The Scoop: Industry Insights with Tom Carne

Tom Carne, Grocery Business Development Manager here at Radnor Hills, talks to us about all things new product development (NPD) in the soft drinks industry.

So, Tom, can you tell us about some exciting developments happening in the industry right now?

Absolutely. It’s an exciting time for the industry, with so much change and innovation. Something I’d like to touch on now, though, isn’t actually about the drinks themselves, but rather the way brands are marketing their products in new, imaginative ways. Right now, we’re seeing some amazing work around the theme of this year’s ‘Summer of Sport’.

With the Euros now finished and the Paris Olympics opening, brands are tapping into this excitement and driving sales with sports-themed campaigns. Capri-Sun’s latest campaign is a great example: with each promotional pack bought, kids can choose a free session in one of 30+ sports, at 1,500+ locations across the country. Our own ‘Fuel the Fun’ partnership with Go Ape is another great example. Here, we’re giving away weekly prizes of £25 vouchers which can be used against Go Ape activities, so a child can get out, explore and enjoy a bit of an adventure. Head to our website if you want to learn more about the giveaways.

And what are some challenges producers are facing right now? How will they innovate to combat this?

As an industry, we’re always facing challenges, always working and innovating to achieve the unachievable! There’s a new extended producer responsibility scheme due to come into force from January next year. This will see many soft drinks manufacturers become fully responsible for the costs of dealing with packaging waste they’re responsible for. The financial implications for producers here will be significant, but it’s also a chance for companies to really think about their environmental impact and, we hope, introduce more sustainable packaging options for their product lines. It’s interesting to see how the consumers will respond here, too. Sometimes, we make a change to a product, and it can take the consumer a while to catch up with this change and get fully on board. We saw something like this when we started selling water in cans – customers were hesitant to make that switch at first, but now it’s really popular.

Do you think we’re going to see any big changes in the market on the product side over the next year?

We’re already seeing some big shifts. The past two years have brought loads of change to the market, with ever-increasing legislation coming in, as well as so many new products. The ‘functional’ drinks market – drinks that marketed as having extra health benefits – is booming right now. Tesco has introduced a dedicated module for these drinks to their stores, offering a huge selection. The same goes for Boots.

There seems to be increasing confidence in the functional drinks market as well, with big players investing serious money in gut-health–oriented brands. Living Things, a soda brand whose drinks contain prebiotics, raised £500k through a funding round led by James Watt, former BrewDog CEO. JamJar Investments, whose portfolio contains brands such as Innocent, Oatly and Graze, have just put £4m into XOXO, another prebiotic drinks maker. COMMON, a CBD and mushroom drinks brand, also recently secured six-figure funding from a range of investors. It’s an exciting time, with lots of trial and error, so I’m curious to see what sticks.

Why do you think this is happening? What changes in consumer behaviour do you think are causing these shifts?

Good question. I’ll have to give a yes/no answer here. So, on one hand, there’s definitely evidence to suggest that, since the pandemic, consumers are more focused on health than ever, and they’re putting this at the centre of their buying decisions. They want more fibre, more vitamins, more micronutrients, etc. They’re asking for more than just flavour and refreshment – they really want those added health benefits, too.

However, what consumers say they want doesn’t always match their buying decisions at the point of sale. We call this the action-intention gap, where people’s values and attitudes don’t always match their final buying decisions. On average, 67% of our buying decisions are made at the point of fixture, on the aisle. In that moment, where we’re confronted with price points and, often, seek instant gratification, we won’t necessarily go for the values-influenced choice. Rather, we’ll choose the cheapest or most instantly appealing option. Of course, this is something that’s always changing, and as different products take up greater space in the market and in people’s minds, attitudes can shift too. So it’s fascinating to see these changes in consumer behaviour over time, and see the longer-term effects these have on the industry.

And that brings our Scoop interview to a close, we look forward to sharing more industry insights from the Radnor team in the next issue.