Britvic

We believe that the growth in the GB soft drinks industry has been driven by the following trends:

• The market has seen growth in two distinct areas:
  • "Better for you": The subject of health and diet are increasingly on the public agenda. In line with this public debate, the more traditional drinks categories (for example, cola and squash) have in recent years seen a greater rate of growth in the low or no-sugar alternatives than in the regular versions. However recent data would suggest that this trend is moving on as new users to the cola category are moving into regular cola as they make a definite choice towards rejecting artificiality and choosing the full sugar alternative. The rejection of artificiality in itself is not new - in response to a consumer survey carried out this year about whether or not consumers would make a definite choice to avoid artificial sweeteners 54% said they would, against only 45% when posed with the same question last year. This is something we have observed only recently within cola. The trend continues however for consumers increasingly to seek products which are perceived as "better for you" for consumption by themselves and their families. Bottled and dispensed water have been key beneficiaries of this trend, as well as pure juices, fruit drinks and, more recently, dairy drinks and smoothies.
  • "Added Value": Consumers have been seeking a functional drink or an indulgent treat (whether in terms of product type or packaging format), with a consequent growth of sports drinks, smoothies and other premium products. Although the most recent data indicates that the growth levels in Smoothies are falling as the relatively expensive price point has meant that penetration is flattening off, so hampering future growth.
• Broadening consumer demands: Again driven by changes in lifestyle and an increase in disposable incomes, consumers are demanding a wider choice of products to meet an increased range of consumption occasions.
  • As many people's lifestyles have become more hectic, there has been an increase in consumers eating and drinking "on the go". This has led to increased sales by volume through the impulse channel and changes in consumer preferences for a greater choice of packaging formats and sizes (for example, a trend towards re-sealable 500ml PET bottles and bottles with a sports cap design).

There is a growing trend to eat out during the day, as well as making food part of a "night out" (as evidenced by the increased number of licensed outlets serving food). In addition, family-led eating out has also become more frequent. All of these trends have served not only to increase the number of occasions on which a soft drink may be purchased, but have also driven a wider range of products being made available in licensed on-premise outlets to cater for the broader choice demanded by the modern consumer. As a result, in 2007 soft drinks represented the third largest major category in terms of value growth in the GB licensed on-premise channel, only appearing behind cider and wine.

Suppliers have sought to capitalise on these trends by developing products (for example, no added sugar extensions of existing brands) and packaging (for example, bottles with sports caps), which align their offerings with evolving consumer preferences. Furthermore, Britvic believes that innovation in products, packaging and promotions has helped to drive the growth of the soft drinks industry.

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