Challenges for the Soft Drink Manufacturer

Soft drinks are a major sector in the UK food and drink market, accounting for 15% of total sales. The market value of these products has seen consistent annual growth and this looks set to continue. This is similar globally with huge potential growth in newer markets such as those throughout Asia, in particular China. Soft drink companies have some of the most well recognised brands globally and own some of the most advertised products.

One of the greatest challenges for soft-drink manufacturers and retailers is the growing perception of an association between drinks with large quantities of sugar and obesity. Although there is no direct medical link between sugar alone and overweight or obesity, the image of the product has been degraded by this negative association.

With fears growing regarding overweight and obesity in young people, particular focus in the UK is now moving towards restrictions to limit children's and young people's exposure to advertisements for products that are high in fat, salt, or sugar (HFSS food and drink). Ofcom (UK Office of Communication, independent regulator and competition authority for the UK communications industries) has a consultation out that proposing several options, and invites companies to restrict advertising of HFSS food and drink to children. The consultation closed in June 2006 and recommendations will be made later in the year.

There is also a move towards reducing young people's access to snacks with high sugar content while at school, by restricting access to vending machines. This has become an increasingly important issue with consumer groups and government in the UK and USA. Across several states in the USA an agreement has been made between soft-drink manufacturers and state officials to exclude several types of full-sugar soft drinks and limit quantities of others. Currently, the UK Government is looking at strategies to develop guidelines to encourage healthier vending in schools without employing the draconian measure of banning soft drinks all together.

With growing fears of overweight and obesity levels, and perhaps because of increasing consumer awareness of the issue, soft-drink retailers and manufacturers have been reporting a trend towards more healthy products with 'cleaner' ingredients (i.e. free from artificial flavours, colourings and preservatives). The trend towards a healthier lifestyle and demand for products that satisfy this requirement have led to increased sales of diet or low-calorie soft drinks. While this begins to address one of the challenges that the soft-drink manufacturer faces, association with overweight/obesity, it raises the new challenge of successfully handling the use of intense sweeteners, which has stirred controversy and provoked criticism from some consumer groups.

To maintain their market value, it is imperative that soft-drink manufacturers respond to these pressures and continue to create and deliver choice for consumers while developing products that can offer consumers the opportunity to adopt a more healthy lifestyle.