The impact of reduced disposable incomes and continued economic difficulties affected consumer decisions in terms of impulse purchases of soft drinks in 2012. As a result, value growth within the UK soft drinks market fell from 3% in 2011 to 2% in 2012.
The UK soft drinks market saw a limited effect from the continued economic pressures between 2007 and 2012. The year was characterised by small but stable growth in value terms and stronger volume growth than previously.
The off-trade channel continued to grow at the expense of the on-trade, mainly driven by the on going cocooning trend. Within the soft drinks category overall, it was RTD coffee, followed by sports and energy drinks, that showed the strongest performance in 2012.
The gloomy economic situation in the UK, along with the cost-cutting mood of British consumers, has seen the soft drinks category post growth only for a few brands and private label lines able to offer value. The global economic downturn and Eurozone troubles have significantly impacted household incomes in the UK.
The indicator began to fall in real terms in 2008 and is not expected to bottom out until 2013. This has affected consumer spending as cost-conscious shoppers cut back on discretional items and instead switch to staples such as cola carbonates.
Consumers continued to drink more tap water in place of bottled water and increasingly chose standard liquid concentrates over premium cordials and 100% juice.
Coca-Cola Enterprises Ltd continued to be the top player in the UK soft drinks industry, with an off-trade value share of 22% in 2012. The company derives its strong position from its successful brands in almost all the sub categories of carbonates. It is also present in other categories, such as sports and energy drinks and fruit/vegetable juice.
Coca-Cola continued to fuel consumer demand through constant promotional discounts and new product developments and launches, as well as its extensive marketing and sales activities. Furthermore, it benefits from high consumer awareness and very strong brand loyalty.
With challenging economic conditions expected to continue through to 2017, there is little likelihood of an increase in demand for a wider range of soft drinks. Furthermore, there is a likelihood of increased inflation over the next five years which will put further pressure on unit prices.
For more information on the UK soft drinks market, see the latest research: UK Soft Drinks Market
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