CHICAGO — The carbonated soft drink category has lost its pop in recent years, with sales dropping 3.6% between 2011 and 2014 on rising concerns regarding added sugars and artificial ingredients. But while traditional brands may be falling out of favor with consumers, craft and natural options are poised for growth, said Mintel, a Chicago market research firm.
|Elizabeth Sisel, beverage analyst at Mintel.|
“The definition of health is changing from desiring low/no-fat and -sugar, to ‘real’ or unadulterated ingredients,” said Elizabeth Sisel, beverage analyst at Mintel. “Natural and craft brands tend to feature ingredients in more natural forms, to position products as a better-for-you option. 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, she added, the craft and natural segments are still too small to make a significant impact on category performance. Only a third of U.S. adults drink craft sodas, and less than half (44%) of non-craft drinkers expressed interest in trying it, Mintel said. Of those who consume or are interested in craft sodas, 54% said natural or real ingredients are important to them. Parents (55%) are more than twice as likely as non-parents (23%) to consume craft sodas, and of those who do not drink craft soda, a higher percentage of parents (53%) than non-parents (42%) said they are interested in trying craft sodas.
“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,” Ms. Sisel said. “Similar to the progression of craft beer, consumers are veering away from big brands and seeking smaller brewers that are perceived as more authentic.”
To capitalize on consumer interest in craft soda, PepsiCo recently introduced a line called Stubborn Soda for food service outlets, featuring such flavors as agave vanilla cream and black cherry with tarragon. The introduction follows PepsiCo’s limited launch of Caleb’s Kola, which is packaged in glass bottles and made with cane sugar, kola nut extract and spices.
Earlier this year, Starbucks unveiled its Fizzio line of handcrafted carbonated beverages in select markets. Made without artificial flavors, preservatives or high-fructose corn syrup, each Fizzio soda contains 100 calories or fewer per 16-oz serving. Flavors include spiced root beer, which blends cinnamon, nutmeg, clove and star anise; golden ginger ale, made with real ginger, citrus and brown sugar; and lemon ale, featuring lemon juice with hints of apricot and ginger. Sonic recently rolled out a line of hand-crafted sodas made to order with pieces of fruit and fruit flavors.
Meanwhile, brands selling products positioned as natural are improving on existing offerings. This year, Honest Tea, a subsidiary of the Coca-Cola Co., completed the conversion of all varieties of its Honest Fizz zero-calorie soft drink line to organic certification and introduced a new organic ginger ale variety. Zevia recently achieved Non-G.M.O. verification across its product line and removed caramel coloring from all varieties.
Barriers to natural and craft soda consumption include unfamiliarity with the products and higher prices. Among those who do not drink craft soda, roughly a fourth do not recognize the brands or flavors, and 22% don’t know what craft soda is. More than half of all consumers agree craft and natural options are too pricey to purchase regularly.
Additionally, 42% of consumers fear natural products won’t taste like their favorite soda brands, and 18% of consumers who do not drink craft soda showed a preference for the taste of traditional soft drinks.“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,” Ms. Sisel said. “However, natural and craft manufacturers are tasked with justifying higher prices and increasing familiarity through better exposure. The predominant negative attributes of craft soda could be curbed in time as more products enter the market and pricing evens out.”