Britvic: Soft drinks are key to unlocking growth

The foodservice market is at a crossroads, according to the latest Britvic Soft Drinks Review, with current economic pressures continuing to have an impact on the channel. At a time when the market is experiencing polarisation between value and premium when it comes to consumer preferences, soft drinks provide a refreshing opportunity for growth, says Britvic, particularly in light of the food-to-go market which is set to reach a value of £22.2bn in 2023. Soft drinks sales through Britain's foodservice sector surged by 66.1% on 2020 levels to hit a value of more than £2.9bn, and Britvic’s Soft Drinks Review 2023 delves into the role soft drinks have in helping operators weather the storm. 

Overall, the foodservice market is in volume decline on pre-pandemic levels, with value up just 4% on 2019, with 38% of consumers saying they are eating out less frequently for financial reasons. While this paints a challenging picture for operators, the food-to-go market is showing signs of recovery post-pandemic. In 2022, the overall value of the eating-out market hit £95.2bn, up 44% on 2021, when trade was stifled by lockdowns and restrictions on socialising – and the food-to-go revival looks set to continue with the market expected to reach a total value of £24.3bn by 2026. This is being driven partly by technology – more consumers are expected to cut spend on dining out and order through delivery apps in 2023. The rise in hybrid working could also benefit foodservice outlets. With people spending fewer working days in the office, they’re likely to spend more on lunch and drinks when they do.

Dino Labbate, GB commercial director for hospitality at Britvic, comments: "What we can see from last year, is that the foodservice market is polarising between value and convenience-led missions on the one hand, and less frequent but more indulgent, premium occasion-led missions on the other. This represents a real opportunity for foodservice outlets that can adapt their offer to serve both audiences. Our annual Soft Drinks Review reveals that soft drinks are continuing to perform well, driven by strong performances from still juice drinks, pure fruit juices and flavoured carbonates. As a resilient category, we’re confident that soft drinks can offer opportunity to operators in these challenging times – everyone from fast food and coffee shop operators, to contract caterers and workplace venues. But they will need to rethink their soft drinks offering in order to make a difference.”

The trade-up opportunity

Offering greater choice, paying close attention to how drinks are served and encouraging people to trade up are just a few of the key takeaways from the Britvic Soft Drinks Review that can pay big dividends for operators. Britvic calculates that simply encouraging 10% of diners to trade up from tap water to a soft drink could deliver an extra £170m and convincing them to buy an elevated soft drink such as a Pepsi Max® with a shot of Mathieu Teisseire could unlock a sales opportunity worth a whopping £123m.

Labbate continues: "One way of encouraging customers to trade up is by pairing more premium soft drinks with popular food. For example, London Essence Company Spiced Ginger Beer or Delicate Ginger Ale complements the spice of curry dishes, while fried chicken can benefit from being paired with J2O Spritz Apple & Elderflower or Pear & Raspberry. Pairing food with drinks in promotions can also help operators enhance customer perceptions of value and increase average spend by encouraging diners to buy a greater number of items per visit, while helping customers feel they are getting value for money. Pairing soft drinks such as Pepsi MAX® or 7UP Zero Sugar with crisps, nuts or baked goods can help raise average spend throughout the day, as can linking fruit, nuts and other snacks with health-focused drinks such as Aqua Libra or Purdey’s."

Refreshing the approach to meet consumer demands

One of the key trends highlighted in the report is a growing demand for elevated experiences. Despite the squeeze on discretionary spend, Britvic believes that consumers still want to indulge when they go out to eat and drink so it’s crucial that operators continue to give diners experiences that cannot be replicated elsewhere. This is especially important for younger consumers – research shows that 69% of those aged 16 to 24 and 64% of those aged 25 to 34 would rather spend their money on experiences than physical goods; in comparison to just 41% of those aged over 55.

The report also highlights ‘health’ as another consumer trend that is gaining momentum. In 2022, 46% of British adults described themselves as "very health conscious", up from 43% in 2021 – and foodservice operators are changing their menus in response. Natural, low caffeine and energy-boosting ingredients with added health benefits such as supporting immunity and reducing stress and fatigue are increasingly featured in hot and cold beverages.

Labbate concludes: "The soft drinks category is supremely versatile and the value it can bring to the sector shouldn’t be underestimated. Whether consumers are looking for a meal deal that includes an on-the-go drink, a more premium experience when dining in or healthier alternatives that continue to perform well in light of a renewed focus on wellbeing – there is something for everyone."

The Britvic Foodservice Soft Drinks Review is available to download here

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