Craft Soft Drinks Add Fizz to Soda Sales

Craft soda volume grew 5% in 2016 to 88.8 million gallons, compared to 2015.

May 30, 2017

MCLEAN, Va. – Amid flat soda sales, the craft segment is starting to make a positive impact in the $52.5 billion U.S. soft drink market, reports USA Today.

The news source writes that craft soft drinks “are capturing share by hyping premium and natural ingredients, creative flavors, limited runs, unusual packaging or their local roots.” The craft soda market is also starting to look like beer, where larger companies like AB InBev and MillerCoors participate in the market with regional and small-batch craft brewers.

Citing Beverage Marketing data, USA Today writes that craft-soda volume grew 5% in 2016 to 88.8 million gallons, compared to 2015 when the rest of the carbonated beverage industry was down 0.85%. Craft soda reached $541 million wholesale in 2016, up from $427.7 million in 2011. Craft sodas also resonate among millennials, which could turn out to be a boon for the overall soft drink market—in 2016, bottled water surpassed carbonated soft drinks to become the largest beverage category by volume in the United States.

"When you pick up a craft soda, you're saying something about yourself. You identify with the qualities of that beverage. If you pick up a craft soda or beer, you're saying, 'I’m looking for something better, more natural, more conscious of the environment,’” Michael Bellas, chairman of Beverage Marketing, told the news source. "This has some legs. It has some good growth ahead of it. This is where the consumer is."

While many craft brewers made their mark in specialty stores, retailers who are increasingly offering more healthy choices are helping bring the specialty sodas more mainstream. While their sales numbers may not rival the volume produced by the larger, more dominate beverage companies, they are helping to redefine the soda market. 

"There’s a large trend for natural wellness and there's a trend of gourmet food. This is the place the rubber hits the road," Chris Reed, founder of California-based Reed’s, told USA Today. "Every industry I know has a premium category from hotels to ice cream to cars. Soda didn’t have it. It made sense."

PepsiCo entered the craft soda market in 2014 with its Caleb’s Kola brand, named after the company’s creator Caleb Bradham. "We start with a consumers focus, looking at the trends and primarily the millennial generation is looking for new taste experiences," Chad Stubbs, PepsiCo vice president of marketing, told the news source. "We thought it was more limited than it was, because it's working all the way from smaller places to Walmart, Dollar General and our other retail partners."

Soon after, Coca-Cola entered the segment in 2015 with its purchase of Monster Beverage's portfolio, which included the craft soda brands Hansen’s and Blue Sky.

Read more about craft soda opportunities in the NACS Magazine feature, “Generating Some Fizz.”