Kombucha, cold brew coffee and hard seltzer products were largely nonexistent just a few years ago. Now they’re front and center in grocery display cases worldwide. This surge in popularity is due mainly to changing consumer consumption habits and a shift away from traditional beverages like soft drinks and beer.
Across the industry, I’ve seen five key trends that reflect the growing popularity of new alcoholic and non-alcoholic drinks.
- Increased focus on health and wellness. Consumers, particularly millennials, are more health conscious, and they’re willing to try new, healthier alternatives to traditional soft drinks. As soda consumption declines, we’ve seen more brands develop sparkling water products. Healthy drinks like plant-based waters, kombucha and functional beverages are also gaining popularity. One statistic that I find to be particularly reflective of this shift is that in 2016, bottled water dethroned soft drinks as the leader in beverage sales.
The lower calorie, sugar and alcohol content of hard seltzer has also been popular with consumers. New hard seltzer products are being offered by brands ranging from bottled water to beer, and these brands are acquiring hard seltzer companies. Sales of non- or low-alcoholic versions of spirits, wine and beer are likewise increasing. From 2018-2013, it’s expected that no-alcohol wine, spirits and beer will see the most growth within the alcohol category.
- Premiumization. As the economy remains strong across the globe, consumer interest in more expensive drinks remains high. With access to many different roasts from various regions around the world, consumers are eagerly becoming coffee connoisseurs. They visit their local coffee shop for a cup of pour-over coffee, even though it might be double the cost of a regular drip coffee. For home brewing, they buy single origin, whole-bean coffees that often retail for more than twice as much as the traditional mainstream brands.
The growth of premium mixers is also particularly compelling to watch. These zero-alcohol, zero-calorie beverages are made with exotic herbal ingredients. They come with a price tag reflective of these high quality ingredients, and consumers are willing to pay for them.
- Convenience. Beer and soda are no longer the only beverages that come in cans. Canned wine, hard seltzer and cocktails have all become mainstream. They give consumers the ease of drinking their favorite products at the location of their choice and with the instant satisfaction they’ve come to expect. Drinks like ready-to-drink (RTD) cold brew coffee and cold-pressed juices are also growing in popularity as they offer the grab-and-go convenience that fits into busy, yet healthy lifestyles.
- Direct to consumer offerings. Just as cans offer convenience, so too do companies that deliver alcohol in sixty minutes or less. Dirty Lemon, a direct to consumer line of functional beverages, takes orders only via text messages. And with the emergence of subscription boxes for coffee, beer, wine and spirits, as well as online liquor stores, consumers are increasingly turning to the internet for their beverage needs. These businesses are disrupting the traditional retail model while giving brands access to consumers in a new way.
- Sustainability. Environmental concerns around excess packaging and single-use plastic are influencing consumers’ decision making. Beverage companies are responding to these concerns and becoming more eco-friendly. Single-use plastic water bottles are an ongoing concern, especially given the increased popularity of bottled water. Companies are starting to change their packaging to more eco-friendly options, including aluminum cans and paper boxes.
Alcohol producers are also using alternative sources of energy to run their distilleries, reducing waste from their plants and eliminating plastic packaging. By reducing their environmental impact they can leverage their sustainability efforts as a brand differentiator in advertising campaigns.
It’s an exciting time in the beverage industry. We’re seeing the rapid adoption of new twists on traditional drinks as well as the greater popularity of new concepts. As large beverage companies align their portfolios to reflect changing consumer preferences, I’d expect to see further changes in the beverage landscape in the future.