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Beverages Deep Dive Day

Sustainability and holistic health: Trends driving the soft drink sector [interview]

Nicolas Hodac, Director General, UNESDA Soft Drinks Europe
The sustainability and health credentials of beverages are growing increasingly important to consumers. How is the industry capitalising on these demands and what more should be done? We asked Nicholas Hodac, Director General of UNESDA Soft Drinks Europe.
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Nicholas will be taking part in the Beverages Deep Dive Day on 20 September, part of the free-to-attend Fi Webinar Series. Click here to register.

The cost-of-living crisis, the COVID pandemic and supply chain issues fuelled by the war in Ukraine continue to significantly impact the global food and beverage industry. What are the biggest challenges currently facing the European soft drinks industry?

“There’s no doubt that the last couple of years have been difficult times for citizens, for consumers and for industry. First, we had two years of the Covid-19 pandemic causing closures of the HORECA sector and significant reductions in purchasing in supermarkets. These closures had a huge impact on the food and drink industry and especially on the soft drinks sector.

“With COVID restrictions gradually lifting at the beginning of 2022, we started seeing the light at the end of the tunnel as sales steadily rose to pre-pandemic levels. The Ukraine war created another shock effect with soaring energy prices and restrictions in access to certain raw materials. This, combined with high inflation rates, gas rationing, and a highly uncertain future is having a huge impact on our business.

“Currently, we are experiencing significant shortages of carbon dioxide, which is important for both the beer and soft drinks industry. For us, what is absolutely critical is that food and drink is recognized as a critical industry as governments around Europe implement gas rationing measures and restrictions.

“We're navigating this big storm but at the same time we are committed to continue investing as responsible companies and don't want to backtrack on our commitments. We will do everything we can to remain laser focused on meeting our commitments.”

Last year, UNESDA launched its Circular Packaging Vision 2030. What is the purpose of this?

“The aim of our Circular Packaging Vision 2030 is very clear: to accelerate the transition to a circular economy in Europe. We are doing this by going far beyond the existing mandatory EU legal requirements on collection, recyclability, and recycled content. By 2030 we want a situation where our packaging is fully recyclable, fully collectable, and made from fully recycled content.

“Why are we doing this? Firstly, we don't like our packaging to be regarded as waste and end up as litter; that's something we absolutely want to avoid. Secondly, our packaging is a valuable resource so it shouldn't be thrown away and not reused. It is extremely important that we create this circular economy disclosed loop so that our packaging is reused.”

How is UNESDA progressing with its sustainability aims?

“We announced the vision in 2020 and have been making significant progress despite the pandemic. Recently, we published a progress report which highlights some of the achievements we have made. For instance, today more than 96% of [soft drink] packaging is fully recyclable - an increase of up to 19% over the last two years.

“We have also significantly increased the use of recycled content in our packaging by as much as 30% over the last two years. While it is clear that we are on track, the challenges remain significant.”

What is the enabling policy framework to help UNESDA deliver on its vision?

“There are three things: firstly, efficient collection schemes. And we have been calling for the EU to introduce minimum requirements at European level of how a deposit return scheme should be developed.

“Secondly, access to recycled content. There is a fierce battle happening in the secondary raw materials market over access to plastic bottles. The problem is that there is now an imbalance between supply and demand, so prices have skyrocketed. The food and drink industry are obliged to use packaging of a certain quality and the beverage industry has mandatory recycled content targets. We believe that there should be a legal mechanism to guarantee that the bottles collected via our financed collection schemes are first offered to us to be reused in new packaging, before being sold to other sectors.

"Thirdly, the discussion around how reusable packaging, bottles, and systems are used.Reusable packaging is definitely part of the solution going forward and our members are using more [of it]. However, single use [plastic] is not something that can, or even should be replaced overnight. We need a well-managed transition that considers both environmental and cost implications.”

Zero sugar formulations and ‘better for you’ alternatives have been a key driver of sales growth in the carbonated soft drink (CSD) sector over recent years. Are brands doing enough to ensure products provide actual health benefits to consumers, or is more innovation needed in this space?

“As an industry, we committed to reduce average added sugars at European level by 10% between 2015 and 2020. Recently, we announced that we have achieved a 17.7% reduction in Europe. We surpassed our goal and have now made a new commitment to a further reduction of 10% by 2025.

“Looking at the numbers demonstrates that the efforts that the industry are making are significant and real in bringing healthier [products] to consumers. Sales of no and low-calorie drinks have been steadily increasing over the years, already [accounting for] a 30% market share at European level, and as much as 60% in some countries.

“Suntory, which owns Schweppes and Ribena, have committed to reduce average level of added sugars by 35% by 2025, while PepsiCo have pledged 25% by 2025 and 50% by 2030. In terms of sugar, Coca-Cola’s Sprite has been reduced by 33% since 2016, PepsiCo’s 7UP reduced by 50% since 2017, and Trina Tropical has been reduced by 48% compared to its version prior to 2020.

“I think it's very clear that our members are innovating, steadily reducing sugar, and offering healthier alternatives to consumers.”

What advice would you give beverages manufacturers interested in capitalising on the holistic health trend?

“Embrace this trend, embrace the changes in consumer behaviour, and embrace the calls from policymakers and other stakeholders for a healthier and more sustainable food environment. Then, focus on innovation and innovate, innovate, innovate. We have seen that consumers are responsive to brands that innovate and bring to market healthier and more sustainable food.

“Continue listening to the consumers and remain focused on improving the sustainable footprint of your brand, whether it's from a packaging perspective or from a health perspective. It’s a difficult journey but consumers are embracing new alternative, healthier, more sustainable consumption opportunities.”

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