Lukewarm sales for cold beverages COLD BEVERAGES By Gillian Hurst Flat is one retailer s description of cold beverage sales in his store and he is not alone. With the exception of the most popular carbonated drinks brands, sales have for the most part flat-lined over the last year. With shoppers watching every cent they spend, all too often, the costlier options such as flavoured milk, energy drinks and fruit juices are left on the shelf in favour of more economical choices. Water sales drop As consumer confidence fell so did sales of bottled water. Cash-strapped consumers moved back to simple tap water, as bottled water is considered a luxury purchase. Consumer confidence is inextricably linked with bottled water consumption. When the decline in confidence began in the latter half of 2007, bottled water became one of the easiest products for cautious consumers to sacrifice. After years of not having to worry about money, the first question consumers started asking when purchasing was is this value for money?- and tap water suddenly seemed a much more sensible option, says Jonny Forsyth, senior drinks analyst at Mintel. Even though we are reaching the tail end of the recession, consumers are still reluctant to splash out on discretionary purchases like water. According to the Mastercard Consumer Confidence Survey, South African consumer confidence is at 26 SUPERMARKET & RETAILER, JANUARY 2010 the lowest it s ever been since the first survey in 2004. Once optimism begins to grow, water sales will surely grow in equal measure. Instant energy gratification People need to perform better, play harder and work longer hours. To do this, they need extra energy and this is where the energy drink comes in. For many, it has become an essential tool in surviving the competitive, fast moving world we live in. Ours is a culture that demands instant gratification. Energy drinks give us the quick immediate fix we require in order to achieve more. This is a highly competitive and rapidly evolving category. The only way for manufacturers to differentiate themselves is with a combination of unique benefits and eye-catching packaging. As consumers look more to food and drink to obtain health benefits, they are increasingly drawn to the energy and sports drink category. Energy drinks, unlike other carbonated beverages, are not bought purely for refreshment, they are chosen for the perceived benefit the consumer can obtain and they are often perceived as trendy status beverages. Energy drinks, unlike other carbonated beverages, are not bought purely for refreshment, they are chosen for the perceived benefit the consumer can obtain and they are often perceived as trendy status beverages. South Africans are known for their active lifestyles and to this end, manufacturers actively target these drinks at the 16 30 year old age group. Gavin Tanner, trade marketing manager for Red Bull says that functionality is the biggest perception. Consumption may start out as a trend, however once consumers have tried and tested Red Bull, they believe in the products benefits and are therefore more likely to use it for other occasions. The case of concentrates The concentrates category has shown marginal growth over the recessionary period. One of the main reasons for this is that there is significant value in their purchase. Theola Conyers, brand manager for Super Fruit notes that consumers are obviously extremely price sensitive and when it comes to concentrates, a little goes a long way. Conyers recommends sampling instore so that customers know what they are getting. Brands are important as consumers are unable to experiment and trial could be costly hence in-store tastings are vital! When it comes to the quest for health, concentrates don t score too well because of their sugar levels. While they can have up to 20% fruit, the sugar content is high, which is a major consideration for the diabetic consumer. The body conscious consumer may also be shying away from the high calorie count of concentrates.
COLD BEVERAGES Read our cold beverages case study on page 35 However, Theoly points out that, the perception is that concentrates are unhealthy but nectars, for example are rich in Vitamin C. Traditional tastes As both a food and a drink, Mageu satifies consumers needs on two levels and has a loyal customer base. It is a healthy choice because of its low GI status. Expectations are that with pressure on disposable income and the search for affordable healthy snack solutions, the category will continue growing. Karin Fritz, marketing manager for Mageu Number 1 says that the market is still very biased towards the traditional consumer, but there has been some new uptake especially with sportsmen for carbo-loading that shows usage across cultural groups. With disposable income under pressure, this food drink is perceived as good value. Sales are good and new products that target the modern female are in the pipeline. Putting the fizz back in sales The country is slowly emerging from the recession, but consumers are obviously still cautious with their discretionary income. Here are some ideas to grow sales: Offer combo deals chocolate and drink combos for example, or if you have an HMR department, five drinks for a reduced price when a customer buys a family meal. In-store tastings. Remind your shoppers of their old favourites and let them sample new drinks on the market. Cross merchandise where you can. Target parent s shopping for school lunches. Place fridges at the tills to encourage impulse purchases. The old adage if it s cold, it s sold remains true today. Make sure your drinks are chilled to the perfect temperature as no one refreshes himself or herself with a warm drink! Even though cold beverage sales leave a lot to be desired at present, the improving economic climate will bring about improved sales in time. As consumer confidence begins to grow, shoppers will once again begin to spend money on 28 SUPERMARKET & RETAILER, JANUARY 2010 products like beverages that almost became luxuries during the recession. The upcoming Soccer World Cup will do a lot to increase cold beverage sales and retailers should take advantage of every marketing opportunity related to the tournament to boost sales. A little time and good marketing should see the tide turn for this category. Category overview According to Kerith Botha, product leadership director from Nielsen, as at December 2009, the annual sales value of the Carbonated Soft Drinks (CSD s) category was R15.3bn. The category has shown annual value growth of 12.4% and annual volume growth of 4.3%, the annual market size is recorded at 1.9bn litres in volume. CSD s continue to dominate the cold beverages market. Here is a look at the other categories: Short-life juices The total short-life juices category is up 6.5% on last year s annual sales value, at R2.7bn December 2009. Sales volumes, however, showed declines of -0.8% annually, to 254.7m litres. Dairy fruit mixes have seen declines in volume with the segment recorded declines of -1.6% in volume, taking the annual sales volume to 91.1m litres. Value showed slow growth at 4% annually increasing annual sales value to R1bn. Mineral water Mineral water is still a very trendy option with more and more consumers become health conscious, despite this, this category saw only marginal volume growth from 2008 to 2009. The still mineral water segment showed a 12 month moving value growth of 20.6%, recording an annual sales value of R677.4m at the conclusion of 2009. The category Carbonated beverages have survived the recession better than other cold beverages grew annually by 6.7% in volume, selling 103m litres nationally. Sparkling flavoured water showed declines of -0.5% in value and -5.5% in volume, taking the total annual sales value to R676.4m as of December 2009 and the total sales volume to 69m litres. Sparkling Pure Water grew by 7.9% in value, to an annual value of R86.8m, and declined by -0.9% in volume, to 10.9m litres in 2009 Iced tea The total iced tea category sold 20.6m litres this year, a 4.1% growth on last year. This translates to a market size of R 280.4 million in sales value, 9.7% up from last year. Sports & energy drinks Sports & Energy Drinks grew by 10.3% in value from last year. The market was worth R1.3bn this year. The category showed volume declines of -0.5% to 63.7m litres. Concentrates Liquid concentrates showed annual volume growth of 4.6% and annual value growth of 11.9% from 2008 to 2009, with the sales value increasing to R1.9bn and sales volume to 143.7m litres. Dairy Blend Syrups was the key driver of this market across 2009 growing annually at 22.5% in volume and 21.2% in value amounting to 51m litres of volume and accumulating R646.9m worth of value. About the Nielsen company The Nielsen Company is a global information and media company with leading market positions and recognized brands in marketing information, media information, business publications, trade shows and the newspaper sector. The privately held company has more than 42 000 employees and is active in more than 100 countries, with headquarters in the Netherlands and the USA. For more information, please visit www.nielsen.com.
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