PREMIUM SOFT DRINKS SET TO DRIVE ON-TRADE SALES HIGHER

• Premium soft drinks and cocktails are set to drive licensed revenues higher in 2022
• Consumers are more willing than ever to upgrade to premium soft drinks
• Britvic’s latest Soft Drinks Review reveals that during the pandemic operators missed out on £100.2bn of sales in 15 months

Premium soft drinks and cocktails are in more demand than ever after consumers traded up into expensive beverages at home during lockdowns, and continue to elevate their experiences in licensed venues with high-quality serves, Britvic’s 2022 Soft Drinks Review has revealed.

The higher margins on premium soft drinks and cocktails, which operators can charge more for, will help licensed venues claw back some of the £100.2bn of sales lost over 15 months during the coronavirus pandemic.

It is expected more consumers will visit on-trade venues in 2022, with 36% saying they missed going out over the lockdowns. When in venues, they will be seeking to buy the best drinks they can afford and will make their decision to buy premium brands, including J2O and London Essence, based on quality.

Consumer sentiment towards premium has changed so much that 58% of those asked, said they would be willing to trade up to a premium soft drink if it was paired with a dish, presenting an opportunity to outlets as guests seek a well-rounded premium experience including both food and drink.

NEW AGE FOR COCKTAILS

Consumers are also calling for mixed drinks, such as gin and tonics, and cocktails to be of the highest quality possible, with over half of those asked saying they were willing to buy more premium cocktails.

Soft drinks and mixers can play a bigger role in the cocktail space through no and low alcohol alternatives, as 35% of consumers agreed they would upgrade their soft drink to a premium non-alcoholic alternative. Mixed drinks and cocktails are also set to continue their pre-pandemic growth, with sales already on the rise and distribution tracking up by 5.3% in the third quarter of 2021.

Like-for-like cocktail sales in licensed venues rose from 6% to 9.9%, equating to £1 in every £10 of licensed sales between Apr 2021 and Oct 2021, further cementing the segment’s continued growth.

“Premium has long been a lucrative and growing drinks trend, as data in this year’s Britvic Soft Drinks Review shows,” said Katy Watts, Head of Channel Development (Foodservice & Licensed) at Britvic. “However, it is clear the pandemic has sped up this trend as consumers sought to treat themselves during lockdowns, gaining a taste for the best-quality drinks they can afford which they now want in outlet.

“On the whole, the pandemic did not affect consumers’ desire for premium drinks, with many opting for premium food and drink options to enjoy at home when they couldn’t go out. The desire for quality is here to stay, as 15% of consumers predict they will exclusively visit premium venues1, showing upsells can help to recoup lost revenue from the pandemic.”

This bodes well for pub and bar businesses, as 23% of consumers said high-quality drinks in licensed venues will be more appealing to them than pre-Covid. A further 32% said their decisions to purchase a drink will be led by quality, while 21% agreed they would mostly be influenced by the value of a drink.

THE INCREASED COST OF LIVING

A customer’s willingness to spend more on a drink may, however, be affected by the ongoing cost-of-living crisis that is set to bite into disposable income. Many people built up additional savings during the lockdowns, but others struggled. This means the value of a drink could lead a customer’s decision to purchase6.

Value, however, isn’t always necessarily about price, but what the product offers the customer for the money they pay for it, which is poignant as 70% of Brits agreed experience is now more important to them than possessions. Almost two-thirds of consumers said a varied soft drinks range contributes to a good quality experience in outlet, while one in five say a varied soft drinks range is ‘extremely’ important to their level of experience.

“As this year’s Soft Drinks Review shows, customers of all types of income are looking to have memorable experiences in the on-trade, having missed out on so much during the pandemic,” continued Watts. “It is important outlets provide a premium experience, not only in price, but through how drinks are presented. Extra profits can be earned by elevating a drink’s appearance, such as through garnishes or nice glassware. It can also be done by making something customisable, such as a house soda offering with a variety of flavoured syrups to add to the soda.”

HEALTH & WELLBEING CONTINUES TO GROW

While consumers are looking to treat and enjoy themselves, the pandemic also sped up the health and wellness trend, as more guests make a conscious effort to look after their minds and bodies. This has led to low-calorie cola taking the largest share of cola sales for the first time in October 2021.

The importance of healthy or healthier options will continue to grow for customers, as 58% say they would like to see more healthy soft drinks options in venues. A further three quarters of consumers say it is important to have healthier options on menus when eating and drinking out, rising to 84% of 18-34-year-olds. This will only become more prominent with mandatory calorie labelling on menus, now in many outlets, as well as upcoming HFFS labelling.

THE FUTURE

However, eating and drinking out is the top spending priority for consumers in the coming year which, as well as being encouraging for outlets, highlights how important the licensed sector is to consumers. Regular pub and bar visitors were the quickest to return to venues when restrictions lifted, with 34% visiting weekly and 31% going monthly.

“A strong cohort of regular customers were ready to support the sector with plans to increase their time spent in venues in 2022,” continued Watts “However, just two in five pub and bar occasions are drink only, which means operators must work harder to increase wet revenue through the likes of premium options, as well as diversify their offering in order to bolster add-on sales.”

The Britvic Licensed Soft Drinks Review is available to download at Britvic.com