Market for Health Drink in the UK

Market for Health Drink in the UK

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Executive Summary

In this report I shall be looking at data compiled on the client and using this data I will analyse the market potential and demand for "health drinks" within the United Kingdom. Also I will consider whether it is viable to expand and develop the brand within the market whilst maintaining the socially responsible attitude of the company, in conjunction with the growing health trends and the client's ethical product production.
The key issues facing the client are that; firstly; the business is focusing all of its energy onto the youth market and not attracting business and sales from the older demographic that in years to come will be a massive market, which is as yet untapped. This may be due to the fact that one of the client's main aim is to "help provide children with healthier food" (GMID 2007). Secondly; the client has not fully taken into account the changing lifestyles of people and their demands, emerging markets within the health drinks market such as health snacks have not been considered by the client and must be if they wish to expand their business and move away from being known as a one product business.


Table of Contents

Introduction – Page 5
Problems & Opportunities – Page 6
Research Objectives – Page 7
Background Information
The changes in culture in the UK– Page 8
The changes in demographics – Page 9
Conclusions & Recommendations – Page 10
Bibliography & References – Page 11
Appendix – Page 12


Introduction

The fruit juice and health drinks market has, over the past couple of years, seen a massive growth both in terms of sales and of the increasing demographic of customers that are choosing to purchase the products, especially at the expense of carbonated drinks. In 2006 the estimated value of the total market was £2.77 billion at retail selling price, having grown from 30.7% in 2002 (Key Note, 2007). Innocent Drinks are the markets biggest player with a market share of around 62% , selling in excess of 600,000 drinks every week (Barnett, 2005) The business is currently valued at £100 million. Not only content with being the largest distributor of smoothies the business has branched out to start the selling of "thickies" – a yoghurt based drink which promises to be a hugely innovative idea and also water based fruit drinks aimed at children.
The aim of this report is to examine Innocent Drinks position within the market and to see how their position of strength can be built upon, both in the current market and any potential new markets.

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When looking at the market as a whole it is important to remember that Innocent are a young company without any re-branding experience. Big companies such as Coca-Cola are re-branding all the time, from the celerity craze of a couple of years ago to a more homely marketing approach currently. In order to re-invent themselves and cement their place as the market leader within the health and fruit juice market, Innocent must look at a number of things including product portfolio and other areas of the general health market they could look at expanding into, rather than being simply known as "the smoothies company".



Research Objectives

Within this report I will be looking at the following areas to help the client understand to a better degree the change in lifestyle, cultures and the demographics in the United Kingdom.
The cultural trends of the population are changing in the UK. People are more aware of themselves and more importantly of their own health and well being. The obesity "epidemic" is cause for major concern and must be considered into any new strategy as must the snacking culture of British people. The change in demographics since the launch of the business has changed and will change even more in the next 20 years; this must be built into the long term plan for the business.
Looking at these areas will help me understand where the market is going and how Innocent can gain from this knowledge in the goal of expanding and cementing its name in the health market.


Background Information
(Changes in culture)

When we look at the changing of the UK populations self awareness of personal health over the last few years it is clear to see that as a nation we are more aware than in the past. This is reflected in table (i) in the appendix where more than 75% of people interviewed in the survey say that they are trying to be healthy or are least attempting to exercise more regularly and in general are more aware of their diet.
These figures sound promising to the client as it appears that 75% of the population care about what they eat and drink. However, these figures don't add up to the fact that 20% of the UK population is considered obese, this is expected to reach 40% if eating and drinking habits do not see some form of change (Marketing Week, 2006).
As the government wage a war on the obesity issue some consumers are starting to reassess snacking choices which could bring a change in the entire market. The data states that people are trying to eat more healthily. There has been a vast increase in the number of people buying healthy snacks, which are just as convenient as typical ‘snacky' food such as chocolate bars etc. In fact, Sales of health snacks have risen so significantly that some products expected to rise in sales by as much as 49% in the next few years. With people working more hours in a week than in any previous generation the "snacking culture" that has emerged in the UK has become worth vast amounts of money and is a viable option for any company in the health market as barriers to entry are moderately low.

Changes in demographics

"The over 50's is the fastest growing segment of the population in many European countries and by 2030 there will be three people in their 50's for every one in their 20's" (Gower 2005). This change in demographics is something that the business needs to take into consideration. The shift of power from the younger consumer as it is now towards the older consumer in the future is a vastly important point. Although many companies do not wiush to be associated with this segment of the market as it is seen as unexciting, research has shown that those aged 65 to 74 will increase their retail expenditure by up to three quarters in the next ten years, a fact that many businesses will be considering in any decision they make in the future.
Younger consumers are less likely to purchase Innocents products as they have little or no disposable income. They are "more susceptible and more likely to be aimed at by the junk food sectors advertising campaigns" (Nicosia 2007). However, with the ongoing food education within schools, the banning of fast food vending machines and the healthier government produced menus; it is viable that this market may well be one to watch for signs in increased growth in the future.


Conclusions & Recommendations

The health drinks market is predominantly aimed at the younger side of the population, people with more disposable income who can afford to buy luxuries and non-essential items such as ready prepared smoothies. Short term, this is a perfectly acceptable way to conduct business within the market. However, in the future the ever increasing demographic of older people within the UK may feel alienated from the product and may not purchase. I would suggest here that the client look to attract not only the core users of the product currently (the younger and more affluent) but look to attract a wider variety of consumer for the future too.
Secondly I would look into the diversification of the products on offer to the consumer. I think the launch of a yoghurt based cereal bar with the Innocent brands name attached to it could do very well and help attract new consumers to the business as a whole, as well as increasing brand awareness and sales.
All in all I would suggest that ongoing new product development, including the use of seasonal ingredients within products would help maintain interest in, not just the product, but the business itself. I believe that the release of more products will not harm the consumers' view of the ethical side of the business but will help support their goal to increase awareness of healthy living.


Bibliography & References:

Barnett, Emma – Health Drinks Report 2005
Gower, Isla – Market Report 2005
GMID – Company Report on Innocent Drinks (Strategic Direction) 2007
Keynote – Market Report 2007
Marketing Week – July 2006
Nicosia, David – GCI October 2007




Appendix

Consumer attitudes towards health, June 2006
%

I try to be healthy but do not follow a strict diet or exercise regime 49
I exercise regularly and follow a very healthy diet 24
I rarely exercise and I eat what I like 18
I regularly try to lose weight through diet and exercise 9

None of these 1


Base: 1,047 adults aged 15+
Source: BMRB/Mintel
Table (i)
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