Soft Drinks: Survival of the fittest

Have you every wondered where the UK soft drinks market would be without sports and energy drinks? It would be more than £1bn smaller for sure, as that’s its current value.

Mintel reports that the sports and energy drinks category grew by 55% in value and 39% in volume between 2008 and 2013 and, what is more, that growth looks set to continue. The research firm estimates it will be worth £2bn by 2018.

NPD is rife with new pack sizes and flavours, but who has room to stock all these?

Uben Nagendran, from Hythe Road Convenience Store in Ashford, Kent, makes a pretty good go of it. His range includes Lucozade Energy in seven flavours, Lucozade Sport in four flavours and Monster in five flavours. But despite all the flavours, orange is still his best selling Lucozade variant.

Then he’s got Euro Shopper isotonic 500ml in four flavours, Euro Shopper glucose 380ml in three flavours, Euro Shopper original in three flavours, as well as sugar-free. Plus there’s Red Bull.

Further north, in the News Shop in Market Weighton, Yorkshire, Lionel Cashin’s biggest selling soft drink is Lucozade Energy, which he carries in four varieties. “We always try to have the new flavours in as innovation is the key to selling impulse lines such as soft drinks.”

His range also extends to Lucozade Sport in four varieties, Red Bull including sugar free, V, Pure Rush, Boost, Monster and Relentless.

“There was a time, of course, when Red Bull was the top seller,” says Lionel, “but the market’s been split. We may have market growth, but there are many more product lines sharing that growth.”

Of course, some retailers just don’t have the space for loads of variants. David Poluck of HV Kingsley in East London says: “We stock Lucozade, but we haven’t given a huge amount of space to all the flavours because we just haven’t got the room. We have one row in the chiller dedicated to new lines.”

Paul Stone has Spar stores across Manchester city centre. He says: “With Lucozade there really are too many variants for us. We don’t have a lot of space so we have to use the ‘one in, one out’ rule.”

Speaking specifically about his 24-hour Spar on Oxford Road, Manchester, Paul says: “Energy drinks is still a growing category and is very important to us, but we are not selling more energy drinks than cola - in fact, bottled water is our biggest selling soft drink in this store. But that said, Red Bull is still massive - outselling its nearest branded competitor four to one. Looking at figures for June, we sold 162 x 250ml cans in one week. We premium price it and make good margins on it. We also stock Red Bull Zero 250ml (146 sold on that week in June), and the 473ml size, which doesn’t sell as well (66 sold in one week in June).

“We’ve only six energy drinks in our top 50 at Oxford Road. Lucozade Energy original 500ml comes in at number 21, while Monster original is down at number 43.”

Who is drinking what?

A lot of Paul’s customers are foreign students, and he reckons some buy energy drinks for when they are up late at night doing course work. “We have one or two younger team members who work here during the night and they consume energy drinks. I guess 75% of our energy drinks sales are to men.”

At Dean Holborn’s two stores in Surrey, people of all ages are buying energy drinks. “We have some women who come in every morning and buy five or six cans of Emerge. I think that’s because it’s a good price - 37p a can. But everyone has their specific favourite - we have one chap come in who always buys V Energy.”

It’s a mixture at David’s London store, too. “We have a combination of office people and builders coming in the shop,” he says. “There are definitely women drinking energy drinks now; I’d estimate we sell 70% to men and 30% to women. And we sell them all day long.”

Uben agrees that energy drinks sell quite well to women. “One woman comes in and buys energy drinks regularly - she says she has them instead of coffee and I started stocking sugar-free variants for her.”

He has two secondary schools within walking distance of his shop. “Kids come in every morning for an energy boost. They rarely buy Red Bull; they like Euro Shopper 250ml, which is on a deal at three for £1. It’s their fizzy wake-up drink.”

There have been stories in the press about banning sales of energy drinks to youngsters, and the Scottish Grocers’ Federation has thrown its weight behind a campaign which urges retailers not to sell energy drinks to under-16s. Indeed, at the time of writing, Lithuania announced that it was banning the sale of ‘highly caffeinated beverages’ to under-18s.

Until a few years ago, Dean had a firm policy on not selling energy drinks to children. “We just felt this was the right thing to do,” he says, ’but we attended a trade show and found out there was no such law in place about selling these drinks to kids and everyone else was, so we changed our policy.” However, he says he wouldn’t be surprised to see the law changed in future.

In Lionel’s shop, the higher caffeine-content energy drinks are kept on the fifth highest shelf so they are hard for younger kids to reach.

Dave Brunt from Londis Stoke says he hasn’t got a policy on selling to children, but adds: “If a kiddie came to the counter with a can we’d query it because they might not have realised what it is - it would all depend on how old the child was.”

Pricing

Many energy drinks are available in pricemarked packs, but pricemarking still divides retailer opinion. Paul says: “We don’t do any pricemarking in the store, but we do carry the Spar Blue Bear energy drink which sells quite well. The 250ml can is on a deal at ‘2 for £1.30’ and we sold 72 of those deals in just one week in June. Being in the city centre, we’re all about cash margin. We were offered Spar’s S budget drink but it just would not generate enough cash for us.”

But Uben and his customers like pricemarked packs. “We have Euro Shopper 250ml for 35p and 500ml for 69p. I think it tastes the same as the other drinks; I can’t tell the difference - and kids with 50p to spend will buy the smaller cans. Euro Shopper isotonic, priced at just 50p, is popular.”

He has Red Bull pricemarked at £1.35 but says it’s been as low as £1.19. Non-pricemarked, it sells at £1.59. He’s noticed a pattern in pricemarks being lowered. “Recently, on Lucozade, pricemarked packs went down from 99p to 79p for a limited time.”

Meanwhile, Dave’s best-seller is Bulldog in the 250ml can, which is pricemarked at 35p. “It flies out,” he says. “Most of these drinks are sold on price but older customers are more brand loyal - if they want Red Bull or Monster then they’ll buy it whether it’s on offer or not. Generally, if Relentless and Monster are out at the full rrp then sales slow down. Offers work on these drinks whether it’s ‘two for a price’ or pricemarked.”

He says Red Bull is not his fastest selling line, but he couldn’t possibly be without it. “It goes on offer from time to time, but as it’s a premium priced product, others are still always cheaper. Kids on their way to school are just looking for the cheapest one. And the 250ml size is our most popular because the bigger the size, the higher the price.

“We sell a Musgrave brand - Dart. We have it in the 1ltr bottle. They recommend a price of £1.26, but we sell it out at £1 and still get a good margin. It sells well in the evening as a mixer.”

Boost seems popular across the board, thanks to its ‘only for independents’ ethos.

Dean is impressed: “That sort of ethos is going to win you over every day of the week. With us being under attack on everything else, it’s fantastic that Boost is on our side. I carry quite a strong Boost range and that’s largely down to meeting Simon (managing director Simon Gray) at trade shows.”

Lionel adds: “Boost is a good seller. It’s pricemarked, but as it’s aimed at the independent, the margin recognises that.”

And David says that as a general rule he steers clear of pricemarks, except for Boost, for which he makes an exception. “Boost sells well for us, probably equalling Red Bull’s sales, and the 250ml size is our best-seller.”

Boost Drinks sales director Al Gunn says the Champion of the Independents campaign has had a fantastic response from the trade. “We always felt it was a strong positioning for us as a business, but we have been totally overwhelmed by the traction it has with retailers.

“We are building on this with a campaign of in-depot trade days, a nationwide programme of sampling activity in major UK cities and a new series of digital and social media campaigns.”