Staying in is the new going out, or at least that’s what a lot of us think around Christmas time. Nowadays Christmas social occasions often take place in the home when friends or family come over, and this commands premium products - after all, festive celebrating still needs to be done in style.
So for convenience stores it’s the perfect time of year to tap into an increase in demand for premium soft drinks, which are bought not only as mixers but also to fill the gap for indulgent non-alcoholic options.
Ghafoor Hussain, who runs four Costcutter stores in London, thinks a lot about merchandising at Christmas, especially when it comes to combining products that work well with socialising.
Exotic flavours are gaining in popularity
During the festive season juices are popular both as non-alcoholic options and as mixers. Refresco Gerber’s James Logan notes that orange and apple continue to do well, with apple blends up 20% and orange 34% by volume.
Other flavours also performed well last year, including pure grape (up 65% in volume), tomato (up 29%) and blueberry (up 33%), with exotic blends expected to be big hits this year, too.
“As well as the ever-popular orange and apple, c-stores should look at juices that work with alcohol for fruit punches and cater for the increasing popularity of exotic flavours such as mango, or tropical mixes such as those in the Sunpride range,” says Logan.
Princes convenience channel marketing director Graham Breed agrees that new flavours will be on shopping lists this year.
“Consumers are looking for new and exciting flavour combinations,” he says.
Breed also notes that an increase in health-conscious consumers has helped boost sales for its Jucee brand.
“For Jucee, almost all of the range is now No Added Sugar, which puts us in a strong position given the consumer and media interest in health.”
“We think about ways of linking soft drinks (in sharing formats) with snacks or chocolate - anything that represents indulgence and social occasions, or nights in,” he explains.
In the run up to Christmas, soft drinks are the second most popular food and drink category (Kantar, eight weeks ending 5 January 2014). Dave Turner, communications manager at Coca-Cola Enterprises (CCE), says that this spike in popularity means there are an average of 8.4 soft drink purchase occasions per shopper in the eight weeks leading up to Christmas (Kantar).
“It means soft drinks are bought more than once a week at this time,” he says. “This suggests that getting product range and merchandising right at this time of the year is critical, with 95% of households enjoying soft drinks products.”
Turner also notes that CCE’s 1.75ltr bottle range and its multipacks of 330ml cans are particularly suited to the social sharing occasions that occur during the festive season.
CCE is supporting its brands with a festive marketing campaign again this year, along with Christmas packaging and promotions.
Convenience stores not only need to be prepared for shoppers who want to buy more, but should consider the fact that people are happy to pay more for their soft options at this time of year.
“In the lead up to and throughout the festive season, people are willing to spend on affordable luxuries and many are looking for that extra- special treat to add a bit of sparkle to their in-home socialising,” notes Britvic’s commercial director for out of home, Nigel Paine.
“With consumers either hosting or attending events around the festive season, retailers should be sure to deliver shopper solutions, as research shows one in four of these shoppers are using convenience stores for these occasions, presenting a real opportunity at Christmas and New Year.”
Paine also points out that December is the biggest month for multipack sales in impulse, (Nielsen, total impulse 2011).
Ghafoor says he is already well positioned to tap into these potential growth areas. “With carbonated drinks we see sales of the multipacks doing well around Christmas, but we are near supermarkets here so most people see us as somewhere to do their top-up shopping. I do expect sales of large sharing bottles to pick up and we will also be making sure mixers are positioned near the spirits.”
Adrian Troy, head of marketing at AG Barr, confirms that Christmas represents a “significant profit opportunity” for convenience stores, particularly when it comes to carbonated drinks.
He notes that sales of the 2ltr Irn-Bru and Barr family 2ltr bottles were up 19% last Christmas, with sales of 2ltr Barr lemonade “exceptionally strong” with a 90% uplift (Nielsen, four weeks ending 24 December 2013). Sales of multi-pack cans also rose by 43%.
Concerns about obesity and related health problems have stimulated the market for non-calorific sweeteners, particularly natural plant-derived ones such as stevia.
Consumer demand for non-calorific sweeteners is projected to grow by 5% a year until 2017, according to research by Canadean. Of the 360 new products picked up in 2013, 38.3% contained non-calorific sweeteners.
In 2013, about 20% of new non-calorific soft drinks were based on natural sweeteners, and Canadean expects this category to continue to show impressive growth.
Product manufacturers are still struggling to find the right balance of steviol glycoside in their drinks, according to Canadean, and taste continues to be the main obstacle for the natural sweetener, it says.
The report ads: “Not everyone embraces this distinct taste and some drinks brands, such as Glaceau Vitamin Water, combine the sweetener with sugar. In the US, Coca-Cola Enterprises had to reverse engineer the Vitamin Waters back to the original composition as they realised Americans didn’t appreciate the stevia taste.”
Canadean ingredient analyst Karin Nielsen notes that “stevia may be more suited for certain products such as teas, nectars and juices, as it has an ability to enhance the taste of the natural ingredient”.
Despite this, many of the big soft drinks producers are now starting to embrace stevia with more confidence. CCE, for example, has used the sweetener in Sprite for some time and recently added Coke Life, sweetened with a blend of sugar and stevia leaf extract.
Pepsi True has emerged as a rival to Coke Life, with both brands packaged in green cans. Currently, Pepsi’s version can only be purchased online via Amazon.
Irn-Bru will be running digital and social media activity through December, as well as providing seasonal packs and POS as part of its £1m Christmas support package.
Fizzy drinks are winners
Carbonates are certainly a winner for Barrie Seymour, who runs a Londis store in Liversedge, West Yorkshire. He confirms that his fastest selling lines at Christmas are “without a shadow of a doubt” carbonates such as Coca-Cola, Diet Coke and lemonade, particularly in 1.75ltr bottles.
Recent sales data shows potential for many areas of the soft drinks category at Christmas, but it also indicates that historically, convenience stores do well at this time of year. Amanda Grabham, marketing director for soft drinks at SHS Drinks, whose portfolio includes Shloer, says: “Last Christmas convenience stores were once again the star performers when it came to increasing festive soft drink sales.
“In the 12 weeks leading up to Christmas and New Year they outperformed the total take-home market with value sales up by 6% - three times the total take-home market growth of 2% (Nielsen 12 weeks ending 4 January 2014).”
She explains that, as a result, convenience stores accounted for more than a third (35%) of soft drinks sold over the 2013 festive period and this generated £568m-worth of retail sales for convenience retailers.
In Liversedge, Barrie says he sees Christmas as a growth opportunity for soft drinks, but he has two multiple retailers on either side of his store, which makes it difficult.
“We do most of our trade on Christmas Day itself, when those two stores are shut,” he says. “I am open for three hours then and it will be rammed. We did just short of £3,000 for the three hours we were open last Christmas Day, so about £1,000 an hour. People come in for items such as tonic water and carbonated drinks - some years I stock it all down the aisles through the holiday period.”
While the figures reflect a positive picture, suppliers are well aware of the challenges convenience stores face. Says Refresco Gerber commercial director James Logan: “At Christmas convenience stores stock a broader range of products than normal and yet have the same space with which to work. It’s a balancing act of ensuring core ranges are available as well as more exotic or luxury items that appeal to customers and can command premium prices. Research by Kantar revealed last year that there was year-on-year growth of 56% in premium products over the festive season.”
Alcohol is in demand at Christmas, but an increasing number of us are thinking of our health more by reducing our alcohol intake.
Concerns about obesity have also driven some to curb their drinking habits. For others, premium soft drinks simply offer a more indulgent alternative to wine or Champagne at social occasions, particularly for the designated driver.
“Appletiser’s premium credentials mean that the product is an ideal choice for adults looking for a premium adult soft drink product that won’t look out of place next to, or replacing, a bottle of wine on the dining table,” explains CCE’s Turner.
Another option, says Paine, is Britvic’s classic alcohol-free brand J20. “To target those socialising with friends but choosing not to drink alcohol, J20 is the perfect adult premium soft drink to have on shelves,” he says. “Available in multipack and fridge-pack formats J20 comes in three core flavours, orange & passion fruit, apple & raspberry and apple & mango, as well as limited-edition Glitter Berry for the festive season.”
Barrie confirms that his Londis store sells quite a lot of J20 multi-packs throughout December, while sales of multipacks of other drinks, such as Coca-Cola, have also performed well at Christmas. “We have offers for these at the moment such as two (four-packs) for £3. We may also have some six or 10-fridge packs around Christmas.”
Last Christmas adult soft drinks was one of the best performing sectors of the soft drinks category, along with bottled water, according to SHS’s Grabham, who believes there’s a big opportunity for impulse retailers to grow sales even further this Christmas if they put more focus on choice for adults “both in terms of the range they stock and how they promote them in-store”.
“The figures clearly illustrate how retailers need to adapt their soft drinks range to cope with the massive surge in consumer demand for adult soft drinks at this time of the year,” says Grabham. “One of the factors contributing to this growth is the increase in the number of adults not drinking alcohol - more than one in five adults (21%) do not drink alcohol and there is undoubtedly a much greater demand from adults looking for more sophisticated soft drinks.”
Grabham points out that being grape-based, Shloer is the perfect no-alcohol alternative to wine, and therefore ideal for socialising and entertaining at home. Last Christmas the company launched Shloer Celebration Pink Fizz and Celebration White Bubbly to tap into the demand for premium no-alcohol ‘celebration’ soft drink options.
SHS Drinks is also helping impulse retailers this year by providing £1.69 pricemarked bottles of red and white grape Shloer to the convenience and independent sector.
Bottled water was also a successful sector of the soft drinks market last Christmas, and premium options that work well at dinner parties were particularly popular.
Harrogate Water Brands managing director James Cain explains: “This Christmas we’re expecting consumers to continue to replace traditional sugary mixers such as lemonade, soda and tonic waters with sparkling water in tall drinks and spritzers. Consumers are adding botanics to the mix, too, such as mint, elderflower and cucumber, as they search for a refreshing and more premium touch.”
Cain explains that this trend stems from what consumers experience in restaurants and bars, where mixologists use sparkling water in cocktails to create more innovative drinks. “This inspires discerning drinkers to recreate these drinks at home, offering sophisticated options for guests at dinner parties,” he says.
He advises c-store managers to focus on larger bottles of water in the run up to Christmas, particularly the 750ml, 1ltr and 1.5ltr sizes. “Naturally-sourced bottled water complements wine on the table at dinner parties,” he adds.
Mixers in the mix
Sparkling water may well be one of the new mixer ingredients, but producers of traditional mixers are also gearing up for a spike in sales over Christmas.
CCE’s Turner explains: “This sector is playing an increasingly important role, with data showing that half of all mixers are now consumed without alcohol (Kantar, 12 months to end November 2012).
“Earlier this year, we responded to this growth by refreshing the iconic Schweppes line-up to recruit a new generation of adults. The investment in the brand saw the introduction of striking new packaging and a multi-million pound campaign.”
Maurice Newton, sales and marketing director at CBL Drinks, notes that sales of spirits are much higher at Christmas, and as a result it is naturally a key time for mixers.
“Therefore, it is important to try to place your soft drinks alongside spirits where possible, as this will encourage incremental and impulse sales,” he advises. “If space allows, it may be worthwhile placing secondary sites outside of your usual soft drinks display areas, particularly in the week leading up to Christmas Day.
CBL Drinks has recently launched a range of traditional soft drinks in time for the Christmas period.
At Boost Drinks one of its growth areas has been sales of its sugar-free options, and consequently the company has invested in further development of its Sugar Free Pink Lemonade.
The 500ml PET drink, which boasts less than 10 calories - and less than five calories for its 250ml can - sits alongside other sugar-free Boost drinks including Citrus Zing and Exotic Fruits.
Boost sales director Al Gunn comments: “Following extensive research, we are confident that our three new flavours will be very popular with consumers. These products will not be available in supermarkets as Boost remains committed to being a champion of the independents.”
This year the company is tapping into the key Christmas period by promoting its full range of PET bottles at £1 (down from £1.28).
Gunn adds: “We want to support our trade customers at this busy and potentially lucrative time by providing products that can’t be bought in the multiples, offering consumers great tasting drinks with a fantastic price point, while still delivering great margins to our retailers.”
For Barrie, this support will be good news. He says sales at Christmas tend to pick up at lunchtime in the run up to Christmas, until the holiday period properly starts. “For these shoppers I tend to see sales pick up for energy drinks, and we have done very well with the 1ltr Boost energy drinks,” he says. “I think these will pick up more over Christmas as people want them for mixers at parties. Our Smart Buy energy drink at 50p a can has done amazingly well for us too.”
Ghafoor says the Christmas planning in his Costcutter stores will include a look at the energy drinks sector, which tends to sell well all year round for him.
Over at Lucozade Energy, the company is putting its faith in the popularity of Cloudy Lemonade flavour. Earlier this year it brought out a Reduced Sugar version, which it says was developed in response to consumer demand for healthier drink options. The company says that, according to research, consumers aged over 25 are becoming increasingly conscious of their sugar and calorie intake, which is driving growth in the reduced sugar arena.
Healthier lifestyles are also on the agenda for Red Bull, which created a calorie-free energy drink earlier this year. Red Bull Zero Calories is packaged in 250ml cans, a four-pack and a 250ml £1.19 pricemarked can.
“It’s the second low-calorie product we have brought to the UK market, giving consumers an everyday energy option without compromising on taste, for zero sugar and calories,” says head of category marketing Gavin Lissimore. He explains that the launch “delivers against consumer health concerns, but was also designed to drive further penetration into the category”.
Growth in energy drinks throughout the year is set to continue, so a natural jump in sales at Christmas is likely.
According to Mintel reports, the sports and energy drinks category grew by 55% in value and 39% in volume between 2008 and 2013. It is expected to reach a value of £2bn by 2018, according to the firm.
With shoppers heading your way to buy soft drinks to see them through the party season, energy drinks could be just what’s needed to keep both you and your customers going until the new year.
The relaunched Occasions range from Del Monte works well as a cocktail mixer, or as a standalone adult soft drink, according to Refresco Gerber. It comes in three flavours - Margarita, Pineapple Mojito and Spicy Tomato Mary - in 1ltr packs, rrp £1.99.
CBL Drinks has created its own range of traditional soft drinks. Zack’s Classic Sodas features favourites such as Cream Soda, Dandelion & Burdock, Sarsaparilla, Lemonade and Ginger Beer, in a two-litre bottle format. Zack’s uses natural spring water sourced from CBL’s own Hadrian Well, a natural spring in the Northumbria Hills.
More juice flavours added
Princes has introduced new Princes Juice flavours including orange & lime, apple & raspberry and apple & pear, as well as a Zesty Cranberry & Lime juice drink variant.
Harrogate Water’s Diamond Bottle design has now been implemented across the entire Harrogate Spring Water glass and PET range. The company says they provide a contemporary and attractive look.
Reduced sugar Lucozade
Lucozade Reduced Sugar Cloudy Lemonade contains half the sugar of the Lucozade Energy core range. The variant was created to meet 25- to 34-year-olds’ changing lifestyles and the demand for healthier options. Marketing director Corrine Hopwood says: “We have identified a new opportunity for a reduced sugar proposition within the energy category.”