The Beverage Edge: Nine Ways the Bar’s Being Raised

Trends from Datassential’s FoodBytes beverage report

Published in Convenience Store Products

By
Steve Dwyer, CSP Reporter

Coke’s partnership with Green Mountain and Keurig Cold featuring carbonated drinks is poised to have a significant impact on the segment.

CHICAGO -- In the beverage category, there are followers and leaders, stragglers, up-and-comers and pretenders. What binds most of them is the call to innovate within new pockets of opportunity in their respective segments of play. Convenience store retailers should clear a few slots in the cold vault now.

Sparkling water, energy drinks and packaged coffee (particularly Keurig) are riding a nice wave of success these days with compelling and refreshing offers, while carbonated soft drinks continue to experience the winter—and summer—of its discontent, according to a new report by Chicago-based research firm Datassential.

FoodBytes, Datassential's monthly e-report, has an inside track on beverage goings-on, and it detailed several latent trends to monitor, including those of major players such as PepsiCo, The Coca-Cola Co., Nestle and Keurig.

What follows is a list of nine growing trends that caught our attention from Datassential’s report.

1. Good things, small packages. Coca-Cola and Pepsi have introduced smaller package formats. Mini cans of CSD varieties means regulating portion control and less artificial sweetener intake—not to mention fashioning a larger profit margin. The rising sales of smaller packages may also indicate another trend: Consumers now view soda strictly as a treat or indulgence as opposed to a thirst-quencher to drink with a meal or during the day, reveals FoodBytes.

2. New CSD innovation inroads. Even though CSD sales are down, product innovation is high. Datassential found that “operators of every size are handcrafting new non-alcoholic beverages, from house-made sodas to functional juices, sometimes taking inspiration from the mixology movement, where it’s hip to take drinks seriously (and charge a premium for the resulting product). Examples include waters made from artichokes, birch trees and barley—all attempting to dethrone coconut water. Bottlers are also expanding innovations to energy/sports drinks and packaged coffee beverages, the only two categories showing steady growth. 

3. Naturally sweet—south of the border. Beverage makers are working diligently to replace their products with natural sweeteners such as cane sugar or stevia. The cane-sugar-sweetened Mexican Coke is a “must-have” at many chef-casual and fast-casual restaurants, according to Datassential. Mexican Coke appears on an astonishing 611% more beverage menus vs. four years ago. Pepsi meanwhile introduced its “Throwback” line of beverages that are sweetened with beet sugar. Earlier this summer, Pepsi replaced the product with “Pepsi-Cola Made With Real Sugar” in some markets.

4. How naturally sweet—with a caveat. The low- or no-calorie sugar trend is not advancing without challenges. Coca-Cola recently reformulated VitaminWater to include a mix of sugar and stevia, but protests were lodged from consumers who reported a “metallic” or “bitter” flavor. This prompted the company to announce a return to the original formula by the fall.  

5. Operator opportunities. Datassential suggests that operators can cater to consumer indulgences by using fresh and local ingredients, and by incorporating other “healthy halo” terms into their beverage menus. Some of these include cucumber, hibiscus, blood orange and lychee. Starbuck’s Fizzio is an example of a handcrafted and carbonated fresh sodas with no artificial flavors or preservatives.

6. Stream of consciousness. The SodaStream impact on at-home beverage preparation is building like a tidal wave. SodaStream sold 4.4 million carbonator units last year, and other companies such as Hamilton Beach and Cuisinart are now entering the space. Coke’s partnership with Green Mountain and Keurig featuring cold carbonated drinks is also poised to have a significant impact, predicts Datassential. SodaStream, meantime, is going on a healthy kick, refocusing on health and wellness with a line of SodaStream Free syrups with no artificial flavors, colors, sweeteners, or preservatives and available in flavors including green tea lychee and passion mango.

7. Customize domestically. Both the home carbonation and coffee pod markets have expanded at a time when customization is a growing need state. Customization has been a key growth driver in foodservice for the past five years, as these products enable consumers to personalize products that have historically limited any chance of customized options. The trend extends to beverages such as MiO liquid water enhancer, which instructs consumers to “put water at your mercy” because “it’s truly all about you.”

8. Customize remotely. In 2011 7-Eleven encouraged customers to create customized flavor mixtures with their “Slurpee MixMaker” promotion (acknowledging that customers were doing it anyway). 7-Eleven’s new-concept stores include prominent signs marketing the “made to order” espresso-based beverages and a “My Kind Beer” craft beer wall. C-store chain Stripes touts the fact that customers can make more than 2.1 billion flavor combinations from their mix of flavor shots and beverages.

9. Swimming at Freestyle.The trend toward customization has also affected dispenser technology—best exemplified by the Coca-Cola Freestyle machine. The f'real milkshake machine found in many stores allows customers to choose their milkshake’s thickness level. Both Coke and Pepsi, with its Spire machine, are reporting the types of flavors and drinks that customers are creating back to the respective companies, with Coke rolling out Fanta Cherry after it became a Freestyle sensation.