BRITVIC Soft Drinks
Report 2009

Key stories

Sales
Holding up in a tough market

Hopes of a boost from a long hot summer were disappointed. Instead the weather, along with the economic climate, got worse. But the soft drinks industry proved its resilience, keeping sales value virtually flat – down just 1% to £8.4bn – on volumes down 2%. In fact, it actually grew value by 1% to £6.1bn in take-home, its principal sales channel. However, it could not escape the impact of a tough year for the licensed trade: despite faring better than almost all other drinks sub-categories, soft drinks still saw a 4% fall in sales value to £2.3bn.

LabellingEurope goes for GDAs

In January the European Commission recommended its preferred food labelling system for adoption across Europe – the Guideline Daily Amount (GDA) system. Most of the UK industry favours this scheme, rather than the rival "traffic light" labelling, on the grounds that it enables consumers to make their own informed choices. More than 50 UK food and drink companies display GDA labels on over 20,000 product lines.

AdvertisingKids get sugar-free TV

The Government continued to tighten-up the rules for advertising seen by children, as part of its Obesity Strategy. The squeeze on TV ads for products classified as "high fat, sugar and salt" (HFSS) began in 2007 with scheduling restrictions to protect under-10s.

Restrictions were extended to cover under-16s in January 2008. Dedicated children's channels, which stood to be most severely affected by loss of revenue, were given an extra year to adapt as the restrictions were phased in. But by the end of 2008 the ban was in full force: no HFSS advertising to youngsters is allowed from January 2009. But the impact on the soft drinks industry is negligible, as most manufacturers voluntarily stopped advertising high energy drinks to kids before the restrictions came in.

ObesityGovernment urges Change4Life

Another product of the Obesity Strategy is the Change4Life campaign, which was announced in July 2008. Its tagline: "Eat well, move more, live longer". Backed by a coalition of industry partners [Business4Life], government departments, NGOs and community organisations, its aim is to prevent obesity in families – especially under-11s.

The campaign calls for a lifestyle revolution against "the biggest challenge faced by UK society": obesity, it says, causes 9,000 people to die prematurely every year, costing the NHS £4.2bn and the economy £16bn a year. Without radical change, it warns that 90% of today's children will be overweight or obese and at risk from serious diseases by 2050. The campaign moved up a gear in January 2009, launching an ambitious TV, poster and magazine ad campaign. A number of soft drinks companies have signed up to support this campaign.

LabellingControversial colours on the way out

In July 2008 the EU ruled out a ban on a number of food colourings that have been linked with adverse effects on children's behaviour. But it will require warning labelling on products using these additives by mid-2010. In November the UK Government confirmed it is working with the food industry towards a voluntary withdrawal of the additives by the end of 2009. The British Soft Drinks Association confirmed that only a very small minority of UK-produced drinks used the colours, and manufacturers were working to find alternatives wherever possible.

RecyclingScotland mulls compulsory deposits

In July 2008 the Scottish Government said it was seeking views on how to improve recycling rates, including the possible introduction of some form of mandatory deposit scheme. The British Soft Drinks Association believes that developing kerbside and on-the-go collection is a more cost-effective way of increasing recycling, as confirmed by a wide body of evidence including a report published for DEFRA in December 2008.

Climate changeLess CO₂ in UK food and drink

In November the Food and Drink Federation announced that its members had cut their CO₂ emissions by 17% since 1990. The industry has been releasing an average 58,000 tonnes less CO₂ annually since 1990 – equivalent to taking 22,000 cars off UK roads each year. Members are on target to meet their commitment to a 20% cut in CO₂ emissions by 2010, compared with 1990.

HealthcareWelsh wards give sugar the boot

In November 2008 the Welsh Assembly introduced a blanket ban on hospital vending machines selling crisps, chocolate and soft drinks apart from water and fruit juice. It had already declared its intention of replacing unhealthy snacks with fruit and no added sugar, still drinks to help patients make "healthy choices". Reminders to eat five portions of fruit or vegetables a day have replaced logos on the sides of machines. Four health trusts with long-term supplier contracts have been given more time to complete the change. Meanwhile, the Welsh Assembly's action has raised concerns that it might start a trend across the UK public sector, undermining consumer choice.

MarketingAdvertisers hold back for a second year running

Another glum summer dampened marketers' enthusiasm. In the absence of the traditional hot-weather upsurge in demand, soft drinks manufacturers again reduced advertising investment accordingly down 11% to £103m following the previous year's 6% fall. But with ad prices coming down less spend doesn't necessarily equate to less brand investment.

PepsiCo, Britvic, Coca-Cola GB and GlaxoSmithKline again topped the list of advertisers, with an aggregate £67m spend (down by £6.8m). The most advertised brands were Coca-Cola (Diet, Regular and Zero), Pepsi Max and Red Bull (overtaking Lucozade to take fifth place).

Coca-Cola GB remained the largest spender with a 28% share, and was the only advertiser in the top four to increase its spend (up 6%). Among the top 10 advertisers, the mood was split: half cut their spend and half increased it, and there were notable increases by Red Bull and Ocean Spray. But the increases totalled only £6.3m, against cutbacks totalling £13.9m.

Cola was the largest category spender, driven by more than £6m of extra spending on Regular Coca-Cola (up 66%) and over £1.5m behind the launch of Red Bull Cola. Dairy drinks took second place with £16.8m investment, down 23%. They now stand only just above energy drinks, which took a close third place at £15.2m, down 4%. The general decline in spending on sports and energy drinks was strongly offset by Kick Start, with spending doubled to almost £3m, and £1.4m to support the mid-year launch of sports drink Gatorade. The sharpest falls in sub-category spending were squash (down 48%) and smoothies (down 50%).

Noteworthy campaigns of 2008 included Coca-Cola's launch of Fanta Still across television, outdoor and print. Britvic relaunched Drench with its successful breakdancing Brains campaign, spending £2.3m on TV and online, and Red Bull significantly increased its spend with the launch of Red Bull Cola.

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