Executive Summary
Within the last decade, one of the major trends to have occurred in the
total drinks market is the decline in popularity of hot drinks. Shunning the
customary `tea' break, consumers are increasingly likely to grab a bottle of
mineral water or can of cola.
The share taken by soft drinks of the total beverage market grew from 14% in
1982 to 22% in 1993. During the same period, the share taken by tea has
declined from 29% to 25%, while there were also slight declines in the drinking
of coffee, alcohol and milk.
Despite this trend, sales by value of soft drinks fell in 1993 by around 2%.
This was largely as a result of a poor summer coupled with an uncertain
economic climate. Furthermore, retail prices of soft drinks continue to be
discounted among the grocery multiples as part of their general price-war aimed
at attracting customers. Discounting among manufacturers has also been on the
increase. Based upon industry estimates, Key Note values the 1993 market for
soft drinks at £5.7bn at retail selling prices.
Factors influencing the soft drinks market encompass a wide range of variables
ranging from the highly unpredictable weather, demographic trends, health
issues and the general economic climate. The recent trend towards lower alcohol
consumption has also had an important bearing on the market for soft drinks.
During the 1980s, the proportion of teetotallers increased significantly from
12% of the adult population to 18% in 1991.
Consumer research commissioned specifically for this report examines consumers,
opinions on issues related to soft drinks -- such as advertising, price, to
health and recycling -- and assesses the factors influencing choice of soft
drink. The research indicates real concern over health-related issues,
particularly among women. Over half of all adults believe manufacturers fail to
consider the damage to children's teeth caused by soft drinks. Similarly, one
in five of all adults consider a soft drink's additive content when choosing a
product. This issue was rated as the third most important influence among 35 to
44 year-olds -- key purchasers of soft drinks for their children. These
results should send clear signals to all soft drink manufacturers to address
these issues.
Flavour was considered to be the most important influence on the choice of soft
drink purchase, followed by price and branding. Calorie content influenced the
choice of almost a quarter of all adults and three out of ten of women.
By geographical region, the drinking of carbonated soft drinks other than cola
is higher than average in the North, Scotland and Yorkshire/Humberside regions.
This is in very marked contrast with the pattern of cola-drinking in which
penetration levels are at their lowest in these regions.
Following significant growth in the last decade, carbonated soft drinks now
account for almost half of the total volume of soft drink consumption in the
UK. The carbonated soft drinks market comprises colas, lemonades and other
fizzy drinks such as orangeades. Market growth has been fuelled by the
extension of existing brands to include diet and caffeine-free variants and the
establishment of new markets, such as that of sports drinks. The
recently-developed sports drinks market is one of the most dynamic within the
soft drinks market.
Aside from concentrates, colas account for the largest single product sector of
the total market. One driving force behind the cola market is the continuing
global war conducted between the two multinational giants, Coca-Cola and
Pepsi.
The distribution of soft drinks can be broadly segmented between on-trade and
take-home (off-trade) sales. There is a strong bias towards the off-trade,
which accounts for some 89% of total sales by volume of soft drinks.
The changing demographic profile is expected to impact on the future soft
drinks market in a number of ways. Firstly, the rise in the number of children
aged under 14 during the 1990s is likely to result in new product development
increasingly targeting the children's market in preference to the youth
audience. Manufacturers are also expected to respond to growing demand for
healthier products for children, such as a wider range of additive-free
products. Secondly, the increase in the number of consumers in their 40s and
50s will further fuel sales of `adult' soft drinks, such as mineral waters,
fruit-/herb-based products and mixers. Distribution within the soft drinks
market will continue to be dominated by the grocery multiples. In the immediate
future, discounting will continue as a negative influence on total market value.
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