Recent independent research conducted by Freedrinks Ltd into consumer behaviour with regards to soft drinks consumption in the on-trade has produced some staggering results with £1 billion lost revenue given away each year in the form of tap water – and a major revenue opportunity identified for pubs and restaurants.
Martin Hall, CEO, Freedrinks Ltd said: “what makes for very interesting reading, and I suspect therefore radically under calls the overall soft drinks market in on trade, is the lack of inclusion of tap water in the on trade figures which has been previously unmeasured.”
Soft drinks including tap water = 1 in 3 drinks served
“I hear the statistic of one in four drinks served is a soft drink as the ‘official’ data on soft drinks. As such publicans and restaurants see soft drinks as less important than alcohol. However, add in our research statistics that tap water has a staggering weekly penetration larger than that of all colas at 30% of people per week, and all of a sudden ‘soft drinks including tap water’ rises to one in three drinks served. What’s more, this is effectively a free service with zero margin.
£1 billion lost revenue
“Even more staggering is the value that can be put on this lost revenue. If colas in the on trade are valued at £1billion and regular penetration of tap water is higher, it can be concluded that revenue lost through tap water sits at £1 billion, at least. By not offering credible alternatives to tap water the industry is turning away (or literally handing away) £1 billion in potential cash sales. And that is even before we consider that tap water consumers have a propensity to spend less on food and stay in outlet for a shorter time period.”
Unaware or in denial of reality
Freedrinks Ltd have identified that publicans are often either unaware of the situation or in denial about the reality. “Speaking to many pub owners they are sometimes unaware of the scale of the tap water giveaway. Some measure it on their till receipts, but most do not. I have been in outlets that say they don’t give away tap water at lunchtime and dinner time, and I see at least half the tables with it.
£700 million opportunity
“Even if we assume that 30% of tap water consumers choose this option due to cost, we are still left with £700 million opportunity to go after by offering what the consumer is asking for – low sugar, natural alternatives and adult style soft drinks.”
Need to promote soft drinks
A survey conducted by Freedrinks and HIM! has revealed that 62% of publicans aren’t doing anything to promote soft drinks in their pubs. “Soft drinks purchases have been a default decision for many consumers, rather than a positive choice” said Hall. “I think that is why this research has shown an increasing preference to have one drink they really want and then have tap water in favour of other choices.”
By promoting natural low sugar alternatives to tap water publicans can increase revenue and give a reason for consumers to stay longer. (usually the driver of other consumers). “It concerns me the number of pub and restaurants I go into and how easily I can just get a tap water without anyone recommending anything else to me. That is a lost sale” said Hall.
Stocking the right alternatives to water
“Our research shows it’s about stocking the right alternatives to water. Consumers have changed, they know too much sugar is bad for you, they are suspicious of artificials (60% of adults now think diet products are bad for them), and they want more choices. The same care should be invested in soft drinks offerings as it is in a wine menu or selection of beers.”
ZEO is the first offering from Freedrinks Ltd, who aim to provide a constant stream of innovation within the soft drinks market by producing low calorie drinks using natural ingredients such as stevia. ZEO was originally inspired by the premise that a drink does not have to be alcoholic to be interesting and a desire to re-create the sensation and feel of vodka but without the alcohol.
Hall said: “We as an industry must react to these changes and reflect it in what we offer. ZEO is a great alternative to tap water and the benefits are clear: increased takings, longer visit times and greater overall per person spend.”
“That is why I will passionately bang the drum that it is time to wake up to the missed opportunity and to get proactive in the pub and restaurant trade”, said Hall. “The consumer is crying out for choice and when they don’t get it they go to tap water. How often do you see that size of opportunity sitting in an industry?
ZEO is a sophisticated soft drink with fewer calories and less sugar than rival products. It contains no artificial ingredients, including artificial sweeteners. Developed and crafted over several years, ZEO is now available in three refreshingly crisp, fruity variants: ZEO peach and grapefruit Burst, ZEO citrus Crush and ZEO lime Zest. Each offers complex, subtle flavours and the ZEO ‘tingle’ effect, which was devised to re-create the sensation and feel of vodka but without the alcohol.
About Freedrinks
Freedrinks Ltd is a UK company with a clear defining brand ethos across all its products: Free from artificials. Free from compromise.
Backed by a £7.6 million spend, ZEO launches nationally in 2014 following a successful 2013 pressure test in the South East of the UK. ZEO is the title sponsor of England Netball 2014.
About ZEO
The first ZEO drink was borne from the premise that a drink does not have to be alcoholic to be interesting. A lack of innovation was spotted within the soft drinks category which developed into a non-alcoholic beverage called ZEO. 4.5 million euros was spent on developing the unique blend of natural fruits and botanicals designed to create a tingling taste sensation. The ZEO range includes: ZEO lime Zest (45 calories), ZEO citrus Crush (45 calories) and ZEO peach and grapefruit Burst (30 calories).