Cover Story
What’s In Store for 2020?
JOHN PATTERSON Sales Director, JUUL Labs UK Grasping the vaping opportunity will be key for Scotland’s local retailers in the year to come. Despite 26% year on year category growth, independent and symbol retailers are still playing catch-up. Vape sales in independent retailers grew 28.8% over the past year – beating their symbol counterparts who achieved growth of 22.8% – but still lagged behind the multiple channel which posted 37% growth and a total category growth of 31.8% in traditional retail according to IRI. Together independents and symbols have a combined 28.2% of the traditional retail sector. Multiple retailers continue to have the majority of vaping sales with a market share of 62%. Over the same period, closed pod systems have increased their share of the total market from 12.5% to 31.6% while liquids – although still in growth – have seen their overall share decline from 47.7% to 39.6%. Despite solid growth this year, the independent and convenience channels are still underperforming. This signposts the huge potential for growth still to come within the category and for the channel. Although independents were slower to see the potential of closed pod vaping systems, they are now catching up. This time last year, closed systems accounted for just over 6% of all vaping sales in c-stores. That figure is now over 28%. Although open systems still dominate the
sector and should be a major part of any vape offer, the gap is narrowing rapidly as closed pods become the system of choice for adult smokers looking to switch. One of the main reasons the multiples are pulling ahead is that they embraced closed pod systems earlier and closed systems now outperform open system sales in their stores. Closed pod systems are driving 80% of the total market growth in traditional retail and although independents have 28% of this sector, if we include specialist vape and online stores, their combined vape share is around 12%. The opportunity lies in these stores getting the same share of vape as they have in tobacco – roughly 45%. Adult smokers looking to switch expect to see smoking alternatives in the stores where they buy tobacco. By providing a credible vaping solution with simple, convenient closed pod systems at its heart, independents can retain these customers instead of pushing them into other channels. The good news is that there is still fantastic headroom for growth as 60% of the UK’s seven million adult smokers want to quit and see vaping as the preferred method to begin their switching journey.
AMY BURGESS Senior Trade Communications Manager, Coca-Cola European Partners The soft drinks category has performed incredibly well in 2019. It is now worth £8.5bn [Nielsen, Sep 2019] and continues to grow suggesting that it will be a hugely important category for retailers again in 2020. As part of our Total Beverage Company Vision we are committed to evolving our portfolio to reach more consumers, on more occasions, in turn providing convenience stores with more opportunities to increase their sales. In 2020 we expect to see the demand for low and no sugar products increase across different sectors, including colas. Diet Coke remains the most popular light cola brand in GB , with a value of more than £464m, while Coca-Cola zero sugar is growing significantly, currently up 28.9% in value in GB, which we expect to continue into 2020. We will also continue our ongoing efforts to offer more low-calorie options to our consumers across different categories and occasions. With 40% of convenience store shoppers rating a range of healthy products as important [HIM CTP, 2018], it is vital for us to introduce even more low and no sugar variants across different formats for consumers to enjoy. Shoppers are becoming more adventurous and are looking to experiment with new and exciting variants of their favourite soft drinks. More than a third of shoppers (35%) [HIM CTP, 2018] agree that they like trying new things when grocery shopping, so retailers should keep an eye out for the latest soft drink flavour innovations launching in 2020. The success of our 2019 NPD, including Fanta Zero Grape, which is now is now worth nearly £5m according to Nielsen, and the latest additions to our Light Colas portfolio, Diet Coke Twisted Strawberry and Coca-Cola zero sugar Raspberry, shows that consumer demand for flavour innovation in our low-sugar soft drinks portfolio remains high. We will also continue to explore ways we can reach new consumers by expanding our brands into different segments and occasions. This year has seen us launch our Monster Brand into the RTD coffee section with Espresso Monster, which is now worth £3m, and Coca-Cola enter the energy segment for the first time in its history with Coca-Cola Energy, the number three soft drink launch of 2019 to date. We will look at new emerging trends in 2020 to see how we can diversify our brands to meet the latest consumer demands.”
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LEIGH SPARKS Professor for Retail Studies, University of Stirling Locally based consumerfocused retailing is still very much in demand. Yet, the challenges are considerable and will continue to grow in 2020. The specificity of local convenience stores can be challenged by new stores, and operators such as Aldi are experimenting with convenience-sized local operations. Competition has not gone away, it has changed. Secondly, the cost base is a challenge. Convenience stores may gain from rates relief, but as a physical operator, employing significant numbers of people, costs and taxes which are more easily applied to these characteristics continue to grow. Is it too much to hope from Westminster and Holyrood that these policies be thought through from the viewpoint of valuing employers who require space and put people at the heart of communities rather than from that of an automated, distant fulfilment centre? Thirdly, convenience stores are in the firing line for the changing expectations of consumers and governments. Some of this is positive in that local and personal has become a positive in retail. But, especially in Scotland, what we expect from convenience retailers has changed. From tobacco control and promotional restrictions on alcohol to possible restrictions on ‘unhealthy’ foods and with minimum unit pricing and deposit return schemes also to contend with, the nature of retail operations is altering. The focus on healthy living and sustainability is not a bad thing for 2020 but it does require adaptation and change, and this can be tough to get right, especially in smaller operations. Only time will tell if my 2020 vision was perfect or clouded. Convenience stores, especially those embedded in the local community have a great future, but it is hard won, and that is not about to change in 2020.
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04/12/2019 14:56:54