For decades, carbonated soft drinks have been some of the most popular beverages in the UK, but have begun to lose their fizz as consumption has fallen every year since 2012.

The carbonates decline is mainly due to consumers becoming increasingly health conscious about lifestyle-related illnesses, such as diabetes and obesity, diseases which are perceived to be linked to high carbonates consumption because of the sugar content of these products. In fact, according to GlobalData’s 2015 Q1 consumer survey, 64% of British consumers were concerned about soft drinks sugar levels and have made active attempts to reduce their intake of sugar from beverages.

These health concerns have led to the announcement of a ‘sugar tax’ by the British government that specifically targets soft drinks. Taking effect in April 2018, the tax is designed to placate health-conscious consumers worried about overly sugary drinks, like carbonates. This new tax will add to the declining consumption of carbonates as the segment is set to see a compound annual growth rate (CAGR) decline of -0.5% from five billion litres in 2016 to less than 4.9 billion in 2021 as consumers seek out less sugary options, such as packaged water.

While the sugar tax is expected to hurt carbonates consumption it is also anticipated to boost packaged water consumption as more switch to beverages they perceive to be ‘better for them’.

The premium, healthy, and natural positioning of many water brands means that packaged water consumption is forecast to rise in the UK from 2.3 billion litres in 2016 to over 3.2 billion litres in 2021 at a CAGR of 6.7%. The lack of sugar and ‘artificial’ ingredients in packaged water makes it very appealing to consumers seeking healthier lifestyle choices as carbonates are increasingly perceived to be unhealthy and unsafe. Consequently, soft drink manufacturers are heavily investing in the water segment as a means to increase profits and avoid the new sugar tax.

Nevertheless while carbonates consumption will continue to decrease in the foreseeable future it will still be one of the most important categories in the British beverage industry. However, the burgeoning consumer health trend and new hostility from Westminster means that carbonates bubble may finally pop while packaged water levels continue to rise.  

Related links

https://www.globaldata.com/store/report/cpg8838mp–carbonates-soft-drinks-market-in-united-kingdom-outlook-to-2020-market-size-growth-and-forecast-analytics/