Energy in the room - analysing the energy drinks and juices market21 September 2015
Beverage Packaging Innovation recently had the opportunity to discuss developments and insight into the energy drinks and juices market with Lucozade Ribena Suntory’s Peter McConville, CTO, and Satvinder Dhillon, head of packaging development.
Beverage Packaging Innovation: What would you describe as your key markets?
Peter McConville: The Lucozade and Ribena brands were acquired by Suntory in January 2014, when Lucozade Ribena Suntory (LRS) was created. LRS is now part of Suntory Beverage & Food (SBFE), the world's third-largest soft drinks company. The GB&I business is one of four business units, along with France, Iberia and International that together make up the SBFE region. So, in addition to Lucozade (a sports and energy brand) and Ribena (a fruit-based drink brand), we also have Orangina (an iconic French orange drink), Schweppes mixers in many European markets (originating from Iberia), and other brands like V energy drink (from our sister company Frucor in New Zealand and Australia).
The Lucozade and Ribena brands are present in a number of markets worldwide, and as part of Suntory Group we should see this increase, as well as seeing some of our Asian products and brands coming to Europe.
What are some of the leading trends across LRS?
PM: There are a number of key trends that we see. Some are shared across the portfolio, and others might shift depending on the particular consumer need. Ultimately, our package development and NPD are driven by consumer insight. What have been revealed as 'global' trends are convenience, occasion, health and channel. However, running in conjunction with these are two further sub-trends of environment and cost.
Within the context of environment, the two key areas of focus are packaging materials waste (addressed by lightweighting) and packaging development innovation, as well as the growing trend towards sugar reduction.
Consumers want naturalness and provenance with their drinks, while being increasingly interested in the calorie or sugar content. This can be seen with the decline in the carbonated soft drinks market in the US due to sugar content, and in parallel the 'diet' concerns as consumers move away from 'unnatural sweeteners'.
When we consider our range of products altogether and their average composition, our ambition is, by 2025, to reduce the number of calories in every 100ml by 20% from what the average levels were in 2012.
Following the trend of occasions, a particular occasion will drive a package's format, material, size and the portion. For example, a family might buy Ribena as a single large PET bottle of squash to make up at home when planning to have an informal meal, but might buy cartons in a multipack if they are going into packed lunches. The same for Lucozade: if there is a party being planned, a multipack with smaller single-serve drinks might be appropriate, but if it's an informal group maybe a single large bottle is enough to share out over the course of a single sitting.
Satvinder Dhillon: Consumer insight helps to drive packaging format choices. When we listen to consumer needs, we can ensure that the right format or bottle is ready for them to use how and when they need it. Following the example of occasion trends, we look at convenience: how easy is the pack to use for that consumer's purpose?
PM: The final area of focus is cost. With the 2008 crash, retailers and consumers are still very cost-conscious, which means packaging has to be fit for purpose and tuned to consumers' needs - but the product can't be too much more expensive, or consumers will not purchase it. Packaging is the first opportunity consumers get to interact with the product before using it, so it needs to provide the information and protection required to ensure the maximum freshness and the highest quality. If it fails this test, consumers will simply move on to a better option, and retailers will stop stocking an unwanted product.
What are some of the new products being developed to address these trends?
SD: The most recent launches will be on Orangina. In PET, Orangina will launch in 420ml bottles, which are somewhat similar in shape to the iconic glass bottles. It will be available in the original heritage flavour as well as a new, low-sugar alternative. There are multiple other projects in progress across Lucozade Sport, Ribena and Lucozade Energy, but these are expected to launch more mid-term (in 12 to 18 months).
PM: As a previous example of innovation coming from matching consumer needs with available technology, there is the Lucozade Sport bottle with flip-top sports closure. The bottle is lightweight (the lightest in the product category of all the sports/isotonic drinks), and the cap was designed to provide the consumer with control over how much liquid they drink (the harder they squeeze, the higher the product flow, but with an inbuilt seal to prevent spillage). Aseptic filling means we keep the active ingredients fresher for longer, and the bottle has contoured shaping so that it can be held, opened, closed and replaced one-handed whether you are running a marathon, cycling or doing other physical activities. Despite being lightweight, the bottle still holds its physical strength through the supply chain and is fit for purpose, however a consumer uses the bottle.
SD: From our research, we have numerous examples of how consumers use our drinks, and what is clear is how personal the experience is to each consumer. We have to be able to provide the right format, size and functionality so that each of these individual occasions can be met by the pack - wherever, whenever and however a consumer chooses to use the product.
Where is packaging innovation taking place?
SD: As mentioned earlier, the main innovation is being driven by consumer insight and needs.
PM: You have to pay attention to the market you are in rather than global trends, as they don't necessarily correlate. Consumers have to 'get' and buy into the concept for an innovation to be successful. There are examples where a superior taste and innovative packaging concept have not translated an American innovation into European or Asian markets.
At the moment, with the drive towards naturalness and provenance, materials are one of the most important parts of innovation - the fresher the product can be for longer, the better.
What is the packaging materials mix for LRS and is this changing?
SD: At the moment, plastic is the main material, but glass, metal and cartons all figure in the mix. As consumer insight drives the pack format and material used, this mix is constantly adapting and evolving, and is likely to keep changing according to need as well as technology advances.
What drives changes to packaging? Is it consumer needs and regulation?
PM: Regulation is an important point to raise. The process in the US is different from that of Europe or Asia. If you can justify a claim with data, then you can publish the claim on packaging in the US. However, in Europe it is a much more complicated procedure, requiring a process through EFSA, a large financial commitment, and some time without a guarantee of a successful application (there's about an 80% failure rate through this process).
An example of this can be found in the probiotic market, which used to be able to market itself as such but has had to shape their message over time to avoid using the word 'probiotic' as it is no longer allowed in the EU. Asia, specifically Japan, sits between the two in terms of the process. This means that certain benefits cannot be communicated to consumers, so regulation does dictate how we can engage consumers through packaging, and depends on where in the world we are attempting to do so.
Consumer need is the second key driver. As mentioned before, if a consumer does not 'get' the packaging or its message then they will not use it, so we have to understand their needs in order to deliver the right format or package that is fit for the purpose. Where and how they use the product will also determine what material is used, the size of the container, and its functionality.
Can you discuss some of your developments in sustainable packaging?
SD: Our Ribena bottles are made from 100% recycled PET. We used to split the percentage amongst the different brand groups, but now it's all on Ribena alone. The bottles are also fully recyclable.
Sustainability is important and education in this area is important - for instance, recognising the difference between recycled and recyclable PET. We are also continually lightweighting our bottles using advances in bottle blowing technology and design. Most recently, we launched our 1.5L Ribena Concentrate bottle in an optimised weight (which is much lower than the one used for our previous 2L bottles), enabled by our own new-design bottle base. We have to always ensure that package integrity and product freshness remain, but changing the shape or size of the bottle does allow us to create lighter and more sustainable products.
What improvements can be made to make it easier to reduce, reuse and recycle, and can you use bioplastics in your products?
SD: We are constantly looking at ways to improve the materials and environmental impact of the packaging we produce. There has to be a balance between delivering to satisfy the consumer need and making best use of the technologies available for disposing of waste. At the moment, many consumers understand recycling, and it is easy for them to conveniently dispose of their plastic bottles in an appropriate recycling stream. For Ribena, we are also able to reuse the recycled PET and create the bottle from 100% recycled material. Cans or glass are equally simple to recycle.
Our consumer insight tells us that what consumers are concerned about is the environment and reducing landfill or litter. Bioplastics have not quite addressed either our or their needs. The production of these materials also needs to be economically feasible on a large scale, and we are not yet sure how big the benefit would be. At the moment, recycling addresses [our] need more simply and efficiently than a biodegradable bottle would. However, we are still learning about the ability of a biodegradable bottle to go through the supply chain without any impact on shelf life, taste, or freshness, and these and other questions need to be answered before we can fully understand how it might best be applied. Suntory is investing in work to develop BioPET and we hope to leverage this in the future for Europe.