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How changing consumer demands are driving the soft drink sector

Alex Beckett is a director at Mintel Food and Drink, providing consumer insights and recommendations to food and drink companies around the globe. Beckett will be participating in Fi Global Insight’s Beverages Deep Dive Day on 20 September – see more below.

Alex Beckett

What are the key trends of the year in the soft drink sector?

“Conveying a better-for-you appeal without compromising flavour quality expectations – for example, through sugar reduction or added nutritional and functional claims. Also, we see more demonstrably eco-friendly packaging and production methods being championed. Finally, activity around mixers and adult soft drinks, adding momentum to less-sweet flavours and provenance cues.”

What are some common consumer perceptions of soft drinks?

“Broadly, consumers see soft drinks as a pleasurable and tasty way to stay hydrated. While they are wise to dubious health credentials of some types of drinks, especially around sugar and sweeteners, they also know that some drinks can have a positive impact on their diet. Ultimately though, we are not talking about technology, furniture or fashion, here: soft drinks are an affordable everyday must or treat.”

In terms of consumer demands, what challenges does the soft drinks market commonly face?

“The cost-of-living crisis, which is impacting so many parts of the world, will intensify consumers’ scrutiny of value-for-money credentials. Premiumisation still has a role, but brands need to justify higher pricing.

“Flavour is a complex battleground. Soft drink users have favourite flavours but are also keen to discover something new. They are keen to be tantalised, but in a low-risk way.

“Added nutrients can justify small premium but functional benefits, like calming or immunity, simply must be marketed with efficacy in mind. And if not efficacy, education. Assuming consumers will pay an extra £1 because ‘nootropicals’ are mentioned is at odds with these dire economic times; especially if the benefits are not discernible. Education is vital.

“Also, consumers are confused about sustainable packaging claims. Their trust is fragile.”

Consumers are increasingly demanding ‘better for you’ and natural alternatives to traditional carbonated soft drinks (CSDs). What opportunities is this bringing to the sector?

“Zero sugar formulations have been the driving force of CSD sales growth. Just look at the success of Coke Zero and Pepsi Max. With zero sugar and calories, consumers have been permitted to increase their frequency of consumption. But now, even sugar-free CSDs are threatened by the rise of flavoured sparkling waters, which consumers perceive as being, mainly, a water, and therefore, healthy.

“On the face of it, CSDs with natural recipes are attractive, but these also invite consumer scrutiny and suspicion. How natural can these ingredients be, if they have been so comprehensively processed? Perhaps this is why real juice is being used in flavoured sparkling waters, as a natural, wholesome flavour.”

What can brands do to ensure that their soft drink products are not perceived as unhealthy by consumers?

“In addition to cutting sugar and preserving the nutrient profile of the ingredients where possible, brands can be transparent about health claims. The pre and probiotic drink sector has done a wonderful job explaining physiological processes in a relatable and simple way. “Why can’t we see this also for vitamin C, or antioxidants?

“COVID-19 has intensified consumer willingness to learn about the health impact of food and drink. Drinks companies shouldn’t underestimate their appetite to learn.”

Sugar reduction is a priority for many consumers and regulators alike. What must manufacturers do to keep up to pace with changing regulations and consumer demands regarding the sugar content of beverages?

“Ask consumers what they want, as their tastes and preferences are changing all the time. Also, sweeteners that offer a prebiotic benefit can thrive. This is especially relevant because we see consumers gravitate towards holistic health, so there could be more opportunities to use gut health as a tool to support overall health.

“Finally, drinks companies should monitor developments in adjacent industries. In dairy, for example, technological advancements in fermentation and ultrafiltration have created a breakthrough in zero sugar products.”

Source: FI Global Insights