The UK’s soft drinks market has faced both challenges and opportunities recently, resulting in a plethora of new product launches. The importance of several factors, such as health and wellbeing, flavour, and lifestyle, make innovation in the sector a complex process.
The health-related highlight of 2018 was the introduction of the sugar tax, which forced soft drinks brands to reformulate or face price increases. In terms of lifestyle, most notable was the decline of alcohol consumption. Office for National Statistics (ONS) data from last year show that 20% of the adult population is teetotal. In addition, an increasing number of consumers are making an attempt to reduce alcohol consumption, following a series of health warnings including a Public Health England recommendation from earlier this year.
The alcohol reduction trend creates an opportunity for soft drinks manufacturers to tweak existing products or come up with new concepts targeting the adult soft drinks market. A wide variety of options are currently available for non-drinking and alcohol reducing consumers, some clearly alcohol substitutes (e.g. mocktails, non-alcoholic beer), while others are repurposed to satisfy the needs of this market. By running a multi-answer steer we attempted to establish the most popular alcohol substitutes and eventual gender differences in the preferences of irregular drinkers and teetotallers, i.e. consuming alcohol weekly and monthly or never, rather than daily:
‘Sparkling adult soft drink’ is the top preference of both genders, with a particularly high result for women (10 percentage points higher than men’s), which confirms that this versatile segment presents an opportunity to manufacturers to address the alcohol substitute market. The high popularity with women of ‘mocktail’, the non-alcoholic version of cocktail, provides another opportunity for sparkling soft drinks used in the mixes, e.g. ginger beer, soda, tonic.
An interesting market development is the rise of energy drinks in the role of alcohol substitutes, especially among men, almost a quarter of whom voted for them. This rises to over 32% when looking specifically into younger men, aged 18-35. Perhaps surprisingly, non-alcoholic beer and wine were not particularly popular, mostly having struggled to reach 20% of votes. Within these two segments, there was a pronounced male preference to beer and female to wine. Non-alcoholic spirits and kombucha are least favoured as alcohol substitutes, however, being the most novel, they might increase in popularity in future, especially among female consumers.
Type of drink aside, there is a range of factors influencing the sector. Reduced sugar content is much sought after, while flavour is intrinsically important in soft drinks, being it fun, nostalgic or indulgent. In order to measure the influence of six notable factors, we ran a single-answer steer asking our consumer community to choose the most important reason that would make them select an alcohol substitute:
The results confirm that the segment is price sensitive, with more than a quarter of consumers having prioritised ‘reasonable price’. ‘Familiar flavour’ proved to be almost as important (24%), followed by ‘No/low sugar’ (15%). Many consumers seem to be led by anchoring rather than experimentation when it comes to soft drinks, even if consumed instead of alcohol.
Still, a substantial 10% of our consumer community have opted for ‘Unusual flavour’, which shows that less obvious combinations could attract consumers with more mature palates. From the other hand, the demand for new flavours is likely to be driven by younger, more adventurous consumers, who should also be catered for in new product launches. Using a multi-option steer we attempted to gauge current flavour preferences and establish any gender differences:
Kiwi, lime & mint stood out as the top choice of both men and women. Inspired by hipster brand Firefly’s “homage to the classic Mojito”, this flavour is refreshing and crisp, both familiar and novel at the same time.
Elderflower also proved to be popular, especially among women. Drinks, such as Luscombe’s Wild Elderflower Bubbly, are marketed as celebratory alcohol alternatives that go well with both sweet and savoury dishes. Resembling champagne in terms of food pairing and presentation, more luxurious elderflower drinks allow for more premium pricing.
Drinks characterised by a slightly bitter or tart taste, such as ‘berries and botanicals’ and ‘apple and bilberry’ are more popular with women but nevertheless managed to attract a substantial subset of men. These drinks are reminiscent of gin cocktails, having a more complex flavour profile, including a secondary flavour. Inversely, familiar and nostalgic ‘ginger beer’ has attracted more men than women – 25% versus 20%.
Another flavour that stood out as a male preference was ‘smoky cola’, which attracted 21% of men and 17% of women. The flavour is part of Coca Cola’s newly launched line of mixers, created in collaboration with leading bartenders. Described as an intensely aromatic blend with smoky hints, it is meant to be mixed with dark spirits but could also take advantage of an alcohol substitute positioning. The brand uses retro Hutchinson glass bottles, which are likely to make a difference to adult consumers looking to enjoy sophisticated soft drinks in social settings.
The sparkling soft drinks segment is well equipped to respond to consumers’ key requirements for alcohol substitutes, as they are usually reasonably priced and have high potential in flavour innovation. Flavour preferences vary between men and women but our mojito-inspired option was a favourite for both genders.