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Carbonates Loses its Fizz

04 September 2013

The UK carbonates bubble popped in 2012, recording a volume decline for the first time in four years. Despite tough economic times consumers stay brand loyal with a decline in Private Label share.

In 2012 national spirit was levied by the Queen’s Jubilee weekend and the Olympic and Paralympic games. All of the celebrations associated with these events were likely to boost carbonates consumption, however, in 2012 the industry bubble popped. According to a new report from Canadean, there are several factors at play.

Carbonates Loses its Fizz

Given the poor economy, it could be expected that Private Label (PL) options would see a good growth. In the UK soft drinks market however, it is reported that PL share declined.*

The two biggest flavour variants in the UK are cola and clear lemonade, although cola sales were almost five times higher than clear lemonade in 2012. Within these flavours, PL products account for nearly half of all clear lemonade volumes and a marginal proportion of cola sales. According to Canadean, this situation has been maintained over the years, and is becoming more and more apparent, due to the taste profile of branded colas versus branded clear lemonades.

In the cola segment, PL manufacturers have found it hard to emulate the taste of the two key cola brands (Coca-Cola and Pepsi-Cola) as consumers have a distinct preference. Contrastingly, as there are no secretive formulas used in clear lemonade, it is far easier for PL offerings to be more comparable to branded lines in terms of taste.

Given this, it should be expected that the growth of cola variants is led by brands, as was indeed the case in 2012. Cola variants gained share during the year, putting the importance of branding to the fore. However, this progression is countered by the weakened economy and general consumer health concerns. It seems that consumers have simply reduced the amount they are consuming, rather than shifting from their favourite brands to less costly options.

Unusually, it seems that brand loyalty is a weakness for UK carbonates, particularly with consumer flavour preferences standing as they currently do. In 2013 branded promotional activity has continued to allow these more pricey products to take share from PL options. With Q2-13 also posting decline, there is little to suggest that carbonates consumption will see noticeable recovery within the year.

This information is based on findings from the Canadean report Quarterly Beverage Tracker United Kingdom Second Quarter 2013 published in August 2013.

* This information is based on findings from the Canadean report United Kingdom Soft Market Insights 2013, published in May 2013.

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