ALEXANDRIA, Va.—Health has become top of mind for consumers throughout the pandemic, and that will impact consumers’ food and beverage choices well into the future, according to Progressive Grocer. And when it comes to healthy beverages, manufacturers are responding.
“The products that are coming out now that help boost immunity are not yesterday’s chalky or horrible-tasting products,” said Julie Terrazzino, senior category manager at Naperville, Ill.-based KeHE Distributors. “The products we are seeing are ... delicious, imaginative beverages that also have clean, natural ingredients in gorgeous packaging.”
Retailers can capitalize on this trend. “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,” she said. “With most of these items being a single sell, give consumers an easy place to find their immunity-boosting solution.”
The macro-trend in beverages is all about functionality, according to Kimberly Senter, EVP of analytics, insights and intelligence for Irvine, Calif.-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.”
The trend toward drinks with lower sugar content endures. “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,” Senter said.
“Health-and-wellness-focused beverages, including the use of functional ingredients, will outlast the pandemic,” said Michael Taylor, president of Stamford, Conn.-based private-brand consultancy Daymon. “Consumers are continuing to shift away from overly processed and artificially enhanced beverages.”
He noted that more than 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 they were pre-pandemic. As a result, 35% of consumers are preferring to add functional ingredients through their diet by way of 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,” he said. “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.”
“COVID ... reoriented cooking and eating behaviors, as about 30% of people plan to cook at home, which will be affecting buying decisions, from buying in bulk to buying more online than in store,” said David Stone, managing partner and principal at The New England Consulting Group. “For beverages, this trend will likely affect companies [such] as SodaStream, which offer build-your-own solutions for home consumption.”
Regarding beverage choice, “COVID has accelerated the trend towards more basic drinks such as seltzer and club soda, and because of poor supply-chain issues, many retailers have focused more on core brands and SKUs,” he said. “The impact of this in the short term is to limit market access of newer and smaller brands.”
Despite soft drinks’ less-than-healthy halo, Chicago-based Nielsen sees opportunities for growth, noting in January that “as soft drink manufacturers and brands continue to evolve to meet healthier lifestyles [with reduced-sugar, healthier and premium options], the opportunity to effectively and strategically engage both ... regular and occasional [alcohol] abstainers will continue to grow.”
Something else that retailers need to bear in mind is how often to promote beverages to shoppers who are making fewer in-person trips to the store. According to Terrazzino. “People are not shopping as often, which means promotion frequency may be more strategic than depth of promotion. Frequency not only assists the consumer, but also reduces the mass amounts of products needed to fill deep promotions, reducing out-of-stocks.”
“Retailers should consider the frequency of promotions and merchandising support to meet consumer needs for the balance of the pandemic, especially in light of imminent recessionary pressures,” advises Senter. “In store and online, beverage brands of all types should offer promotions that encourage shoppers to stock up. Two-for-ones, BOGOs and XX% off can be effective incentives for shoppers who are making fewer but larger stock-up trips in store.”
NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.