Key Note Market Report by Andrew Capstick
In 2014 the UK soft drinks market was estimated to have grown in value by 0.2 per cent year-on-year, according to Soft Drinks, a new Market Report from Key Note. This is a fairly encouraging performance for a market that is increasingly under attack throughout the media, as the so-called ‘war on sugar’ rages on. While market value is thought to have held up in 2014, volume consumption is thought to have declined, as the ‘war on sugar’ shifted focus to fructose, or fruit sugar, and its potential health impacts.
The ‘war on sugar’, the industry’s response and potential Government action to reduce sugar consumption are undoubtedly the key issues for soft drink producers and retailers at present. With numerous years of widespread media attention on the negative health impacts sugar, its contribution in rising prevalence levels of obesity and diabetes, and soft drinks’ role in excessive levels of consumption, demand for full-sugar ‘original’ variants of soft drink products across virtually all sectors has been tumbling. While the industry has reacted strongly to this trend — with the widespread development of low-calorie and sugar-free variants of soft drink brands underway — the ongoing coverage has led to a decline in volume sales in virtually all product categories. Furthermore, with soft drinks highlighted as a key contributor to sugar intake in consumers’ diets, many across the public health sector have called for additional taxation of sugar-sweetened beverages — a suggestion that is gaining increasing traction as various governments around the world enact similar policies.
The issue of sugar is likely to impact the soft drinks market for the foreseeable future, with heavily constrained value growth predicted over the next five years, although low-calorie and sugar-free formulations and bottled water should represent higher-growth segments. However, should the Government bow to pressure from the public health sector and introduce additional taxation, volume sales are likely to drop sharply, at least shortly after implementation.
Key Note’s 2015 Market Report, Soft Drinks, analyses the market for carbonated soft drinks and dilutable soft drinks in the UK.