Category: Soft Drinks
This report presents key recommendations for Company X in the critical areas of category management, revenue growth management, and trade marketing. Our insights are drawn from two primary sources: custom studies tailored specifically for Company X and the comprehensive Accuris 2024 Benchmark Study. The latter encompasses data from 17 categories across all grocery multiples for Q1-Q2 2024, with equivalised volume weighted based on turnover. By leveraging these in-depth analyses, we aim to provide actionable strategies that can drive growth, optimize category performance, and enhance trade marketing effectiveness in the competitive soft drinks sector.
Insights and recommendations
Key recommendations for selling soft drinks more profitably
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Brand Makeovers and Limited Editions: Major soft drink brands are using packaging redesigns, limited-edition flavours, and health-focused reformulations to drive sales. For example, Coke's cherry and zero sugar variants have shown growth due to their fresh appeal.
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Healthier Alternatives: As consumers become more health-conscious, brands like Coke Zero and Pepsi Max are performing better than their full-sugar counterparts. Emphasising products that are exempt from sugar taxes and aligning with health trends is a profitable approach.
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Flavour Innovations: Introducing new and exciting flavours, especially through limited editions, can boost short-term sales and create a buzz around the brand. Pepsi Max Mango and Coke Zero Sugar Cherry have both seen significant growth.
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Adapting to Changing Consumer Preferences: Shifts towards natural ingredients, away from artificial sweeteners, and towards functional beverages with added benefits like caffeine are notable trends. Brands like Dash Water, which focus on unsweetened, clean label products, are gaining traction.
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Strategic Partnerships and Promotions: Collaborations with popular food brands (e.g., Coke’s promotions with Domino’s) and leveraging sporting events or festivals (like Coke’s UEFA Euro 2024 partnership) are helping brands target key occasions and increase visibility.
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Tailoring to the Discount Retail Market: The growing role of discounters like Lidl and Aldi means brands need to consider budget-friendly product lines, such as smaller packaging or meal deal formats, to capture value-conscious shoppers.
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Sustainability and Ethical Sourcing: Highlighting sustainable practices, such as the use of organic or Fairtrade sugar (e.g., Karma Cola) or upcycling "wonky" fruits (e.g., Dash Water), resonates with environmentally conscious consumers, offering differentiation in a crowded market.
Source: The Grocer: Focus on soft drinks 2024-1).
Category expansion generated with promotions
How to Increase Category Expansion:
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Target elastic segments and categories: Focus on promoting categories that have more potential for growth, as not all categories are expandable.
Code: DO-CATE-AC-0001 -
Boost penetration in low penetration categories: Implement promotional strategies to attract new buyers in low penetration categories.
Code: DO-CATE-AC-0002 -
Increase purchase volume in high penetration categories: Use offers like multi-buy or graduated discounts to encourage larger purchases in high penetration categories.
Code: DO-CATE-AC-0003 -
Drive traffic to the category: Use category-wide promotions across all SKUs to attract more attention and footfall.
Code: DO-CATE-AC-0004 -
Encourage variety: Stimulate sales by offering multiple flavours, sizes, or packaging options that target different occasions and consumer needs.
Code: DO-CATE-AC-0005 -
Choose to promote strong brands: Strong, leading brands generate more category expansion than promotions for challenger or niche brands.
Code: DO-CATE-AC-0006 -
Promote in stores with large display spaces: Promotions tend to generate more category expansion when products are displayed prominently in large spaces, typically more available in hypermarkets than supermarkets.
Code: DO-CATE-AC-0007 -
Use volume-plus promotions instead of price-off promotions: Volume-plus promotions are more effective, especially in high penetration categories, as they drive increased consumption, while price-off promotions only maintain current consumption levels.
Code: DO-CATE-AC-0008
What to Avoid (as it limits category expansion):
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Avoid promoting “me-too” brands, niche brands, and private label: These typically do not contribute significantly to category growth.
Code: AV-CATE-AC-0009 -
High penetration and low expandability segments: Focus less on categories that already have high penetration or minimal room for expansion.
Code: AV-CATE-AC-0010 -
Promotions that do not encourage larger purchases: Single-unit price discounts do not drive an increase in overall purchase volume.
Code: AV-CATE-AC-0011 -
Predictable promotional schedules: Avoid making promotions too frequent or predictable, as this cultivates loyalty to promotions rather than the brand or category.
Code: AV-CATE-AC-0012
How to Maximise Retail Switching:
Promote in underperforming retail locations: Drive sales in stores with lower footfall to switch consumers from competitive retailers.
CODE: DO-RETSW-AC-0001
Offer exclusive in-store promotions: Create retailer-specific deals that are not available elsewhere, encouraging customers to switch retailers for the best offers.
CODE: DO-RETSW-AC-0002
Create loyalty-based promotions: Reward loyal customers of a specific retailer to prevent them from switching to competitors and to attract shoppers from other retailers.
CODE: DO-RETSW-AC-0003
Utilise store-specific advertising: Targeted advertising for a retailer’s local area can attract competitive shoppers.
CODE: DO-RETSW-AC-0004
Promote in retail stores with large customer bases: Promotions in major retail outlets tend to generate more retailer switching as they attract shoppers from smaller outlets.
CODE: DO-RETSW-AC-0005
How to Maximise Competitive Switching:
Promote your brand in competitor-dominated categories: Offer superior promotions to attract customers who typically buy competitor brands.
CODE: DO-COMSW-AC-0006
Introduce new products or flavours that differentiate from competitors: Encourage trial and switching by offering unique products that your competitors do not have.
CODE: DO-COMSW-AC-0007
Use competitive advertising campaigns: Highlight the advantages of your product over competitors in marketing campaigns to drive competitive switching.
CODE: DO-COMSW-AC-0008
Offer aggressive price promotions on leading competitor brands: Create deals that are directly targeted at competing brands to encourage shoppers to switch.
CODE: DO-COMSW-AC-0009
Bundle products to increase value: Offer product bundles that competitors cannot match, making switching more attractive.
CODE: DO-COMSW-AC-0010
How to Minimise Cannibalisation:
Promote across distinct product lines: Avoid focusing too much on one product to prevent sales from cannibalising other products within the same brand.
CODE: DO-CANIB-AC-0011
Use targeted promotions for different customer segments: Tailor promotions to different consumer needs and preferences to avoid shifting sales from one product to another within your brand.
CODE: DO-CANIB-AC-0012
Focus on higher-margin products in promotions: Ensure promotions prioritise higher-margin items to avoid cannibalising sales of lower-margin products.
CODE: DO-CANIB-AC-0013
Rotate promotions between product lines: Avoid promoting the same product line too often, which can lead to cannibalisation of other products.
CODE: DO-CANIB-AC-0014
Limit promotion overlap between similar products: Avoid running promotions for similar products simultaneously to reduce the risk of cannibalisation.
CODE: DO-CANIB-AC-0015
What to Avoid:
Retail Switching:
Avoid generic promotions that do not encourage retailer loyalty or do not incentivise customers to switch retailers.
CODE: AV-RETSW-AC-0016
Competitive Switching:
Avoid price reductions on products where there is minimal competition; focus on high-competition categories for switching strategies.
CODE: AV-COMSW-AC-0017
Cannibalisation:
Avoid heavy promotions on low-margin products that might cannibalise sales from higher-margin products.
CODE: AV-CANIB-AC-0018
Promote products within the same category at the same time: This can lead to excessive internal competition and cannibalisation.
CODE: AV-CANIB-AC-0019