier
soft drinks, health was the key theme of new product developments in 2017. In order to
1%
tap into the growing demand for (functional) bottled water and to dodge the sugar tax,
Lucozade Ribena Suntory introduced FitWater, a bottled water brand with added
electrolytes. In addition, Coca-Cola Enterprises launched Monster Hydro, a non- 0%
carbonated energy drink with a mere 4.6g of sugar per 100ml. Bottled water was the
soft drinks category with the most new entrants in 2017, as companies sought to -1%
2003 2017 2022
capitalise on the strong growth in demand for flavoured bottled water.

Volume growth set to be driven by bottled water in the forecast period

With the health and wellness trend set to heighten over the next five years, as the
debate around sugar and health intensifies, it is expected that an increasing number of
consumers will purchase bottled water in the forecast period. Not only is bottled water
perceived to be the healthiest soft drinks option, but more variants of bottled water
will also become available, as companies are set to launch products in the category to
capitalise on its growth. Flavoured bottled water in particular is set to see a strong
increase in the forecast period, due to the projection that consumers will increasingly
substitute carbonates with bottled water, as they do not want to compromise on taste.

APPENDIX
Fountain sales in the UK
Trends

Fountain sales of soft drinks increased in volume terms in 2017. The growth recorded
in 2017 was in line with the volume CAGR seen over the review period.
The top spots in fountain sales in 2017 continued to be occupied by the two key

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 multinational soft drinks giants, The Coca-Cola Co and PepsiCo Inc. The most popular
on-trade establishments for fountain sales of soft drinks in the UK are fast food Sales of Soft Drinks by Category
Off-trade Volume - million litres - 2017 Growth Performance
chains. These two global soft drinks giants have exclusive contracts with different
popular fast food chains. Coca-Cola and other brands owned by The Coca-Cola Co are
Bottled Water
served in the outlets of McDonald’s, Subway, Burger King and Domino’s Pizza, whilst 2,689.0
premium burger chain Five Guys also serves Coca-Cola brands. Pepsi and other
Carbonates
PepsiCo brands, meanwhile, can be found on sale at outlets of KFC and Pizza Hut. 3,717.1

Fountain volume sales of soft drinks are expected to continue to rise over the Concentrates
370.8
forecast period. The rise of the fast casual dining scene, exemplified by the premium
burger chain Five Guys, is likely to sustain growth in sales of fountain soft drinks, Juice
1,820.0
despite the classic fast food chains experiencing declining sales in the UK. The
impending sugar tax and the accompanying debate surrounding the health risks RTD Coffee
13.0
posed by excessive sugar consumption are unlikely to have a noticeable effect on
fountain sales of soft drinks during the forecast period. RTD Tea
11.5
Sports and Energy Drinks
SOURCES 692.2
Asian Speciality Drinks
Sources used during the research included the following: 6.1
-5% 15% 30%
Summary 1 Research Sources
SOFT DRINKS 9,319.8 CURRENT % CAGR % CAGR
Trade Associations Automatic Vending Association YEAR % 2012-2017 2017-2022
GROWTH
Ba kers Federa tion
Britis h Bottled Wa ter
Britis h Bottled Wa ter As s ocia tion
Britis h Soft Drinks As s ocia tion
BSDA
Copella Fruit Juices
Food & Drink Federa tion
Food Ingredients Europe
Food Sta nda rds Agency
Home Grown Cerea ls Authority
Interna tiona l Bottled Wa ter As s ocia tion
Interna tiona l Federa tion of Fruit Juice Producers
Milk Development Council
Na tura l Minera l Wa ter As s ocia tion
Orga nic Milk Suppliers Coopera tive

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Trade Associations Automatic Vending Association Competitive Landscape
Orga nic Tra de Boa rd
Soil As s ocia tion Company Shares of Soft Drinks
The Soil As s ocia tion % Share (NBO) - Off-trade Volume - 2017
UNESDA & CISDA
Coca-Cola Enterprises Lt... 22.0%
Trade Press Bevera ge Da ily
Britvic Soft Drinks Ltd 11.5%
Bevera ge Net
Tesco Plc 8.5%
Bevera ge World
Bloomberg Danone Waters (UK & Irel... 5.4%

Bra nd Republic Nestlé Waters UK Ltd 5.3%

Checkout J Sainsbury Plc 5.3%
Chemis t & Druggis t Asda Group Ltd 5.1%
Convenience Store Lucozade Ribena Suntory ... 4.5%
Convenience-Store.com
Highland Spring Ltd 2.3%
Da iry Reporter
Barr (AG) Plc 2.0%
Fina ncia l Times
Tropicana UK Ltd 1.9%
Firefly Juice/Tonics
Food & Drink Innova tion Network Nichols Plc 1.7%
Food & Drink Interna tiona l Innocent Drinks Co Ltd 1.3%
Food Bev Princes Soft Drinks Ltd 1.1%
Food Ma ga zine Red Bull Co Ltd 0.9%
Foodna viga tor.com
Silver Spring Mineral Wa... 0.8%
Gra zia
Cott Beverages Ltd 0.4%
Interna tiona l Hera ld & Tribune
Spadel (UK) Ltd 0.3%
Jus t-food.com
Licens ing World Private Label 3.5%

Ma d.co.uk Others 16.2%

Ma rketing
Pa cka ging News
Publica n, The
Soft Drinks Interna tiona l
Ta lkingreta il.co.uk
The Drinks Bus ines s
The Grocer

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 Trade Associations Automatic Vending Association Brand Shares of Soft Drinks
The Independent
% Share (LBN) - Off-trade Volume - 2017
Times Online Tesco 8.5%
Source: Euromonitor Interna tiona l Coca-Cola 6.4%
Sainsbury's 5.3%
Asda 5.1%
Diet Coke 5.0%
Pepsi Max 4.3%
Lucozade 3.4%
Evian 2.8%
Volvic 2.5%
Buxton 2.4%
Highland Spring 2.3%
Pure Life 2.2%
Pepsi 1.9%
Robinsons 1.7%
Fanta 1.7%
Vimto 1.7%
Coca-Cola Zero Sugar 1.6%
Tropicana 1.6%
Private Label 3.5%
Others 36.2%

Increasing share Decreasing share No change

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