Non-Alcoholic Beverages

Category Snapshot: Non-Alcoholic Beverages

Overview of Category
The non-alcoholic beverages category consists of soft drinks and tea/coffee sectors.

Soft Drinks Industry in ROI
According to Euromonitor, soft drinks in Ireland recorded both off and on trade value growth of 1% in 2016, reaching total value sales of €1.4bn and volume sales of 751 million litres.  Bottled water, concentrates and juice registered average value growth of 2%, while carbonates and sports and energy drinks remained flat.

Soft drinks sales are most likely to occur in off-trade channels (such as supermarkets and convenience stores), making this the main route to market for soft drinks brands.

The following chart represents the breakdown by category and value.

Mintel has identified some of the key factors which are influencing the soft drinks market in Ireland as follows:

Obesity – this is a major health issue with some 60% of Irish consumers overweight or obese.  Also, the ROI has the highest prevalence of childhood obesity in Europe.  Sugar sweetened drinks are seen as a leading contributor to obesity.

Sugar Tax – to tackle the high consumption of sugar sweetened soft drinks a sugar tax will be introduced in 2018 in the ROI specifically targeted at soft drinks companies.

Price changes – in ROI, the prices of soft drinks have been declining, while in the UK, they have been rising.  The introduction of the sugar tax will likely see prices increasing.  This will place brands under pressure as consumers may switch to lower cost alternatives such as private label variants.

Increasing Visitor Numbers – increasing numbers of tourists to Ireland create additional opportunities for on-trade operators to increase sales of soft drinks.

Health and Wellness – as with other product categories, brands and products in the soft drinks category have sought to differentiate themselves on the basis of superior health properties.  Bottled water usage in particular has been driven by the health trend.  Interestingly an increasing number of consumers are drinking tap water, which is motivated in part by seeking to reduce consumption of sugary drinks, but also the amount of packaging in use.

While continued improvements to consumers’ personal finances in ROI and increased visitor numbers to the country have helped drive soft drink sales to date, growth in the market will be impacted as a result of the sugar tax being introduced in 2018 and retailers and brand owners will therefore place a greater emphasis on diet and sugar free variants to maintain sales.

Manufacturers in categories not usually considered healthy (such as carbonates and sports and energy drinks) are going to great lengths to broaden their consumer bases by offering reduced sugar variants.  Categories viewed as being more in line with health and wellness trends, such as juice, continue to benefit from widening their product ranges.  Consumers are increasingly attracted to new variants such as coconut juice and super-fruit juices while bottled water manufacturers are keen to attract consumers seeking refreshment with flavour.

Millennials and older consumers are key demographics targeted by soft drinks companies, the former tending towards imaginative products and impulse shopping, the latter towards healthier beverages.

Soft drinks are generally regarded as luxury items and as such are very dependent on consumer sentiment and disposable income.  Ireland still maintains the highest level of household debt in the Eurozone and a large number of consumers remain cautious.

Tea and Coffee Industry in ROI 

In 2014, the total tea industry in Ireland was valued at €115m which represented a slight increase on 2013. The total coffee market in Ireland was valued at €80m a rise of 12% yoy.

The chart below represents the company shares within the tea and coffee industry in 2014 (Euromonitor).

  • Tea: According to Mintel, Ireland is the second largest consumer of tea in the world, consuming an average of 4.8 pounds per person annually. The UK is the third largest consuming nation, drinking an average of 4.2 pounds of tea per person, per year. Six in ten Irish consumers drink standard tea on a daily basis, with over a third (37%) drinking it three or more times a day. 
    • NPD: With 22% of ROI consumers drinking green tea at least once a week, this offers opportunities for brands to develop new flavours of green tea. Examples of this would be the desert inspired line which was developed by tea brand Twining’s featuring flavours including salted caramel, gingerbread and caramelised apple.
    • Examples from Mintel of some of the tea products launched in 2014 include: 
      • Lemon and Ginger Tea by Barry’s Tea
      • Twinings Detox Tea 
      • Robert Roberts Pure Rooibos Tea
      • Lipton Warming Apple and Cinnamon tea by Unliever
      • Tesco Finest Camomile and Honey Tea
      • Tetley Decaffeinated Tea
  • Coffee: According to Euromonitor, coffee continues to see an increase in popularity amongst Irish consumers with value sales experiencing a growth of 12% in 2014. Nestle Ireland was the market leader in 2014, accounting for 37% share of the market. 
    • Fresh Coffee: Fresh coffee is driving the growth of the overall coffee category as fresh ground coffee pods saw the fastest growth in 2014, with current value sales increasing by 79% yoy. Coffee pod machines remain a convenient option for consumers, with brands such as Nespresso continuing to see sales rise. 
    • Instant Coffee: Instant coffee experienced a decline of 5% in current value terms in 2014. Despite improvements in product quality, these products continue to be heavily discounted, and sales are declining due to the increase in demand for fresh coffee products, particularly coffee pods, due to their high level of convenience. Within instant coffee, product quality continues to be the focus as it is seen that the aim is to get as near as possible to barista-style coffee, but in an instant form.
    • Examples from Mintel of some of the coffee products launched in 2014 include: 
      • Marks & Spencer Colombian Freeze Dried Instant Coffee
      • Kenco Millicano Wholebean Instant Sunlight Blend Coffee
      • Tesco Finest Colombian Freeze Dried Instant Coffee
      • Bewley’s Limited Edition Christmas Coffee
      • Nescafé Gold Blend Barista Style Coffee
      • Tassimo Costa Latte Extra Large Size Pods