Marketing chiefs say a little creative thinking can go a long way in boosting soft drinks sales
Soft drinks are big business. They are a major area of growth for publicans and nowadays are about as complex a product as food, beer or wine.
Figures for 1999 show that UK consumers spent a whacking £6.7billion on soft drinks — with just under £3billion going to the on-trade.
It's a well known fact that the opportunities for publicans are vast. Strict drink-drive laws, more families in pubs and an emphasis on healthy lifestyles are pushing customers towards soft drinks. Indeed, The Publican Newspaper's recent Market Report survey of 1,000 publicans, proved that soft drinks are a huge money spinner, with 54 per cent of licensees claiming they were of increasing importance.
Soft drinks companies are exploiting the opportunities. Led by Coca-Cola Enterprises (CCE) and Britvic Soft Drinks, the marketeers are constantly challenging consumer taste-buds with new, creative launches.
Kids have never had it so good with a choice spanning from traditional cola to revolutionary brands like Sunny Delight. Adults, meanwhile, can no longer complain about the lack of choice with a huge range of flavoured carbonates, energy drinks and juices to pick from.
However, publicans have been attacked for failing to make the most of the popularity of soft drinks. They have been accused of over-charging — a matter that was subject to a government investigation earlier this year — and, according to CCE's consumer research, soft drinks bought in pubs are still perceived as poor quality and value.
"Not only are customers unaware of the range of soft drinks available, but they also view small serving sizes as poor value for money," said CCE licensed channel director Dave Woodward earlier this year.
He claimed publicans could increase sales by as much as 32 per cent by improving their range, offering bigger measures and communicating better with the customer.
Britvic agrees and has invested heavily in helping to boost sales through its Right Choice initiative which aims to drive soft drinks through four key areas — females, kids, meal occasions and variety and value. The initiative is an extension of the company's Profit Zone 2000 campaign which focused on upsizing, merchandising, promotions and better use of range and space to boost sales.
To test the Right Choice theory, Britvic conducted consumer research to help it understand the role of soft drinks in the on-trade and identify the key occasions when people buy them.
Sue Garfitt, Britvic's on-trade director, said: "In the research, one in five consumers expressed dissatisfaction about the cost of soft drinks in pubs compared with supermarkets and the off-trade — but the same could be said about a bottle of Bud or Beck's. "Price is an issue but the industry has moved forward. It's all about offering value-for-money and licensees have to respond to that. The challenge to the industry is around experience — investment in ambience and good service is what consumers will pay for."
Some companies have reacted by slashing their soft drink prices. In April, Greene King's food chain Hungry Horse announced an offer of unlimited refills to customers who pay £1.25 for a glass of Coke or Diet Coke.
Meanwhile, JD Wetherspoon and Yates's Wine Lodges have reduced their prices. Wetherspoon spokesman Eddie Gershon said: "We were finding that in some cases it was cheaper to buy a pint of beer than a soft drink. That's clearly not right, so we addressed it by cutting our prices and we are now very competitive. We want to cater for everyone as pubs are no longer places where you go simply to buy beer. We have to offer choice and value-for-money."
However, Martin Hartridge, of Hampshire-based Hartridges Soft Drinks, said: "I don't think soft drinks are over-priced in pubs relative to other on-trade premises. What publicans can be doing, however, is upsizing and offering free promotions to encourage soft drink sales.
"If you go back 20 years to when all pubs were owned by brewers, the emphasis was on selling beer. The market has turned on its head and publicans have to look at soft drinks as a profit area. They must look at the cash rather than the gross margins."
Britvic's research also established that there's too much "clutter" behind the bar. With alcohol and soft drinks now competing for prime shelf and fridge space, publicans have the unenviable task of choosing a few products out of a range of hundreds — and many are failing to display the right products for their target customers.
Garfitt said: "Space isn't elastic. Publicans do have a tough job but we are working with them to help them recognise the market opportunities open to them.
"We will produce an easy-to-follow guide detailing specific advice around ranging, backed up with plans, hints and tips. We would never force an outlet to put soft drinks in the fridge, but by striving to satisfy the needs of consumers and understanding the different occasions when soft drinks are purchased, publicans may realise that emphasis on certain soft drinks is more important than other products, like cider, for instance."
A well-displayed range and lower prices are going to boost soft drink sales, but is it enough to win over customers?
"Price is a major factor when I choose a soft drink, but more important is the way it's served," said Natalie Reynolds, a student from Croydon, South London. "I can't stand coke in a warm glass and I like lots of ice and a fresh slice of lemon."
Paula Phillips, from Bromley, Kent, said: "With two kids, a round of drinks in a pub can be a ridiculous price. Cheaper drinks and bigger bottles, to save us returning to the bar every 10 minutes, is what I want."
Hartridge said: "Publicans don't do enough to help the customer. A diet cola is a distress purchase choice when the customer can't think of anything better. Publicans should suggest drinks to encourage sales."
Garfitt agreed: "In the States the staff are incentivised — if a customer does not know what to drink, staff will recommend products. Training is very important.
"There is a challenge to the industry. Most pubs experienced a bad summer in terms of sales of soft drinks but we can't hang around waiting for the sun to shine from one year to the next, we have to be more creative.
"Good service, the right products and, most importantly, value-for-money will result in growth."
Focus on Britvic's Right Choice
- Females
The value of the female soft drinks market in the on-trade is around £1.6billion per year and is expected to grow by five per cent year on year. To build this trade:
- stock a wide range of premium adult soft drinks
- promote new soft drinks and special offers, especially at weekends when female consumption of soft drinks increases dramatically
- promote diet drinks and special offers on table cards
- always serve in a clean glass with ice and lemon, if appropriate.
- Kids
The total five to 16-year-old market is said to be worth £60billion with 47 per cent of kids in control of their soft drinks purchase. The choice of pub among families is highly influenced by its offering for children. Research also shows that 34 per cent of all pub visits involve children.
- make sure you stock a range of drinks that kids want
- offer kids' meal deals and "kids drink free" promotions to encourage parents to your outlet
- promote meals and soft drinks during school holidays
- keep children occupied so parents will stay longer and spend more.
- Meals
A soft drink is consumed with 43 per cent of all meals. Family food pubs are forecast to grow by 17 per cent over the next five years and 1.13billion meals are consumed every year in the on-trade.
- customers are less likely to want alcohol with their meals at lunchtimes so make sure a good range