04 Feb 2016 The long slow decline of the juice and smoothie business

New evidence from the UK market confirms that a big change in beverage habits is firmly under way:

1. In 2015 the UK’s £1.84 billion ($2.7 billion/€2.5 billion) juice and smoothie category declined by 3.5% by volume, 4.4% by value. This came on top of a decline in 2014 of 6.5% by volume and 3.5% by value.

2. The decline of market leader Tropicana continued, with sales down 7.1% in 2015, following a 6.8% drop in 2014.

3. Innocent, the second-biggest player, experienced a sales fall of just 0.3% – but only because the company started marketing coconut water and sparkling water, which went some way to offset the underlying decline in the smoothie business.

4. Stevia’s failure to get consumers drinking juice was underscored by the decline in Tropicana’s low-sugar, stevia-based juice drink Trop 50, whose sales fell by 14.2% in 2015.

It isn’t difficult to find what people are drinking instead:

Plant waters. Coconut water – an all-natural product which has fewer calories and less sugar than juice – experienced a 74% jump in sales to (on a very conservative estimate) £44 million ($64.9 million/€59.8 million).

Vita Coco, the market leader, experienced a 28% sales increase but after Vita Coco the biggest contribution to category growth came from Coca-Cola-owned Innocent, which began selling coconut water in mid-year, earning retail sales of over £5 million ($7.4 million/€6.8 million) in just six months and saving Innocent from a bigger overall loss of business.

Plant waters are becoming more common, their growth fuelled by entrepreneurs. The products appeal to people concerned about the sugar content of juice and who want something with taste and all-natural credentials.

As they become more available in mainstream distribution, more and more people will choose plant waters. It’s one of those rare moments when what’s on the horizon is very clear.

Bottled water sales rose by 9.3% by volume and 9.4% by value in 2015, following a 2014 increase of 11.2% by value and 8.9% by volume.

Danone’s market-leading Volvic and Evian brands experienced 8.7% and 5.7% growth while Nestle’s Pure Life experienced 26% sales growth. In fact, every one of the top-10 water brands increased its sales.

The £81 million ($119.5 million/€110 million) growth in the bottle water market matched also exactly the decline in the juice and smoothie market.

Energy drinks continue to defy doubters, with the £1.14 billion ($1.7 billion/€1.6 billion) market up by 1.3% in 2014 following a 3.1% rise in 2014. The Red Bull and Monster brands grew by 3% and 18% respectively. In part it is because the young male core consumers are at a stage in life where they are less concerned about sugar.

And in part it is also a reminder that if you deliver people a benefit they can feel – with energy drinks that’s a shot of immediate, caffeine-fueled stimulation – they prioritise that benefit over other aspects of the product, even negatives such as sugar.

SUGAR CONCERNS

The reshaping of the juice, carbonates and waters market is being driven by consumer psychology around sugar:

• People are more concerned about sugar in categories they perceive as healthy – or that present themselves as being healthy – than they are in indulgent categories.
• The presence of sugar in something that is presented as healthy – or which consumers have decided is a healthy choice – conflicts with their own views about what “healthy” means.
• Consumers find it easier to accept sugar in a product that’s “honestly indulgent” and makes no pretence at healthiness.

The challenge for juices and smoothie brands such as Coca Cola-owned Innocent and PepsiCo-owned Tropicana is that they have long depended on fruit juice and smoothies having a strong “naturally healthy” image. Increasingly, juices look like a less healthy choice to the most health-conscious people.

NEXT GENERATION WILL SHUN JUICE

If you are in the juice business and believe that, like King Canute, you can turn the tide think again.

The next generation of consumers – those aged under 18 – are already losing their juice habit. Health-conscious mothers (often concerned primarily about dental health) began limiting their children’s juice consumption, starting about 2000. An astonishing number of children today don’t consume juice even once a week.

The result of the shift in parents’ beliefs can be seen in the UK’s baby juice category, where sales fell by 24% in 2015 on top of a 21% fall in 2014. Market leader Heinz reinvented its juices as fruit-flavoured waters – but that did not arrest the fall in sales. The writing is on the wall – Danone-owned Nutricia has already pulled out of the market.

When the next generation reaches maturity, the last job you would want to have would be an executive in a juice company – unless, that is, it’s a juice company that has reinvented itself with a portfolio of plant waters and spring waters.

Data source: AC Neilsen, as published in The Grocer, December 2015

This editorial from New Nutrition Business’s magazine was first published in its January 2016 edition.

About New Nutrition Business

New Nutrition Business is a London-based research, publishing and consulting company which specialises in researching, analysing and forecasting developments in the business of food, nutrition and health around the world.See www.new-nutrition.com