Soft drinks makers will have to demonstrate added value in their marketing activity because increasing commodity costs are making it harder for them to compete on price, according to Britvic.
The warning comes after it emerged that the value of soft drinks sales from shops grew 6.7% to £6.98bn in 2011, driven by price increases, according to the annual Britvic Soft Drinks Report, which is compiled using Nielsen Scantrack data.
Volume growth, however, decreased to 1%, down from 3% in 2010.
Rising prices mean it is not sustainable for drinks brands to continue to compete on price and maintain margins, according to Britvic’s customer management director Murray Harris.
Brands are set to ramp up the number of on-pack promotions, CSR and digital activity, he adds, as they vie for attention in the ever competitive sector, which saw a host of new entrants in 2011, such as Vimto’s Reggae Reggae drinks range and the Pepsi 250ml can format.
Coke has just launched a 375ml bottle size for all its variants.
“[The industry] cannot support forever lowering its prices with maintaining brand value - people start to question value when they see offers for ‘buy one, get two free’.
“We must continue investing in brand building and brand quality - price is just a hygiene factor,” he says.
Earlier this year Britvic and PepsiCo launched a multi-million pound joint CSR push that sees all soft drinks they sell represent a 1cm2 (squared) piece of land that will be “transformed” into football pitches, parks, playgrounds or skate parks.
At the time of launch, Britvic said the campaign would help to transform the “visibility and credibility” of its brands in a highly competitive market.