Innova Market Insights spotlights “waves of change” in soft drinks innovation

27 Jan 2020 --- Over the past ten to twenty years, the ripples of change in the global soft drinks market have risen to become “tidal waves of innovation, with new categories emerging constantly and genuine novelty flooding the shelves.” This is according to a new report from Innova Market Insights, which highlights that in the global shift in soft drinks, juices and carbonates may still be the two most active sub-categories worldwide, with growth gathering pace in alternative categories.

Meanwhile, alongside the emergence of new categories, existing varieties continue to overlap. “Hello Hybrids,” one of Innova’s Top 10 Trends for 2020, is perhaps nowhere as important as in the soft drinks arena. “Category definitions are blurring all the time,” Lu Ann Williams, Director of Innovation at Innova Market Insights, tells FoodIngredientsFirst. “For example, in the US, Odwalla has recently developed the Smoobucha, which is a blend of fruit smoothie with fermented kombucha.”

Smoobucha by Odwalla.Odwalla Smoobucha marketed as the first of its kind to be sold in-stores, combining three smoothie varieties with pasteurized kombucha and serving as the “perfect blend of flavor and function.” Available in three flavors – Citrus & Guava, Berry & Ginger and Apple & Greens – Odwalla Smoobucha features a mix of fruits and vegetables, fiber and 500MM CFUs (Colony-Forming Units) that contains 40 percent less sugar and fewer calories than top smoothie items.

Over the years 2014 to 2018, ready-to-drink (RTD) sports drinks saw launch numbers increase at a CAGR of 26 percent, compared with 12 percent CAGR for iced tea and coffee and 10 percent CAGR for “other” soft drinks, including novelties such as herbal drinks, jelly drinks and vinegar drinks.

Flavor trends also demonstrate the changing face of the market. The fastest growing flavors in recent years include matcha tea (49 percent CAGR 2013 to 2018), apple cider vinegar (21 percent CAGR) and kombucha (21 percent CAGR), all of which are thriving concepts from Asia that are now distinguishing themselves on a global platform.

Expansion in flavored waters
As suppliers seek new platforms for success, segmentation is also changing the face of the soft drinks shelves. Innova Market Insights notes that “Water+” is an established concept but is continuing to evolve beyond vitaminization and added energy, with fiber, probiotics, collagen and mood ingredients all finding their way into modern waters. 

Flavored water is growing in popularity as consumers relish in the reduced sugar and calorie intake trend. On the showfloor of BrauBeviale 2019 in Germany, Jens Birrer, Head of Market Segment Beverages at Doehler, explained to FoodIngredientsFirst that consumers are seeking more natural ingredients for their well-being, which is driving the flavored water trend. Fruit or floral extracts are becoming a popular part of brands’ portfolios, whether in water or other beverages. “We offer the possibility to get the homemade taste of fruit infusions in flavored water and bring it to an industrial scale,” noted Birrer.

Also at the show, Gerd Diefenthäler, Innovation & Market Intelligence Manager at Austria Juice, commented that many consumers do not get enough pure water because they simply do not like the taste. Adding herbal or fruity flavors encourages consumers to rehydrate. An example from Austria Juice is a Rosemary Lemongrass flavored water. 

The “infusion” tag is both trendy and appealing to beverage consumers.The “infusion” tag is both trendy and appealing to consumers. Innova Market Insights data shows that soft drink launches with “infusion” claims have trebled in the past five years. Within this space, botanicals are increasingly in popularity and cropping up across beverage categories. According to the market researcher, botanicals’ association with health is strong, with half of consumers making the connection. Soft drinks launched with botanicals in 2018 was also 45 percent more than in 2017.

In Kerry’s 2020 European taste charts released earlier this month, the taste and nutrition company outlines how Health & Wellness connotations translate into flavor formulation. The report outlines that profiles such as chamomile and hibiscus – traditionally associated with tea – are on the rise in the flavored water category, as consumers want to move away from traditional soft drinks but also want to have a positive taste experience associated with health.

Better-for-you drinks
The traditional soft drinks market is continuing to undergo huge reformulation to appeal to a broader range of tastes. In addition to sugar reduction concepts, flavored fizzy beverages are given a boost from added functional ingredients that capture attention from health-conscious consumers.

A significant challenge for consumers is experiencing stress more than once a day, Williams highlights. “A small French company at Anuga 2019 presented their beverage line called Bee Zen supporting well-being. Moreover, every purchased drink helps support beekeeping, so this taps into the trend of ‘what I eat is good for me but I also feel good about what I eat.’”

In October, partners Taiyo, Sinalco and Sweethouse launched their second beverage concept – a functional Energy 4.0 cola that is sugar-free and enriched with guar bean dietary fibers. “This is the first fiber-enriched cola worldwide on the market. We call it our functional cola, which is a real innovation. It was in the making for two years. We are also working on several other functional colas that will be brought to the market in the future,” Dr. Stefan Siebrecht, Managing Director at Taiyo, tells FoodIngredientsFirst.

As global alcohol consumption weakens, manufacturers are broadening their soft drink portfolios.Redefining adult beverages
One of the biggest consumer trends we see is that alcohol consumption is decreasing on a global basis or stagnating, Jens Birrer, Head of Market Segment Beverages at Doehler, tells FoodIngredientsFirst. In response to the downturn in alcohol sales, Doehler is helping its clients develop soft drink portfolios, which can allow them to continue growing their numbers.

“We are headed in the direction of fusing the alcoholic industry with soft drinks, so we are fueling ideas like brew-based soft drinks,” adds Birrer. Doehler’s brewed sodas in Brewed Lime or Brewed Ginger flavors position themselves as having “grown-up” tastes, in part due to their reduced sugar content.

Austria Juice also sees plenty of possibilities in the market for non-alcoholic beverages. “We feel the market is there for these products, which bridge soft drinks and alcoholic drinks,” says Gerd Diefenthäler, Innovation & Market Intelligence Manager at Austria Juice. “We are seeing spicy or hot flavors in low- or no-alcohol content beverages as alternatives to drinking alcohol.”

Maple Syrup & Ginger Cider is one of the company’s own formulations that delivers sweet and spicy in a sparkling alcohol-free concoction. Another flavor combo by Austria Juice is mango jalapeno, created with a spicy jalapeno extract.

Tapping into this growing trend, UK grocery chain Waitrose and Partners launched a non-alcoholic aperitif, Æcorn – now the sister brand of the company’s branded distilled non-alcoholic spirit, Seedlip – last August.

Alcohol reduction has become a key platform in the “balancing act” trend that the food and beverage industry has been addressing for several years, notes Innova Market Insights. Low- and no-alcohol beverages with lighter sweetness, flavor and texture are gaining momentum as consumers continue to look for ways to drink more healthily.

By Benjamin Ferrer