FIZZY POP GOES FLAT

07 July, 2006
A scare over benzene in soft drinks could spur the trend towards preservative-free drinks, reports Andrew Williams
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It was panic stations in March when the Food Standards Agency (FSA) pressed the alarm over soft drinks on sale in Britain that contained the cancer-causing chemical benzene. Although only a handful of drinks were affec-ted, the ensuing negative publicity heaped more woes on the soft drinks industry, which has seen sales of fizzy drinks already hit this year.
The FSA study followed tests in the United States, which also found benzene in soft drinks exceeding legal limits. Health scares usually have a dramatic but short-lived impact on consumer behaviour, but the effects could be more enduring, says market analyst Euromonitor. It reports: “Even if manufacturers assure consumers that the offending chemical has been removed, doubts will remain,” (March, 2006).The perception, if not the actual risk, is likely to bolster the trend towards preservative-free soft drinks in the UK, such as smoothies, waters and juices. In March, Britvic, which produces Pepsi, 7UP, R Whites and Tango, reported dismal sales of carbonated drinks, amounting to a 9% downturn in the first two months of 2006 – a record decline. Its still drinks, such as Robinsons squash and Fruit Shoot, are set to overtake carbonates by the end of the year, although fizzy drinks without sugar are still in the ascendancy.Britvic’s CEO Paul Moody says 2005 was “a watershed for the entire soft drinks industry”, but adds there has been a “reassessment of the soft drinks offering towards low- and no-sugar products but also indulgence across the industry”.The consumer trend towards health and wellbeing continued into 2005 resulting in strong sales for smoothies – a small but fast-emerging market, says James Oates, director of category insight for ACNielsen. This is best shown by the growth of Innocent and PJ’s Smoothies, up 200% and 40% respectively. Oates adds: “Excellent sales were also recorded in the more established sectors of dairy drinks, mineral water and pure juice.” Perceived less healthy categories declined: fruit carbonates were down by 14% on the high street; non-fruit carbonates declined by 6%; and lemonade dipped by 4%. Cola bucked the trend, growing slightly last year, with several new sugar-free flavoured variants launched. The high street fell behind the rest of the soft drinks market growth, but a good choice of premium offerings for adults can help tap the lunchtime takeaway trade, comments Britvic category marketing manager Andrew Marsden.“The high street takeaway retailers are able to sustain premiums, which allows people to take advantage of some of the more premium drinks offerings,” he says. “In terms of margin that’s the real opportunity and stretches frankly beyond water, to things like early morning ‘recovery drinks’, such as Purdeys.”



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