Ed Jones of Vimto Out of Home talks trends and the incoming sugar tax
SOFT drinks have come to mean a lot more to the on-trade in recent years, proving to be more than just mixers. So what does 2018 hold for the category in the on-trade?
“There’s a combination of things driving it really, but it’s in a generally healthy place.
“In terms of trends, the soft drinks market in the on-trade is the second biggest category, with beer and lager being number one. So that’s overtaken wine and Champagne in this unit. So it shows the growing trend; more people [are] opting for soft drinks.”
Talking trends, Jones reckons three major themes will dominate the category this year: health, premium and frozen drinks.
“There’s a key trend in the market; more and more people are becoming teetotal,” said Jones, who added that customers are “opting for soft drinks as part of a healthier lifestyle”.
Healthier soft drinks are of particular importance at this time of year, he said, when health tends to be drawn in to sharper focus following the indulgent festive period.
“Footfall does fall down a little bit in January as well, so yeah, [operators] need to make sure soft drinks are very much at the forefront to play on the ‘dry January’ piece; signposting their soft drinks offering, making sure soft drinks are very well called out within menus,” Jones told SLTN.
Similar to many other on-trade drinks categories, the demand for premium soft drinks is expected to continue growing, according to Jones.
He said: “Suppliers like ourselves, with the Feel Good brand, are giving publicans and bar owners and hoteliers… a much wider choice for their consumers.”
As well as healthier and premium additions, Jones reckons frozen drinks will continue to grow in popularity this year. And he said, from an operator’s perspective, having a frozen drinks offer can be a win-win – attracting families and offering a twist on the mixer component of spirit drinks while offering “very strong margins”.
Taking the trends above into account, Jones reckons January is the ideal month for operators to review their soft drinks range to ensure it’s in line with what’s expected to be popular in 2018.
This year will also see the introduction of the Soft Drinks Industry Levy. Under the so-called sugar tax, which takes effect in April, soft drinks producers will pay an additional levy on non-alcoholic beverages containing added sugar at a quantity of five grams per 100ml or greater. However Jones said that, from Nichols’ perspective, he foresees it having a “very limited impact” in the on-trade.
“The impact to publicans is going to be limited in the sense that where we’re a prominent post-mixing dispense operator within Scotland, there is some very minor equipment changes that happen behind the scenes where the quantities of syrup, for example, will reduce as you take the sugar out and the mix ratios that publicans will be aware of with dispense products will be slightly tinkered with,” said Jones.
Jones assured this work is minor and, having begun in September last year, will be completed across licensed units by February to ensure everyone utilising Nichols’ post-mix dispense services is compliant in advance of the implementation date of the levy.
However, publicans mustn’t be entirely complacent with regards to the tax, according to Jones, who said if publicans have sugary soft drinks in their range, “they will see tax-related price increases coming through, which ultimately they have more of a moral than legal obligation to pass those on to consumers”.
While Jones said all of the products that are owned by Nichols, which includes, among others, Vimto, Starslush, Frÿst and Feel Good Drinks, will be sugar tax exempt, he noted that some firms might choose not to reformulate some of their classics.
But this may be no bad thing – as he stressed that, above all else, a range review in light of the impending sugar levy should have consumer choice at its heart.
“I think the number one thing that publicans should make sure they do is offer choice,” he said.
“By restricting choice, it’s only going to have a negative impact on consumers potentially visiting and frequenting those premises.”