Impact of cost-of-living crisis on soft drinks category

By Rebecca Weller

- Last updated on GMT

Enhanced experiences: soft drinks provide operators with a big opportunity to boost margins (Credit: Getty/Alessandro Biascioli)
Enhanced experiences: soft drinks provide operators with a big opportunity to boost margins (Credit: Getty/Alessandro Biascioli)

Related tags Soft drinks Finance Britvic

Habits towards soft drinks in the on-trade are changing as consumers increasingly "seek out" value for money and healthier options amid the cost-of-living crisis and a surge in wellness trends.

Britvic director of foodservice and licensed Adam Russell claimed soft drinks are becoming “more important” for operators as consumers look for enhanced experiences, value for money and healthier options in pubs, with around one in four now identifying as teetotal while one in three adults rarely or never drink alcohol.

He said: “Not only are soft drinks profitable, it's on trend and what consumers are starting to seek out more and more.

“People are looking for healthier options and experiences they could have had with alcohol, but without the negative stuff.

“A lot of the wellbeing and moderation trends that are coming through are important, and that requires operators to give soft drinks a little bit more space than it had before.

“That could include the number of drinks they have in a range or space given on the menu.”

However, Russell advised value for money was the most “important” thing for operators to focus on.

“That doesn't necessarily mean cheap. That means the right experience for the right price on the menu.

“It could be a £2 Pepsi Max for instance, but served well with a nice glass, branded or not, ice and garnish, something that would feel really good value for money for somebody.

Value for money 

“Or it might be a more expensive mocktail that costs £6 or £7, maybe in a more premium outlet. But if it's the right serve with the right kind of service, that will also feel value for money”, he continued.

This comes as data from Britvic as part of its 2023 soft drinks review​ recently estimated operators could boost sales across the sector by £170m if 10% of customers were to trade up from tap water.

Russell said: “Soft drinks play a crucial role [in this] because going from a tap water to a to a beer or a wine, it's quite a big jump in in value, whereas moving to a soft drink is possible with the right range and the right experience.

“The category is, according to CGA data, one of the most profitable for operators; the margins are 80% typically, potentially more.”

Russell added the pandemic had also had an impact on consumer habits, with many people now looking for “enhanced experiences” from the soft drinks category in the on-trade.

To “tap into” this, the director urged operators to concentrate on staff training.

“The perfect soft drink serve can make or break against the experience that the consumer has an outlet.

“We know during the pandemic people were creating more drinks themselves at home, and most people were able to create a standard mix drink relatively well, things like a standard gin and tonic.

“People really want something they can't do themselves and can't experience at home from the on-trade.

“Cocktails and mocktails are a little bit more difficult for people to get right, that is a trend that's going to stay. We've seen that in terms of sales volumes”, he continued.

Moreover, looking at upgrading soft serves to draught format could also help enhance the consumer experience with added sustainability benefits, particularly regarding future Deposit Return Schemes (DRS), according to Russell.

Big opportunity 

He said: “Draught is not only a great way of improving operational simplicity, particularly going forward with DRS, but it's also a really great way of reducing your carbon footprint.

“We know that dispense uses less packaging. Britvic has developed its dispense innovation with the London essence freshly infused font; we're really looking to take packaging, out of the market.

“We're going to be partnering with zero carbon forum over the next few weeks and months to help promote that in the trade as well.”

To support on-trade customers, Russell explained Britvic are looking to develop a “bigger toolkit” to help pubs diversify within the soft drinks category.

“We're aware it's been difficult for the independent trade, particularly coming out of Covid and keeping the doors open, so we continue to work with our drink’s platform in advising operators when planning the best range for their outlet as well as guidance on staff training.”

Overall, Russell implored the soft drinks category offers a “big opportunity” for pubs to increase volume to pre-pandemic levels, especially with the right combination of quality service and value for money.

He said: “Volume is not back to where it was kind of 2019. Value for money is important and there is an element of changing habits.

“With a combination of enhanced experiences with the right value for money underneath it, we can get back to the pre pandemic levels of trade sooner rather than later.

“It’s going to take a little bit of time for that to build back, but hopefully once we get over the cost-of-living crisis, that'll help to drive us back to where we were.”

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