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Soft Drinks Review - UK - June 2017

“The major focus of the soft drinks market in recent years has been on sugar reduction, in response to consumer concerns about sugar and more recently in preparation for the introduction of the Soft Drinks Industry Levy. Sugar is not the only health factor influencing the market though, with a decline in alcohol consumption boosting the relevance of soft drinks as an alternative to alcohol.”

- Richard Caines, Senior Food & Drink Analyst

This report will cover the following areas:

  • Scope for range development along with more prompts in the on-trade
  • Importance of different aspects of soft drinks varies by occasion
  • Soft drinks need a clear taste difference to justify a premium price

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Total soft drink sales increased by 4% in 2016
              • Bottled water sees strong growth
                • Carbonated soft drinks boosted by L/N/R sugar variants
                  • Slowdown in sports and energy drinks
                    • Brexit decision leads to fall in value of the Pound
                      • Soft Drinks Industry Levy set to be introduced in April 2018
                        • Push to improve health of UK population
                          • Real incomes coming under pressure again
                            • Companies and brands
                              • Coca-Cola maintains big lead over Pepsi
                                • Figure 1: Leading brands’ shares in the UK retail soft drinks market, by value, 2016/17*
                              • Juice-based drinks see the most product launches
                                • Big focus on new recipes to cut sugar
                                  • Focus on refreshment and hydration properties
                                    • More adult soft drinks and blurring of category boundaries
                                      • Increase in advertising spending on soft drinks
                                        • Coca-Cola and PepsiCo account for over half of advertising
                                          • Robinsons most trusted soft drinks brand
                                            • Innocent seen as most innovative brand
                                              • The consumer
                                                • Almost universal drinking of soft drinks
                                                  • Figure 2: Usage of different types of soft drink and tap water in the last 6 months, April 2017
                                                • Squash and bottled water drunk most frequently
                                                  • A quarter of fruit juice drinkers drink it once a day
                                                    • Strong loyalty to one or a few favourite soft drinks
                                                      • Figure 3: Loyalty to favourite soft drinks when drinking soft drinks at home or at restaurants/pubs/bars, April 2017
                                                    • At-home drinks are more about hydration and health
                                                      • Traditional flavours have the strongest appeal
                                                        • Going well with meals most important in on-trade
                                                          • Figure 4: What people look for in a soft drink when drinking a soft drink at home and in a restaurant/pub/bar, April 2017
                                                        • Strong demand for wider choice of soft drinks in the on-trade
                                                          • More prompts needed in restaurants and pubs/bars
                                                            • Focusing on taste key to success for premium soft drinks
                                                              • Figure 5: Behaviours and attitudes in relation to soft drinks, April 2017
                                                            • What we think
                                                            • Issues and Insights

                                                              • Scope for range development along with more prompts in the on-trade
                                                                • The facts
                                                                  • The implications
                                                                    • Importance of different aspects of soft drinks varies by occasion
                                                                      • The facts
                                                                        • The implications
                                                                          • Soft drinks need a clear taste difference to justify a premium price
                                                                            • The facts
                                                                              • The implications
                                                                              • The Market – What You Need to Know

                                                                                • Total soft drink sales increased by 4% in 2016
                                                                                  • Bottled water sees strong growth
                                                                                    • Fruit juice hit by sugar concerns
                                                                                      • Carbonated soft drinks boosted by L/N/R sugar variants
                                                                                        • Slowdown in sports and energy drinks
                                                                                          • Downward trend in cordials and squashes continues
                                                                                            • Brexit decision leads to fall in value of the Pound
                                                                                              • Soft Drinks Industry Levy set to be introduced in April 2018
                                                                                                • Push to improve health of UK population
                                                                                                  • Real incomes coming under pressure again
                                                                                                  • Market Size and Segmentation

                                                                                                    • Total soft drink sales increased by 4% in 2016
                                                                                                      • Figure 6: Total UK value sales of soft drinks, by segment, 2011-21
                                                                                                    • Bottled water growth continues
                                                                                                      • Value growth for juice-based drinks but volumes down
                                                                                                        • Carbonated soft drinks boosted by L/N/R sugar variants
                                                                                                          • Slowdown in sports and energy drinks
                                                                                                            • Downward sales trend for cordials and squashes
                                                                                                            • Market Drivers

                                                                                                              • Brexit decision leads to fall in value of the Pound
                                                                                                                • Soft Drinks Industry Levy set to be introduced in April 2018
                                                                                                                  • Push to improve the health of UK population
                                                                                                                    • Changing population dynamics provide an opportunity and challenge
                                                                                                                      • Figure 7: Trends in the age structure of the UK population, 2011-21
                                                                                                                    • Real incomes set to come under pressure again
                                                                                                                      • Drinking of tap water influences soft drink sales
                                                                                                                      • Companies and Brands – What You Need to Know

                                                                                                                        • Coca-Cola maintains big lead over Pepsi
                                                                                                                          • Juice-based drinks see the most product launches
                                                                                                                            • Big focus on new recipes to cut sugar
                                                                                                                              • Focus on refreshment and hydration properties
                                                                                                                                • More adult soft drinks and blurring of category boundaries
                                                                                                                                  • Increase in advertising spending on soft drinks
                                                                                                                                    • Coca-Cola and PepsiCo account for over half of advertising
                                                                                                                                      • Robinsons most trusted soft drinks brand
                                                                                                                                        • Innocent seen as most innovative brand
                                                                                                                                        • Market Share

                                                                                                                                          • Coca-Cola maintains big lead over Pepsi
                                                                                                                                            • Figure 8: Leading brands’ sales in the retail soft drinks market, by value, 2015/16 and 2016/17
                                                                                                                                            • Figure 9: Leading brand-owner sales in the retail soft drinks market, by value, 2015/16 and 2016/17
                                                                                                                                        • Launch Activity and Innovation

                                                                                                                                          • Juice-based drinks see the most product launches
                                                                                                                                            • Figure 10: New product launches in the UK soft drinks market, share by sub-category, January 2012-April 2017
                                                                                                                                          • Branded products dominate new launch activity
                                                                                                                                            • Figure 11: New product launches in the UK soft drinks market, share of branded vs own-label, January 2012-April 2017
                                                                                                                                          • Big focus on new recipes to cut sugar
                                                                                                                                            • Zero-sugar variants being added in energy drinks
                                                                                                                                              • No-added-sugar juice drinks look to avoid sugar levy
                                                                                                                                                • Reformulations in carbonated drinks and flavoured waters
                                                                                                                                                  • Focusing on refreshment and hydration qualities
                                                                                                                                                    • Packaging innovation looks to increase standout
                                                                                                                                                      • Limited edition products
                                                                                                                                                        • More visually appealing packaging
                                                                                                                                                          • New packaging offers practical benefits
                                                                                                                                                            • Juices and smoothies focus on functional benefits
                                                                                                                                                              • Adult soft drinks target those cutting back on alcohol
                                                                                                                                                                • Soft drinks for wine lovers
                                                                                                                                                                  • More sparkling drinks for grown-ups
                                                                                                                                                                    • Established family brands target the adult market
                                                                                                                                                                      • Blurring of category boundaries
                                                                                                                                                                        • Appealing to those with less sweet tastes
                                                                                                                                                                        • Advertising and Marketing Activity

                                                                                                                                                                          • Advertising spending on soft drinks increases
                                                                                                                                                                            • Figure 12: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, 2013-17
                                                                                                                                                                          • Carbonated soft drinks take biggest share of advertising
                                                                                                                                                                            • Figure 13: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, by category, 2013-17
                                                                                                                                                                          • Coca-Cola and PepsiCo account for over half of advertising
                                                                                                                                                                            • Figure 14: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, by advertiser, 2013-17
                                                                                                                                                                          • Coca-Cola Zero Sugar receives heaviest advertising support
                                                                                                                                                                            • Pepsi continues to focus on Pepsi Max
                                                                                                                                                                              • Energy drinks among most heavily supported brands
                                                                                                                                                                                • Tropicana promotes healthy message for orange juice
                                                                                                                                                                                  • Juice drinks shift focus to no-added-sugar variants
                                                                                                                                                                                    • Innocent puts a bigger focus on ingredients other than fruit
                                                                                                                                                                                      • Figure 15: Total above-the-line, online display and direct mail advertising expenditure on soft drinks, top 30 by advertiser and brand, 2016
                                                                                                                                                                                    • Nielsen Ad Intel coverage
                                                                                                                                                                                    • Brand Research

                                                                                                                                                                                        • Brand map
                                                                                                                                                                                          • Figure 16: Attitudes towards and usage of selected soft drinks brands, December 2015-April 2017
                                                                                                                                                                                        • Key brand metrics
                                                                                                                                                                                          • Figure 17: Key metrics for selected soft drinks brands, December 2015-April 2017
                                                                                                                                                                                        • Brand attitudes: Robinsons has the best reputation
                                                                                                                                                                                          • Figure 18: Attitudes, by brand, December 2015-April 2017
                                                                                                                                                                                        • Brand personality: Innocent seen as most ethical brand
                                                                                                                                                                                          • Figure 19: Brand personality – Macro image, December 2015-April 2017
                                                                                                                                                                                        • Coca-Cola stands for authenticity
                                                                                                                                                                                          • Figure 20: Brand personality – Micro image, December 2015-April 2017
                                                                                                                                                                                      • The Consumer – What You Need to Know

                                                                                                                                                                                        • Almost universal drinking of soft drinks
                                                                                                                                                                                          • Squash and bottled water drunk most frequently
                                                                                                                                                                                            • A quarter of fruit juice drinkers drink it once a day
                                                                                                                                                                                              • Strong loyalty to a favourite or a few soft drinks
                                                                                                                                                                                                • At-home drinks are more about hydration and health
                                                                                                                                                                                                  • Traditional flavours have the strongest appeal
                                                                                                                                                                                                    • Going well with meals most important in on-trade
                                                                                                                                                                                                      • Strong demand for wider choice of soft drinks in the on-trade
                                                                                                                                                                                                        • More prompts needed in restaurants and pubs/bars
                                                                                                                                                                                                          • Focusing on taste key to the success for premium soft drinks
                                                                                                                                                                                                          • Usage and Where People Drink Different Types of Soft Drinks

                                                                                                                                                                                                            • Drinking of soft drinks almost universal
                                                                                                                                                                                                              • Figure 21: Usage of different types of soft drink and tap water in the last 6 months, April 2017
                                                                                                                                                                                                            • Squash/cordials has biggest bias to in-home drinking
                                                                                                                                                                                                              • Figure 22: Usage of different types of soft drinks and tap water in the last 6 months, by location, April 2017
                                                                                                                                                                                                            • Bottled water most popular on-the-go option
                                                                                                                                                                                                              • Fruit juice drunk by seven in 10 people
                                                                                                                                                                                                                • Figure 23: 100% fruit juice, juice drinks and smoothies usage at home, by age, April 2017
                                                                                                                                                                                                              • Carbonated soft drinks top choice in pubs and restaurants
                                                                                                                                                                                                                • Out-of-home consumption important for sports and energy drinks
                                                                                                                                                                                                                  • Room for restaurants and pubs/bars to encourage uptake of soft drinks
                                                                                                                                                                                                                  • Frequency of Drinking Different Soft Drinks

                                                                                                                                                                                                                    • Squash and bottled water drunk most frequently
                                                                                                                                                                                                                      • Figure 24: Frequency of drinking different types of soft drinks and tap water, April 2017
                                                                                                                                                                                                                    • A quarter of drinkers of fruit juice drink it once a day
                                                                                                                                                                                                                      • Diet carbonated drinks drunk more often than non-diet versions
                                                                                                                                                                                                                      • Loyalty to Favourite Soft Drinks

                                                                                                                                                                                                                        • Strong loyalty to a favourite or a few soft drinks at home
                                                                                                                                                                                                                          • Figure 25: Loyalty to favourite soft drinks when drinking soft drinks at home or at restaurants/pubs/bars, April 2017
                                                                                                                                                                                                                        • Out-of-home drinking habits also firmly established
                                                                                                                                                                                                                        • What People Look for in a Soft Drink

                                                                                                                                                                                                                          • At-home drinks are more about hydration and health
                                                                                                                                                                                                                            • Figure 26: What people look for in a soft drink when drinking a soft drink at home and in a restaurant/pub/bar, April 2017
                                                                                                                                                                                                                          • Traditional flavours have the strongest appeal
                                                                                                                                                                                                                            • Going well with meals most important in on-trade
                                                                                                                                                                                                                            • Behaviours and Attitudes in Relation to Soft Drinks

                                                                                                                                                                                                                              • Strong demand for wider choice of soft drinks in the on-trade
                                                                                                                                                                                                                                • Figure 27: Behaviours and attitudes in relation to soft drinks, April 2017
                                                                                                                                                                                                                              • Interest peaks among 16-34s
                                                                                                                                                                                                                                • More prompts needed in restaurants and pubs/bars
                                                                                                                                                                                                                                  • Focusing on taste key to the success for premium soft drinks
                                                                                                                                                                                                                                    • Strong preference for drinks with all-natural ingredients
                                                                                                                                                                                                                                    • Amount Drinkers are Prepared to Pay for Soft Drinks in On-trade

                                                                                                                                                                                                                                      • Lack of willingness to pay more than £3 for soft drinks
                                                                                                                                                                                                                                        • Figure 28: The most people are prepared to pay for a soft drink at a restaurant/pub/bar, April 2017
                                                                                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                                                                                          • Appendix – Launch Activity and Innovation

                                                                                                                                                                                                                                              • Figure 29: New product launches in the UK soft drinks market, by flavour component group, January 2012-April 2017
                                                                                                                                                                                                                                              • Figure 30: New product launches in the UK soft drinks market, by claim, January 2012-April 2017

                                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                          Soft Drinks Review - UK - June 2017

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