The beverage sector didn’t stand still during the pandemic, with a raft of emerging and new products and subcategories throwing the spotlight on the need for tightly controlled category management to ensure the shopping experience remains simple.
It’s not just kombuchas and seltzers eating into traditional beverages shelf space. No-alcohol products, of which 24 are listed in Woolworths online, continue to proliferate. Admittedly no-alcohol beer isn’t entirely new, given Coopers Ultra Light Birell is 30 years young, but even that saw nearly six per cent growth in 2020 backing up a previous nine years of double-digit growth, according to The Shout1. And it has been joined on supermarket shelves by a slew of no-alcohol wines and spirits including Seedlip, as well as other no-alcohol beers such as Carlton Zero and even pale ales such as Hawkesbury Brewing.
The accelerating consumer shift to health consciousness including alcohol moderation, compounded by with pandemic-driven needs such as products fulfilling immunity, stress relief and mood enhancement needstates, means that new beverage product development is likely to continue apace. Sixty per cent of consumers are increasingly looking for food and beverage options that support immune health, according to Innova2.
Category management of beverages will need to be continually reviewed to ensure product proliferation doesn’t create chaos for the shopper. As the beverage category matures beyond segmentation by ingredient or flavour into needstates, some subcategories may need to be subsegmented, and shelf stripping and point of sale materials beyond ‘New!’ wobblers and aisle fins devised, to call out functional and better-for-you products.
The space for all of these new functional and better-for-you products has to come from somewhere. This begs the question of the role of the chiller versus the shelf, and where shoppers expect to find categories. Kombucha has been dual located in both chiller and shelf, for instance. Although the chiller is typically for single products and the shelf becomes about multipacks. Space to sales by subcategory will become pivotal for understanding which subcategories’ space should be down weighted to face up the emerging and growing categories. I can foresee a world where carbonated soft drinks, long life juice and bulk pack water, for instance, are downsized in order to free up space for better-for-you beverages.
It also begs the question of aisle flow. Theoretically a flow from ‘best for you’ to ‘least best for you’ could work. However, how this would play out if a category or manufacturer has both better-for-you and not-so-good-for-you SKU’s isn’t clear. And some manufacturers may baulk at their brands being cast as the category ‘sinners’.
Despite the potential space management headaches, there are some good news category stories with the growth of better-for-you and functional beverages.
One is around average weight of purchase as consumer familiarity with new category segments increases, and assuming that these types of beverages have expandable consumption (that is, buy more means consuming more – in this case because the category segments are close to guilt free). Continued consumer working from home at least several days per week means that bulk buying is likely to continue for some time, and whilst perhaps at more muted levels than in 2020 it’s still good news for AWOP-based promotions. The chiller could be better utilised to promote single-pack purchase for trial, supported with bulk trialling programs, the better to run AWOP based promotions around multipacks.
Another is around price. Beyond a reasonable single pack price for trial purposes (shoppers are usually unlikely to buy multipacks of something they haven’t tried, unless it is deeply discounted), these newer beverage categories are not commoditised and so don’t require low price points or EDLP pricing strategies. Everyday pricing, rather than high/low promotions, may be the go.
Likewise, there may be an opportunity to trade shoppers up to more premium, or at least more premium priced, products by ranging the premium products, rather than the category best sellers, on eye-level shelves.
Lastly, and tactically, there’s an opportunity to tap into the traditional winter cold and flu season with functional beverages that have immunity benefits. Promotional programs should be reviewed to optimize seasonal peaks.
All in all, the growth of better-for-you and functional beverages has breathed new life into a category that until 2018 hadn’t really seen the introduction a new product segment for ten years. The ways the beverage category has traditionally been managed are now ripe for review with fresh eyes.
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