Ribena and Lucozade – where next?
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2012 was a bad year in volume terms for the Soft Drinks Category, which is really quite surprising considering the Summer of sport (The Olympics, Euro 2012, The Ryder Cup, Wimbledon etc). However the £7bn category (Nielsen, Dec 2012) is still showing value growth, significantly helped by strong pricing on commodities such as sugar.
Reasons behind this volume drop are somewhat obvious; it was largely due to a combination of the wet summer (Weather Intelligence Experts have estimated the bad weather cost the industry 2.3% of its volume) combined with the fact that the recession is still having an impact on consumers who are still not going out and are cutting back on non-essentials.
It is interesting then, that GSK have just announced the sale of their power brands in the category, Ribena and Lucozade. The reason which GSK’s CEO, Andrew Witty gave was that ‘the iconic brands do not fit in with their core business of pharmaceuticals and they deserve a better focus by a category heavyweight.’
The Soft Drinks category is split into a number of sub-sectors (which vary slightly depending on which data provider you speak to), largest of which is Carbonates, then Juice and Smoothies, followed by Sports and Energy Drinks (where Lucozade Energy is the number 1 brand and showing growth), followed by Bottled Waters and finally Squashes and Cordials where Ribena sits.
‘Sports and Energy Drinks’ is the fastest growing sub-category, driven largely by energy drinks, which continue to perform e.g. Red Bull at +9.9% (Nielsen Value Sales, Dec 2012). Whilst it is number three in the sub-category, Lucozade Sport and other Sport’s Drinks such as Coca Cola’s PowerAde are declining and failed to realise significant growth from 2012’s summer of sport; I believe the reason is, that their sports USP failed to appeal to a wider consumer audience. If Lucozade as a brand wishes to continue to grow it is essential it tackles this issue – so as not to become ‘just another fruit based drink.’
‘Squashes and Cordials’ is seeing growth and is where Ribena sits (declining by 1.3%, Nielsen, Dec 2012). Overall brands are having a tough time – it is the only real sub-category that is dominated by Private Label (circa 70% - Kantar). This is due to consumers choosing Own Label Double Concentrate or trading out of the sub-category altogether.
So what should the new owner’s of Ribena & Lucozade do to maintain or improve their performance ? I think that talking to the consumer is key in this instance; the brands have to fit into shoppers’ evolving life-styles and be relevant, to drive sales. Also Consumers are shopping convenience outlets more – I think these brands can capitalise more on this.
GSK used their knowledge of pharmaceuticals to try to drive brand performance, pushing Ribena down the growing consumer trend of Functional Health (Ribena with added vitamins etc) and launches with Lucozade such as Revive - this is certainly a step in the right direction; I believe one area which could also be explored is the small but fast growing area of Adult Soft Drinks (e.g. Shloer) – a really promising category opportunity for iconic brands if the product is right. Whoever purchases these brands (CCE, Brivic / Barr and Suntory have all been named as potential suitors); they will need to carry out detailed consumer insight to understand and be more relevant to the consumer.
Category Wins are experts in providing bespoke Category Management Services and Products to FMCG food and non-food suppliers and retailers; whether you need to deliver market leading strategy and insight (market, product or consumer) or you need support in a Category Review process – we can help; We can provide a range of automated category management products such as our Category & Commercial Opportunities Tracker to support your business. We can also provide advice, based on our experience, of the best FMCG data solution and how to integrate it into your business and achieve ROI.
I am an accomplished Senior Category professional with over 15 years experience in the FMCG industry – I have worked for both Branded and Own Label organisations including E&J Gallo Wines, Gerber Juice, Elisabeth the Chef, Golden Wonder, Milklink and others. I have dealt with all the major UK supermarkets, Wholesalers and many Foodservice companies and I am practised at running major projects and delivering Category Success.
By David Marston, Category Wins