£170m booty waiting from soft drinks trade-up says Britvic

By Gary Lloyd

- Last updated on GMT

Reconsider your offer: soft drinks can reap huge rewards (credit: Getty/LeoPatrizi)
Reconsider your offer: soft drinks can reap huge rewards (credit: Getty/LeoPatrizi)

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Operators could ease the ongoing financial pain by boosting sales by £170m by encouraging 10% of customers to trade up from tap water to a soft drink, according to the Britvic’s Licensed Soft Drinks Review 2023.

The review explained UK on-trade venues are at a pivotal moment and must rethink their drinks offering to stay ahead of the game. This comes at a time when pubs, bars and clubs have been reborn in the past year, with sales of soft drinks surging by 60.3% and volumes up 53.2%.

According to the report, one in three adults say they now rarely or never drink alcohol, meaning there are huge opportunities for licensed venues to re-evaluate their approach to soft drinks and the way they serve alcohol-free options.

Dino Labbate, GB commercial director for hospitality at Britvic, said: “As consumers curb their alcohol consumption, particularly Millennials and Generation Z, soft drinks are well and truly in the limelight.”

Crucial to sector

Labbate continued: “Soft drinks have obviously always been crucial to the licensed sector, accounting for 27% of volume and 17% of value during last year but, this year, our Soft Drinks Review really highlights the size of the prize available to operators who are able to adapt to keep pace with consumers’ changing needs.

“We’re expecting low and no alcohol on-trade volumes to grow by a huge 48% to 117m litres by 2027, with higher average prices pushing value sales up by 69% to £432m.”

The report claimed alcohol moderation movement isn’t the only challenge facing the industry. Although soft drinks sales in licensed venues surged to just shy of £4.6bn in 2022, Britvic believes the pandemic has had an undeniable impact on what consumers want from a night out. The cost of living crisis hasn’t helped either – 38% of Brits report that they are going out to eat and drink less often: 72% cite cost of living concerns, 58% cite price increases in venues and 53% cite a decline in their disposable income as reasons why they are spending less.

Labbate said: “In the current climate, consumers need more reasons than ever to go out and spend. This explains some of the new trends we’re seeing. For example, 88% of consumers say they want bars and pubs to provide them with an experience they can’t get at home.”

Developing experiences

Labbate continued: “As a result, we’re seeing venues really up their game by developing experiences that can’t be recreated at home. Operators who can follow suit and rise to the challenge will reap the rewards.”

There are a number of shifts in consumer trends, which should be key considerations for operators looking to adapt. Quality is trumping quantity. Overall, 35% of consumers say they are drinking fewer drinks when they go out with 11% say they are choosing higher quality drinks.

What’s more, 32% of consumers have increased their overall spend on cocktails and 92% say they are now choosing cocktails that are better quality, or of the same quality, when they go out for a drink.

Consumers are associating ‘additional health benefits’ with quality too, with 45% equating such benefits with value and 43% stating that they value claims relating to naturalness.

Top tips to help operators adapt their non-alcoholic drinks offer

• Provide an elevated soft drinks selection that rivals the alcoholic options on offer, think elegant glassware with ice, beautifully presented with garnishes.

• Consider pairing food with premium soft drinks, such as J2O, that offer greater depth of flavour – 79% of food consumed out of home in Britain is served with a soft drink.

• Encourage drinkers to trade up – Britvic estimates that 10% of tap water drinkers trading up from: water to soft drinks = £170m sales boost and soft drink to an elevated soft drink = £123m sales boost.

• Spirits and mixers are highly profitable, offering an average margin per typical outlet of more than 80%.

• Give people more reasons to go out by developing experiences that cannot be recreated at home – 69% of those aged 16 to 24 and 64% of those aged 25 to 34 would rather spend their money on experiences instead of physical goods.

Related topics Soft & Hot Drinks

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