UK Government to eliminate sugary drink refills, limiting recovery of on-trade soft drink sales

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In what is already a challenging time for the on-premise sector – with UK restaurants recording a hefty 32.1% decline in value from £32.2bn to a forecast value of £21.8bn in 2020 – the UK Government has imposed a ban on free refill fountain drinks in restaurants from April 2022.

Although this promotes a health-halo for UK consumers, it places further risk on the sales of on-trade soft drinks.

Holly Inglis, Beverages Analyst at GlobalData, comments: “According to our research, 50% of the UK population is extremely or somewhat concerned about their physical health and fitness. The government’s move to minimize excessive consumption of sugary drinks and unhealthy food should help obesity rates improve and adhere to consumer sentiments for healthier offerings. However, the 2022 legislation has huge potential to adversely impact the sales of carbonated soft drinks in restaurants, which will hinder the growth of beverage manufacturers whose products are sold in this format.”

Inglis continues: “Interestingly, GlobalData’s most recent survey in the UK highlights that convenience and value for money are two of the greatest benefits of restaurant-prepared food and drinks*: both of which apply to free-refill beverages. One in ten consumers also highlighted that restaurants with natural product claims are attractive*, presenting a window of opportunity for beverage producers to innovate low-calorie and zero-sugar beverage choices that could reintroduce refillable drinks with less health risk in the long term.”

Consumer trends are increasingly moving towards beverage choices that inherit low-calorie and zero-sugar claims. New beverage innovations are increasingly adopting these themes. Purdey’s natural energy drink, Shloer’s pineapple and lime sparkling beverage, and Gusto Organic’s vitamin-based beverage are good examples – all of which have hit the shelves in the last six months, highlighting a drive towards health-conscious consumption.

Inglis concludes: “Although this is a double-edged sword for many between sales growth and wellness, there are avenues that restaurants and beverage producers can take to ensure that profits grow while maintaining a conscious health directive for consumers such as innovating low-sugar beverage options”.

Business Matters Magazine