Demand for functional drinks could lead to an ‘innovation tsunami’ in 2024
According to SFA’s recently released State of the Specialty Food Industry report, beverages now account for 17% of the industry’s projected sales of $207.4 billion in 2023, up from 14% a decade ago. They also top the list of fastest-growing specialty food categories and most purchased products in-store, according to the report.
At the Winter Fancy Food Show in Las Vegas, David Lockwood of Lockwood Consulting, predicted that growing consumer interest and growing demand for beverages would lead to a “tsunami of innovation” within the specialty industry with an emphasis outsized on new functional benefits, flavors, formats and usage occasions.
In this episode of FoodNavigator-USA’s Soup-To-Nuts podcast, we hear from trade show stakeholders helping to drive innovation and sales of functional beverages, including energy and sports drinks and ready-made tea and coffee to drink, which SFA identified as the two fastest growing categories from 2020 to 2022. We are also exploring the continued potential and growth of mocktails, including options that are positioned as more masculine and more premium as some of the first players in the sector.
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Unity launches “feminine” energy drink
According to data from SFA and SPINS, energy and sports drinks are the fastest-growing specialty category between 2020 and 2022. And while the overall category is dominated by a handful of incumbent players, there remains plenty of white space for brands that cater to overlooked consumers. groups or offer premium offerings with healthier and organic ingredients.
Unity, a new entrant to the industry, is helping to fill this gap by launching a line of “super premium,” non-carbonated, USDA-certified organic energy drinks four months ago that are low in calories and sugar and which, according to President Marcus Mitson, target women. which have been largely ignored by the energy drink category.
“We understand that consumers are tired of being yelled at by our competitors who sell cans,” Mitson says. He explains that Unity offers an alternative drink in a glass bottle with a “luxury” design reminiscent of a European handbag.
Hydration for “average” consumers
The sports drink category, which is expected to reach $36.35 billion globally by 2028 at a compound interest rate of 4.2%, according to Fortune Business Insights, is currently operating under similar dynamics to that of energy drinks.
Ryan Sweeney, director of sales for Waterdrop Microdrinks, explained that the sports drink segment has long been dominated by a few players who target extremely active people like those who participate in CrossFit or who train for marathons, or other end of the spectrum that offer a hangover cure. .
But he says he sees the blank spaces catering to “average” consumers who fall between those two extremes and those who want a solution that’s both better for them and better for the planet.
He explains that Waterdrop’s hydration line is “loaded with electrolytes, vitamins and zinc” but is sugar-free and has much less sodium than many competing products because those are two ingredients that most of Americans consume more than enough in their usual diet.
The dropper’s minimal packaging and small cubic format also means it can fit into the mouth of almost any bottle, reducing the need for consumers to purchase another plastic bottle or risk spilling powder if they try to pour it into a small opening.
What do coffee drinkers look for in a home brew?
Coffee may be a staple for many households, but according to SFA, it is also one of the fastest growing specialty categories as a ready-to-drink option and one of the ten most purchased products in stores as non-ready-to-drink products. .
Nick Thompson, vice president of sales and marketing at Copper Moon Coffee, says the most recent increase in coffee sales was during the pandemic, when many consumers adopted a more sophisticated at-home ritual around the drink . But he says the introduction of innovative formats, blends, flavors and creative brands have helped maintain and further grow consumer interest in the category.
He explained that Copper Moon is pulling all these levers with a recent rebranding and the introduction of discovery packs that offer variety and value.
“We’re trying to make coffee fun again.” It feels like it’s getting a little stuffy and maybe a little pretentious in some cases,” Thompson said. He added the company’s blend names, like “Beam Me Up,” “Stargazer” and “Dark Sky,” to add levity.
The company also offers discovery packs to meet consumers’ desire for more choices at home, as well as flavors that can help recreate the coffee experience at home.
Thompson also sees the potential to build consumer loyalty through limited-time special offers. But rather than the typical seasonal blends, like pumpkin spice, Copper Moon recently launched a limited edition or upcoming lunar eclipse, which Thompson says ties into the company’s origins and branding, but also to a current event that is generating a lot of buzz.
Another coffee trend that Thompson said Copper Moon is exploring is cold brew coffee — it’s the way many younger consumers prefer to drink the beverage.
Mocktails go beyond shiny packaging and fruity flavors
The alcohol-free category continues to evolve and become more sophisticated with several new arrivals at Winter Fancy Food showing where there is still untapped potential – whether in terms of product focus or the types of drinks considered as alternatives to alcohol.
For example, recently launched RSRV Collective seeks to fill an unmet need for mocktails with more “understated” packaging compared to most early players in the industry. The company’s sales director, Alec Sense, explained that instead of the bright, pastel colors and fruity flavors that currently dominate many canned mocktails, RSRV favors flat grays, burgundy and navy blue for its cans sold in packs of four and featuring a simple beige line. -design.
More important than the appearance of the cans is what’s inside, which Senese said was unlike anything he had tasted before, but found delicious.
“One of, if not the most important thing that sets our (products) apart is that when developing and producing RSVR Collective, flavor was the only criteria. We weren’t trying to create something that didn’t contain sugar, that contained adaptogens or nootropics, that gave you energy, that made you sleepy, or that contained CBD. Nothing other than something that has a well-balanced taste and has a nice combination of different components that help make a drink taste good,” he said.
Another newcomer to the alcohol alternatives category is Brook37, which offers rare and premium teas in premium packaging that can be gifted like a bottle of wine and enjoyed with a ritual similar to a cocktail, but without alcohol.
Company founder and CEO Mou Dasgupta explained that Brook37’s mission is to delight the palate by selecting rare and exclusive teas, which she affectionately calls “the sober brothers and sisters of wine” due to their profiles. of complex flavors and their stories of provenance.
Beyond the Basics: Growth Across Categories From Water to Milk to Soda
Other drinks that SFA research shows growth include water and sparkling water, which were the most purchased foods and drinks in store with 54% of consumers adding them to their basket, compared to just 42%. in 2020. Likewise, the second most frequently. food and drinks purchased in stores in 2023 were milk and plant-based milk, which 52% of consumers purchased, compared to just 41% in 2020.
Soda – the classic category that everyone loves to hate and is experiencing a healthier renaissance is also growing. Between 2020 and 2022, the SFA found that the percentage of consumers who purchased soda and soft drinks in-store increased by 10 percentage points to 45%, taking eighth place on the list of items to buy in-store . Fruit juice, non-ready-to-drink coffee and hot chocolate also made the top ten, taking fourth and tenth places, respectively.
