With over a year since the Soft Drinks Industry Levy was introduced, Fleet Street’s own Diet Coke addict Laura Cunningham looks back on lessons learnt and assesses the state of the market now.
Described as ‘ground breaking’ at the time of implementation, it has certainly caused more than a few ripples for the UK’s soft drink market. The levy’s introduction in other countries has been credited with helping reduce the consumption of fizzy drinks overall – however, there is still no evidence just yet that this has led to a corresponding reduction in obesity. So, what has it done for the UK? And what does the ‘success’ of this tax look like? Is it purely economic or do we need to place greater value on the clear social shift to mindful consumption?
Overall the category has remained buoyant since the introduction of the levy. Some brands chose to stay-fast to classic recipes, with some taking the bold move to reformulate, and despite some initial negativity, it does appear that those that did are now performing well. With both value and volume sales up 8.3% and 5.1% respectively, the soft drinks market has arguably benefitted, not suffered, from the levy. The performance of diet, zero, low or no-sugar and reformulations have arguably taken everyone by surprise. After all, people like what they like, and once you get used to something it is hard to accept change. However, if those changes improve the product and taste experience then they become quickly accepted – similarly to the way social media platforms may update their format or interface. It’s disconcerting for the first few uses, but the old way quickly gets forgotten and the benefits become clear.
The introduction of the levy clearly marked an uncertain time for all soft drink producers, but on the flip side it has also added a new excitement and energy to the category. The past 12-months have been rife with innovation. The levy has acted as a catalyst for brands to introduce new flavours, adaptations and NPD that speak to both brand-loyal consumers and work as a recruit driver for new ones. From the various Lucozade Energy flavour variants, and new fruit flavours for both classic and diet Coke, as well as ‘posh’ squash fruit combinations, consumers have never had so much choice and new products to explore.
What the levy has done is brought a greater general consumer awareness to the amount of sugar in their beverages. The shift to ‘mindful consumption’ is something that has been highlighted a lot in regards to alcoholic drinks and in the rise of flexitarianism, but the same can be said for its impact on soft drinks. We can not only see that smaller formats and diet options are popular but also the clear evolution of consumer trends. Caffeine and energy hybrids and tonics have raised the bar and only premium offerings will do; flavoured waters, spritzers and more health orientated drinks are becoming ‘craftier’, with smaller lesser known brands appearing every week – and seltzers are on the horizon (with some predicting it to be worth £50m in the UK in the near future after a resurgence in the US). The rise and rise of the ‘adult soft drinks’ sub-segment continues, with still more growth to come, and of course, CBD launches rumble on in the background.
Whilst not without its trials, it is an exciting time for the soft drinks market and the future is looking bright. Over the past year, the Soft Drinks Industry has proven that when given lemons, it can make lemonade.
 Kantar 48 w/e 24 February 2019