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When the history of the soft drinks market is rewritten, Peter Harding, chief executive of Lucozade Ribena Suntory, sees it being split into two eras: before and after reformulation.
The ‘R’ word refers to action taken to adapt to the introduction of the UK’s sugar tax, which is set to impose tariffs of up to 24p per litre on companies producing drinks which are high in sugar in an effort to combat the nation’s obesity crisis.
The new tax doesn’t come into effect until April 2018, but Harding got in early, asking his company’s scientists to come up with lower sugar versions of its famous energy drinks Lucozade and Ribena two years ago, long before the government decided to bring in the tariff.
Spurred by pressure from culinary health campaigners including celebrity chef Jamie Oliver, the orange and purple beverages now contain half their previous levels of sugar, with just 4.5g of sugar per 100ml of liquid – essentially the volume of a teaspoon – compared to 10g-11g per 100ml previously.
"It’s half the sugar but the same great taste," says Harding.
Part of the plan to introduce the new product to the market has been to give it away to commuters at some of the UK’s largest railway stations.
Harding has spent his career in consumer industries, starting in marketing at Rank Hovis McDougall and working at brewer Scottish & Newcastle, before joining SmithKline Beecham in 1998.
After SmithKline merged with Glaxo, Harding became general manager of GSK’s UK and Ireland consumer healthcare business, which included Lucozade and Ribena.
He then became chief executive of a new combined soft drinks company formed when Lucozade and Ribena brands were both sold to Suntory of Japan at the end of 2013.
The new entity moved into offices near Heathrow Airport, London, and, standing on its own feet under Suntory’s decentralised business model, completely changed its operations.
"It started as simply saying we wanted to be able to take an order, manufacture it, get it to our customer, and collect the cash at the end," says Harding.
"That was the first task on day one. We evolved the business from there, revolutionising our supply chain, taking big, bold decisions on where to take our brands and starting to work in a very different way to how we used to when we were part of a global pharmaceuticals group, rather than a fast-moving consumer goods company.
"This business would now be unrecognisable to its previous owners."
The new organisation, Lucozade Ribena Suntory, took with it the Coleford manufacturing site where Ribena has been made since 1939 and Lucozade since the 1950s.
Now employing 600 workers, the company claims it is second in the UK soft drinks market only to Coca-Cola and ahead of Britvic brand Pepsi, with 9.5% of the off-trade market.
Lucozade on its own ranks as the seventh largest fast-moving consumer goods brand in the UK and Harding sees opportunities to increase its sales both at home and overseas.
However, he believes the group’s biggest opportunity lies in evangelising other sectors of the UK drinks market with the low-sugar message.
"We see opportunities in the UK marketplace for companies that can deliver lower sugar, healthier brands and can step into healthier options such as water-based, coffee-based, tea-based propositions and non-alcoholic premium beverages,” he says.
Reformulation proved an enormous challenge, with Suntory agreeing a 60% increase in capital investment at Coleford and providing access to its global scientific base, enabling researchers across the group to pool and share technical expertise.
There has also been an active programme of bringing suppliers and logistical partners on board this move.
This has been done by signing up suppliers to the group’s four new shared principles: putting consumer health and wellbeing first with great taste; helping customers make healthier choices; inspiring drinkers to move more; and encouraging health and wellness among employees.
While it could have been assumed that some suppliers would greet such an initiative sceptically, Harding says the message resonated strongly with the supplier network and has been received enthusiastically.
"We’ve had the emotional buy-in of our wider supply chain,” he says. “Our retailers and suppliers have been really supportive because they recognised we were motivated by doing right by the consumer.
"We now have the infrastructure and capabilities in place to realise our ambition of bringing a healthier range of drinks to the UK.”
This article is a piece of independent journalism, written by an experienced journalist and commissioned exclusively by Procurement Leaders.