Changing Consumer Beverage Trends
No matter what’s going on in the world, to paraphrase an old saying, people still have to eat — and drink. Paying attention to how beverage trends have been affected by the COVID-19 pandemic, and how they’re likely to remain, even after the current situation has passed, can help grocers plan accordingly to keep category profits flowing.
Unsurprisingly, given the ongoing concern about getting sick, health and wellness is a key long-term trend identified by various industry observers.
- The shift toward functional beverages and increased in-home consumption of coffee and alcohol are major trends likely to outlive the COVID-19 pandemic.
- Retailers should consider carrying larger beverage sizes and multipacks and promoting items more strategically to accommodate consumers shopping in stores less frequently.
- Emerging trends include high-protein plant-based beverages, the mainstreaming of CBD beverages, and sustainable packaging innovation.
“Health has become top of mind for consumers throughout the pandemic, and consumers will continue to focus on overall well-being in the future,” observes Julie Terrazzino, senior category manager at Naperville, Illinois-based KeHE Distributors, who is responsible for the soda, water, shelf-stable RTD coffee/tea and juice categories. “The products that are coming out now that help boost immunity are not yesterday’s chalky or horrible-tasting products. The products we are seeing are ... delicious, imaginative, beverages that also have clean, natural ingredients, in gorgeous packaging.”
For retailers looking to capitalize on this trend, Terrazzino advises: “Adding an end cap display of beverages with added functionality gives the consumer the solution they are looking for: beverages that taste good and help build their immunity. With most of these items being a single sell, give consumers an easy place to find their immunity-boosting solution.”
“The macro-trend in beverage is all about functionality,” notes Kimberly Senter, EVP of analytics, insights and intelligence for Irvine, California-based Advantage Sales. “Consumers are seeking multiple benefits in a bottle, especially for immediate-consumption products. Product attributes and ingredients that promote health and wellness and/or include life-enhancing ingredients, i.e., probiotics, vitamins, protein, antioxidants, kombucha, electrolytes and sustained energy, combined with a great taste, will remain in demand. Also, lower sugar content is another major trend as people have adopted dietary regimens that focus on low carbs/sugar. This will lead to the continued growth in energy, RTD coffee and sports drinks, whereas carbonated soft drinks, bottled juices and iced tea may continue to decline.”
“Health-and-wellness-focused beverages, including the use of functional ingredients, will outlast the pandemic,” asserts Michael Taylor, president of Stamford, Conn.-based private-brand consultancy Daymon. “Closely linked with the demand for enhanced functionality, consumers are continuing to shift away from overly processed and artificially enhanced beverages. Currently, over 80% of consumers are focusing on what they consume as part of taking care of themselves, with 77% of consumers looking to lead a healthier life than pre-pandemic. As a result, 35% of consumers are preferring to add functional ingredients through their diet by way of inherently functional beverages. Successful innovative beverage offerings must align with more general health-and-wellness aspirations, including natural and clean ingredients [and] transparency, as well as the desire for higher-quality experiences.”
Noting that “[t]he time is now for retailers to take advantage of the accelerated growth within the functional space, providing communication around the end benefits of various functional claims,” Taylor advises that “private brands must innovate within functional beverages to maintain or outpace competition, [and] have the opportunity to lead growth. Top growth categories for retailers to consider when developing private-brand products with functionality include coffee, tea and fermented drinks as consumers shift away from traditional sugary beverages such as soda and juice.”
Not all such sales are lost, however.
“Multipacks and larger sizes are driving growth for beverages in the marketplace,” says Terrazzino. “The increase in sales comes from consumers limiting the frequency of their shopping trips, along with the closures of restaurants, bars, events, schools and other gatherings, forcing consumers to eat and drink at home. Water and soda have been the biggest winners in this trend, with their gallon or multipack sizes.”
Raise a Toast
It’s no secret that these days, Americans are imbibing more often on their own premises.
“Another trend we expect to outlast the COVID-19 pandemic is at-home alcohol consumption,” says Terrazzino. “While everyone is anxious to get back out to bars and restaurants, the at-home experience has allowed many people to creatively reconnect to family and friends while enjoying a cocktail. Zoom Happy Hour meetings, back-of-the-car/-van parking lot get-togethers, and family game nights will continue, in some fashion, in a post-COVID era.”
Boston-based alcohol e-commerce platform Drizly reveals similar findings in its “2020 Consumer Report,” released in June. “Even as states reopen and allow for some form of on-premise consumption, those who became accustomed to imbibing more frequently at home are likely to keep at it,” the company notes. “70% of respondents said they are planning to continue to drink less away from home, and 30% are poised to do so more at home … for the remainder of the year, at least.”
This new-found love of do-it-yourself cocktails extends even to low- or no-alcohol options mimicking favorite mixed drinks, while a certain beverage alcohol segment is on course for a meteoric rise.
Predicting that “the beverage alcohol mashup will continue as ‘mocktails’ with low/no ABV,” Stone also acknowledges that hard seltzer brands like “White Claw and Truly are rewriting new approaches to reach the consumer.” This observation aligns with Nielsen’s recent assessment of the beverage as “the most resilient alcohol segment in the U.S.,” due to “its correlation with health and wellness, convenience, and an intriguing variety of flavors.”
Additionally, with grocery e-commerce on the increase — a trend accelerated by COVID-19 — more consumers than ever are buying their booze online. According to Drizly, 71% of its current users and 50% of non-Drizly users anticipated that at least 50% of their alcohol shopping would take place online, versus in store, in the next year.
Exactly what alcoholic beverages are shoppers purchasing from home? Chicago-based Grubhub, in its recent “State of the Plate” report, identified wine as the top food and beverage item searched during the pandemic (beer came in fourth), with Pinot Grigio the most-ordered alcoholic beverage, followed by hot sake, rosé, light beer, IPA, Merlot, frozen strawberry margarita, and Chardonnay.
Also noting the runaway popularity of wine, followed by cocktails and beer, Stacy DeBroff, founder and CEO of Boston-based social media and digital marketing firm Influence Central, urges marketers of alcohol brands and services to capitalize on the growing momentum of online grocery and pickup.
Senter similarly forecasts that “plant-based beverages will see tremendous growth in the beverage category as consumers adapt to these offerings, as we’re currently witnessing with food.”
Functional beverage ingredients expected to rise in popularity include adaptogens, healthy fats like MCT oil, nootropics, global spices and botanicals, BCAA (branch-chain amino acids), and superfoods like turmeric.
For his part, Stone believes that “CBD beverages will come of age as FDA approval will happen, and especially as they will be formulated for lower impact per serving,” and that “[a] very high priority will focus on innovative packaging, as seen by the recent flurry of renewable packaging, especially from sustainable pulp sourcing, as brands [such] as Diageo, Unilever and Nestlé lead the way.”