2014 Beverage Report--Trend: The Stairway to Health. Countertrend: The Road to Flavor

Consumers alternately demand wellness and big tastes, and they’re willing to pay for both

By
Steve Holtz, Online News Director & Beverage Editor

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The year in beverages was alternately marred by controversy and enlivened by it. It was harmed by health concerns and invigorated by them. For every piece of bad news, there was good news.

As carbonated soft drinks, most notably diet sodas, suffered to the tune of a 4.2% loss in unit sales, energy drinks grew 5.7% even in the face of national inquiries and legal action that called their safety into question. And this came as bottled-water unit sales in c-stores grew 3.4%, indicating a continued desire for healthier beverage options.

While beer overall was down 1.8% in convenience-store unit sales, “better beers”—imports, crafts and above-premium brews from the major manufacturers—saw impressive growth.

“[Last year was] somewhat of a lackluster year performancewise,” says Gary Hemphill, managing director and chief operating officer for Beverage Marketing Corp. research, based in New York. “Refreshment beverages grew modestly in 2013, driven by solid performance of the bottled-water category, which continues to get a boost from aggressive pricing.”

“It’s a mixed business right now,” agrees beverage consultant Mary Pellettieri of La Pavia Consulting LLC, Milwaukee. “The consumer is seeking alternatives. That’s made it an interesting time for innovators and entrepreneurs.”

Premium Movement

One noteworthy aspect of beverage sales in 2013 is an apparent willingness on the part of consumers to spend a bit more at retail. Generally flat categories, such as beer and iced tea, are seeing growth on the high end, as are more expensive energy drinks.

Sales of carbonated soft drinks, conversely, continue to sag. It’s part of an overall desire for more flavor and genuine taste.

“There’s an interest in flavors and going back to our roots,” Pellettieri says. “We went to the farthest extremes with clear beer and clear sodas, and now we’re seeing the pendulum swing back to the other extreme.”

This means a willingness to experiment on the part of the consumer, experts say, and convenience stores find themselves in the sweet spot for that experimentation.

“As single-serve specialists, this is the perfect place to buy beverages for consumers who want to try something new,” Hemphill says. Over the next week, CSP will roll out its exclusive 2014 Beverage Report to assess the past year of the major subcategories and where they might go in the future. Oh, and keep your eyes peeled for the musical accompaniment to each category.

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