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By Nicholas Rider. B usinesses, the economy and life as we know it have seemed to change daily as the pandemic continues to unravel across many parts of the country and around the world. When it comes to the beverages industry, what impact has the pandemic had on operations and consumer activity? And what impact will it have going forward? According to Australian Beverages Council CEO Geoff Parker, while the non-alcoholic beverages industry is expected to contract this financial year, industry conditions are anticipated to recover over the next five years, underscoring the medium-term nature of the recovery, with revenue forecast to grow at an annualised 1.1 per cent over the five years through 2024-25, to be worth $4.2 billion (IBISWorld, Soft Drink Manufacturing in Australia, May 2020). “While it may be some time before we know the true extent of the damage caused \\\[by the pandemic\\\], it’s clear that many sectors are already being forced to make tough decisions,” he said. “At the same time, however, Covid-19 has sharpened business strategy and crisis preparedness like never before and created an opportunity for government to embark on pragmatic reform to aid economic and social recovery.” Health and energy still front of mind As the recession “starts to bite”, Mr Parker says, it’s likely that the beverages industry will see continued expansion in private-label products, underpinned by consumers looking for increased value. On the other hand, he believes, increased health consciousness is likely to support industry revenue across a range of branded low- and no-sugar products and those that make health claims based on immunity. “Higher value energy drinks and sports drinks, and niche products, including those focused on immunity in particular, are expected to bolster industry revenue and provide avenues for growth over the next five years,” Mr Parker said. Similarly, Frucor Suntory Category Analyst Petrol & Convenience Daniel Vatner says concerns around sugar intake have affected the category. “Take the two largest packaged beverage segments (energy drinks and CSDs) in P&C, for example,” he said. “While sugar free energy drinks have comparably less market share of total energy drinks than full sugar, sugar free energy is growing more than five times faster than full sugar \\\[IRI MarketEdge, Australia Convenience, data to 14/6/20\\\]. “It’s a similar story for CSDs. Despite being smaller than full sugar CSDs, from a market share perspective, sugar free CSDs are growing almost three times faster.” Mr Vatner added: “While the majority of packaged beverage segments have been negatively impacted since Covid-19, energy drinks have been the only major category to remain in strong growth, growing at 3.5 per cent in the latest quarter \\\[IRI MarketEdge, Australia Convenience, data to 14/6/20\\\]. A very strong result given the current climate.” Steve Chapman, CEO of nootropic beverage brand Shine+, says the energy drink market has “evolved considerably” over the past three to five years. “We’re leading busier lives than ever before and at the same time we’re more health conscious than ever,” he said. “Those are two lifestyle factors that would normally be at odds with one another, but natural nootropics do an amazing job of providing the energy needed to manage a busy lifestyle without compromising on health.” Mr Chapman also believes that the recent effects of Covid-19 have further contributed to the strong demand for “better energy” products that provide a natural alternative to traditional energy drinks and supplements. TO PAGE 56 BEVERAGES Getting it right Retailers can maximise category sales, according to Frucor Suntory Category Analyst Petrol & Convenience Daniel Vatner, by ensuring that they have the right range, in the right location, at the right price. “Retailers need to ensure that they have a strong range of beverage options, factoring in rate of sale, consumer decisions, incrementality, and innovation – overlaid with a view of current/emerging trends,” he said. Activation is key, too. This, says Mr Vatner, isn’t just limited to activation of off-location displays, but also includes activation within main chiller planograms, and fast- lane fridges. “From a main chiller planogram perspective, space needs to be appropriately allocated by factoring in metrics such as share of category sales, performance, as well as current and emerging trends,” he said. “From a fast-lane perspective, retailers need to ensure that these prime positions are dominated by the best performing SKUs to ensure they’re able to capture as many impulse sales as possible. “Off-location displays need to be prominent and well merchandised, particularly during promotional periods to ensure they’re capturing shoppers’ attention.” Mr Vatner adds that “pricing needs to be shopper centric and clearly communicated, to ensure easy navigation for shoppers”. SEP/OCT, 2020 CONVENIENCE WORLD 55