Introduction and summary

In 2007 the UK soft drinks industry increased sales value by 2.4% to £8.5bn. This was a significant achievement in a tough year, when total soft drinks consumption reduced by 2% in volume to 7.6bn litres. The key factor was primarily the poor summer; in pubs and bars this was exacerbated by the smoking ban, which combined, contributed to a fall in on-premise sales after months of strong value growth.

Taking 2006 and 2007 together to provide a longer perspective, over two years the industry has achieved an impressive value growth of 11% in take-home (three-quarters of its business) and 6% in on-premise (a quarter of its business).

In 2007 take-home sales value rose 2.8% to £6.07bn despite a 2% fall in volume. The value growth was driven largely by premium and healthier options as well as drinks offering functional benefits. Carbonates slightly improved their value share against still drinks, boosted by fast-growing premium priced glucose and stimulant drinks and sports drinks. These and smoothies were the fastestgrowing sub-categories, benefiting from the health and wellbeing trend, which also brought pure juice closer in value size to the largest sub-category, cola. The long-running trend towards diet or no-added-sugar variants slowed as demand for “naturalness” turned consumers back to natural sugar options.

In the on-premise channel soft drinks continued to grow faster than beer and spirits, with sales value up 1.3% to £2.4bn despite a 2% volume decline. Cola and lemonade continued to be the staples, but bottled water and juice drinks showed strong gains – reflecting the “better-for-you” trend and perhaps an increase in out-of-home dining occasions. In contrast to the take-home channel, no-added-sugar variants maintained strong growth. Internationally, health and wellbeing has become a widespread preoccupation. Bottled water is still gaining ground in most countries except those such as France and Germany where it is already a top category in size. Fast-growing sub-categories in the US are “enhanced water” with electrolytes to aid hydration, and water with added vitamins.

In the UK, health and wellbeing remains a key driver in shaping the market – alongside other strong consumer preferences including indulgence, ethical values, convenience and naturalness. Analysis of consumer behaviour reveals a complex interplay of sometimes conflicting preferences, and the most successful product launches of 2007 tended to address the “complex consumer” on more than one level – for example, combining health with indulgence. Emerging trends include functional ingredients such as antioxidants and calcium, and sustainability. Whilst the premium and indulgent market is growing, health and wellbeing looks set to remain the most influential market driver in 2008.

Innovation in growth markets helped boost 2007 total sales value by 2.4%

Taking 2006 and 2007 together, take-home sales value has grown 11%