The biggest sales gains in soft drinks last year came from those perceived to be healthier, such as water, juices and dairy drinks, but cola is still the largest sub-category. Jason Roots, sales manager at Bako London, says Coca-Cola and Diet Coke continue to be the best-sellers, but other drinks are making gains. “We have noticed growing sales of water, flavoured waters, juices and smoothies, but the biggest trend is a move away from cans into bottles – and this is good news for retailers, as bottles sell for more than cans,” he says.
His view is shared by Russell Jenkins, sales director at 22-store Camarthenshire-based baker David Jenkins. The company has traditionally stuck with the best-sellers – Coca-Cola, Diet Coke, Fanta and Sprite – but is now selling more bottles than cans.
Soft drinks are profitable, providing shrinkage is kept under control, and should be sold from self-select multi-deck units, Jenkins states. “We have to keep an eye on them because we do get a bit of pilferage. But if we didn’t sell them from these units, we wouldn’t sell any at all. On pricing we look at what the competition is doing, except for the supermarkets as we can’t compete with them.”
As well as the big national brands, the chain supports a local one – Princes Gate water – sourced from a nearby spring, which sells 330ml and 500ml bottles and accounts for a sizeable proportion of sales.
David Jenkins is supplied by Swansea-based wholesaler Top Pops, which it has been using for 30 years. “They offer very good prices and a very good service,” he says. “They used to deliver to our central warehouse, but the drinks took up so much room that we now have them delivered directly to stores. Some get two deliveries a week, others just one. But if we run out, they will come out to top us up.”
Potts Bakers in Barnsley, South Yorkshire, which stocks soft drinks in four of its five outlets, doesn’t sell cans at all – just bottles and cartons. “We would sell them in the fifth shop as well, but we are restricted to selling traditional bakery lines there,” says Roger Potts, joint managing director. In the other four shops it limits the range to Coca-Cola and Diet Coke – its best-sellers – Fanta, Lucozade, Ribena and Buxton waters, plain and flavoured. Potts says it recently switched to a new wholesaler for drinks called the Soft Drinks Company, which delivers directly to each store once a week. “Soft drinks are a profitable line for us,” he says. “We sell them for more than the recommended retail price and make a very decent margin on them.”
Alongside the dominant carbonated drinks, bakers need to make sure they offer bottles of a big water brand. According to Zenith International, UK bottled water sales rose by 5.3% last year, and are expected to rise from 2.1bn to 3bn litres a year by 2010. “Despite phenomenal growth over the past two decades, more consumers are turning to bottled water as their favoured soft drinks choice,” explains Zenith research director Gary Roethenbaugh.
According to BMRB International’s TGI survey – figures released by Zenith in April – the percentage of adults aged 15 and over who are drinking bottled water has risen from 35% in 2000 to 55% in 2005, with numbers of male drinkers increasing.
For bakers, unless you’ve got a good local source, as David Jenkins does, it may be safest to stick to the big bottled water brands. These include Buxton, Evian and Highland Spring.Evian is the number one brand of water in the UK, while Volvic is the top seller within impulse outlets. The main sales growth is coming from consumers trading-up to the larger sports cap bottles – typically from 500ml into 750ml and even one-litre sizes, which gives retailers a great opportunity to make more cash margin from single purchases.
At this time of year, as temperatures rise, so can sales. Water manufacturer Danone’s studies of EPOS data suggest that, for every degree of temperature rise (above 17ºC) water sales increase by 6.2%. This means water sales can double when temperatures hit between 17ºC and 29ºC, so bakers really need to make sure they have enough in stock, and it needs to be chilled.
The water companies are taking more of an interest in smaller bakery retailers and other stores. Steve Flanagan, category strategy manager for Danone Waters, comments: “As part of the impulse environment, bakeries are important to us, particularly as we have seen an increase in bottled water consumption in line with the well-publicised health trend. Our recent research has highlighted water as being the drink of choice at lunchtime.”
Innocent smoothies, made by the Innocent Drinks company (Shepherds Bush, London), are now available to bakers through Bako London.
“In May we held a healthy eating day where we showed off low-fat cake mixes and GI bread mixes,” explains Bako sales manager Jason Roots. “On that day we had a lot of requests from customers for smoothies, so we looked into it and opted for Innocent.
“The most important thing for us was the fact that Innocent smoothies are all natural products. Shelf life is not an issue, as we get them in to order.”
The Innocent range comprises seven flavours and a seasonal smoothie, which this summer is cherries & strawberries. All come in 250ml bottles and the recommended retail price is £1.79-£1.99.
FIRST CHOICE TAKES TIGER TO MARKET
It’s business as usual as far as UK bakers are concerned for First Choice Coffee, which was recently acquired by Netherlands-based Drie Mollen International. George Miller, managing director of First Choice says the move will “strengthen and accelerate growth and expansion plans for the brand” as it continues to target bakers.
He says the company’s immediate priority is to introduce the new Tiger compact espresso coffee machine. This has been developed with patented milk texturing technology to produce freshly brewed speciality coffee at the touch of a button. Elaine Higginson, sales director at First Choice Coffee, says its Tiger machine was specifically developed for outlets such as bakeries, where a speciality coffee offering will boost profits.
“When a coffee is ordered, the operator can fulfil the order while the Tiger grinds and dispenses a freshly prepared coffee,” she says. “Coffee culture has demanded the highest-quality coffee and bakeries can capitalise on this market by offering customers a quality beverage to accompany food. A customer is more likely to repeat-visit an outlet that offers the whole package.”
The quality of the raw ingredients is crucial to the finished product, she adds. Grand Café 100% certified coffees from First Choice are sun-dried and slow-roasted to exact specification. The firm also has a range of Fairtrade, organic and 100% Certified Rainforest Alliance coffees.