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Current Position:Home » News » Beverages & Alcohol » Beverages » Topic

A Hard Look at Soft Drinks

Zoom in font  Zoom out font Published: 2015-09-10  Views: 26
Core Tip: With carbonated soft drinks facing mounting negative health perceptions from Americans, craft and natural options are showing promise
Although natural and craft comprise small, relatively new segments of the carbonated soft drink category, Mintel’s new “Carbonated Soft Drinks: Spotlight on Natural/Craft US 2015” report reveals that nearly three in five (57%) US adults agree that carbonated soft drinks made with natural ingredients are healthier than those made with artificial ingredients. What’s more, 34% are interested in seeing carbonated soft drinks with added benefits.

Despite being in its early stages, the craft and natural segments are poised to grow. While Mintel’s research shows that two thirds (66%) of US adults do not currently drink craft sodas, 44% of non-craft drinkers are interested in trying craft products. A similar trend is seen with natural soft drinks, of which 40% of consumers currently drink, with usage highest among parents (60%) and Millennials (58%).

Natural Potential

Concerns surrounding artificial sweeteners, such as aspartame, strengthen natural and naturally sweetened carbonated soft drinks’ positioning as a better-for-you alternative to regular and diet sodas. These challenges have contributed to years of sales declines in the carbonated soft drink industry, with sales dropping 3.6% between 2011-2014. Of Americans who currently consume or are interested in craft soda, 54% indicate that natural or real ingredients are important to them, including 50% of parents, highlighting natural soda’s potential in the market. Another third (34%) of US adults are interested in seeing carbonated soft drinks with added benefits, such as protein, vitamins or minerals.

“The definition of health is changing from desiring low/no-fat and -sugar, to ‘real’ or unadulterated ingredients. Natural and craft brands tend to feature ingredients in more natural forms, to position products as a better-for-you option,” says Elizabeth Sisel, beverage analyst at Mintel. “Craft and natural sodas also provide new flavor experiences, including blends of fruits, spices and herbs, while hitting naturally sweetened and premium ingredient trends. However, the segments are still too small to generate a huge impact on category sales, although interest in natural/naturally sweetened and craft options is promising. Positive health perceptions are on the side of craft and natural soda, but manufacturers need to justify high prices and build awareness to grow sales.”

Flavors, Healthier Ingredients

Consumer sugar concerns have not halted consumption of craft sodas, which has increased this year (34%) compared to 2014 (30%), propelled by Millennials and parents. Increased craft consumption is not only driven by its appeal to consumers turning away from regular carbonated soft drinks, but also from those looking for alternatives to alcoholic beverages. Nearly three in five (57%) consumers agree that craft sodas allow them to enjoy a unique type of non-alcoholic beverage, with two thirds (66%) of Millennials in agreement. Furthermore, half of craft soda drinkers (49%) are interested in craft sodas that pair with meals and 42% are interested in creative flavors.

Mintel research indicates that US parents (55%) are more than twice as likely as non-parents (23%) to be craft soda consumers. As consumers start families, many look for non-alcoholic alternatives, including 70% of parents that overwhelmingly agree craft sodas allow them to enjoy a unique type of non-alcoholic beverage (vs 50% of non-parents). Additionally, more than half (53%) of non-craft drinking parents report that they are interested in trying craft sodas, compared to 42% of non-parents.

“Craft carbonated soft drinks have the potential to peak interests similar to the craft beer segment, offering consumers artisanal beverages that often support local communities and provide a complete taste experience through premium ingredients, unique flavors and small-batch quality. Similar to the progression of craft beer, consumers are veering away from big brands and seeking smaller brewers that are perceived as more authentic,” adds Sisel.

Unfamiliar Territory

Unlike regular carbonated soft drinks, which are facing negative perceptions of health-associated risks and artificial ingredients, primary consumer disinterest in natural and craft sodas is driven by product unfamiliarity and premium pricing. Among non-craft drinkers, one quarter (26%) said that they are unfamiliar with craft soda brands, craft soda flavors (23%) or just do not know what craft soda is (22%). Additionally, more than half of all consumers (55%) agree that natural and craft options are too expensive to purchase on a regular basis.

Comparisons to regular carbonated soda also hinders US consumers from embracing craft and natural options. In fact, 42% of consumers worry that natural versions of their favorite soda brands will not taste the same, with 18% of non-craft drinkers not interested in craft products because they prefer the taste of regular soda.

“While the carbonated soft drink category is facing consumer perception challenges, opportunities exist to strengthen brand trust, authenticity and experience through trending natural and craft segments. However, natural and craft manufactures are tasked with justifying higher prices and increasing familiarity through better exposure,” concludes Sisel.

 
 
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