The soft drinks market has become one of the fastest growing segments in Europe since 1990 – largely fuelled by a consumer-driven thirst for experience. Louise Hunt explores the market and trends.

While some fmcg markets may be running dry on areas to continue dev-elopment, the soft drinks sector is awash with new products flooding into growing niche sectors. Saturation point appears a long way off if current figures are accurate.

The British Soft Drinks Association predicts that the total UK market will grow by 12% between 2002-2005 reaching a total market value of £9bn. Growth in other Western markets, according to Pira*, has been around 10-15% since 1996, with German sales ahead 10% to 19.1bn-litres, expected to rise to 20.6bn-litres by 2006. French sales are up 19% to 13.1bn-litres and by 2006 should make 14.9bn-litres. Eastern Europe and the Iberian peninsula also saw soft drinks sales rise sharply from a com-paratively low base.

Consumer trends that are a major influence on these figures are a growing emphasis on health and lifestyle coupled with a desire to identify with the product. This makes for interesting times for the almighty global brands, as soul-searching shoppers are already beginning to look to niche newcomers, swapping “The Real Thing” for the real thing.

Soft drinks are no longer only purchased to quench thirst. As with the confectionery and snack markets, the soft drinks sector has evolved to become less about the product and more about the opportunity to experience ‘on the go’.

As consumers seek new health-conscious experiences, a trend is emerging from the US and spreading to Europe which sees a growing shift from carbonates – the largest drinks sector – to still soft drinks.

However, carbonate sales should remain healthy, representing £8.4bn in the UK alone.

Carbonate growth has been steady in the more mature markets such as the UK and Germany, with faster growth rates registered in the less mature sectors. Czech sales rose by almost 60% between 1996 and 2001 and Russian sales have risen by 75% with the growing availability of soft drinks due to improved supply. Growth is expected to slow slightly, but overall carbonates consumption across 10 European markets is still expected to reach 34.2bn litres by 2006, represent-ing an increase of 15% on 2001(Pira).

But by far the largest growth sectors are predicted to be energy and stimulant drinks, currently a £61M market that grew by 366% between 1996-2000 and the adult juice sector rose by 14% in 2001 in the UK. Flavoured mineral waters are also set for significant growth (BSDA).

Bottled water has been another key growth area in Europe, particularly in the UK where there has been a cultural shift away from tap water. UK sales almost doubled between 1996 and 2001 to 1.55bn litres.

It may be useful to note that the UK’s consumption is currently around one-sixth of some European countries, and there are still 28M non-users, according to BSDA.

Growth is expected to slow in most markets in the period to 2006, with the exception of Russia where sales are forecast to grow by 34% to 625M litres during that time (Pira).

Louise Southcott, managing director of Link Consumer Strategies, believes that the transformation of the soft drinks market is down to a number of factors.

Part of the reason why health has become such a popular consumer driver is that people are increasingly turning to soft drinks as an antedote to the urban lifestyle. Drinks might be seen as preventative, as with functional nutraceutical products such as Actimel, or they are a quick fix – hence the boom in energy drinks.

Bottled mineral water and flavoured waters are part of this movement as consumers aim to balance the recommended intake of water with a hedonistic appetite for luxury image and exotic tastes.

The health scares and concerns over recent times mean consumers are also more focused on knowing the source of a product which has led to growing interest in organic products and those with a ‘natural’ image, says Ms Southcott.

This myriad of choice is now possible due to improvements in the retail supply chain and packaging technology, particularly with the development of aseptic filling that is said to offer enhanced flavours over hot-filling.

Products are available all year round and consumers have become far more discerning of freshness. As with the arrival of fresh soups to the chiller cabinet, which introduced arguably more refined flavours to those of cans, with the luxury of choice consumers are changing their ideas of what tastes nice in soft drinks and expectations have increased. Soft drinks used to be a commodity product. Now they are an indulgence and retailers are happily charging a premium.

With so much choice, it is increasingly the role of branding and packaging to strike the right chord with the consumer asserts Sieberthead director of structural design Sean Fortune.

“Consumers are continually reaching for brands with personality to identify with. They no longer identify with global brands. They are weary of being part of a big corporate machine. The rise of the niche product is bridging the gap between multi-national brands which are just shifting products.”

Subsequently, niche products are becoming ‘not niche’. Mr Fortune tells the story of the Innocent Smoothie company that started as a very small, niche player and has built a community out of branding that constantly involves the consumer.

“Certain companies will strive, no matter how big they get, to maintain that level of personality and intimacy with the consumer. I would like to think that those people would use packaging both in design and execution in a way that reflects that intimacy.

“There is no need for every single product to be in a bespoke pack. I think there is a need for products to respect that consumers want variation. I think that one of the areas that a lot of categories need to respect is that flavour variation isn’t necessarily what consumers are after. I think there is a degree of complacency over how the consumer is viewed. Too much of the impulse concept of fmcgs is based on ‘if we make it, they’ll buy it’. It should be ‘what does the consumer want?'”

Portability and convenience are, as ever, at the top of the wish list. Rob-insons’ Fruit Shoots range is a product that Mr Fortune believes succeeds in addressing consumer needs.

“A lot of kids drinks were firmly focused on the Tetra Brick packs with a straw or the Capri Sun doypack. I think Robinsons’ approach of a little plastics bottle with a pop-up spout is quite innovative.

“Firstly, this is distinctly different from any other packaging on the market and, secondly, it keeps the language of children. It’s something that is inherently more controllable and it addresses the issues of a Tetra Brik where liquid often accidentally squirts out of the straw.”

Mr Fortune still has concerns over whether current pack innovations are limited by technical processes. “To move the soft drinks sector forward work needs to be done to give it a much more consumer focus, rather than a technical focus.”