A New Vision for U.S. Non-Alcoholic Beverages

A changing consumer is reshaping the US non-alcoholic beverage industry. The US beverage industry has a history of massive shifts—the biggest segment today, bottled water, was a fraction of its size a generation ago. A number of growing and emerging brands and segments are benefiting as consumers continue to move away from colas and juices. As lines blur between segments, and consumers look for something new, this opens up opportunities for disruptive innovation (think cold-brew in RTD coffee or energy drinks with a natural focus). Consumers are looking for FUN (Functional, Unique, and Natural) beverages, and we believe these attributes will help define where soft drink companies should look to find the brands that are best-positioned for growth.

picture of a soda can

Consumers looking for FUN

Functional is anything that adds an additional benefit to the consumer beyond basic hydration. Unique refers to consumers moving away from megabrands and searching out discovery brands. Newer products with interesting backstories have greater inherent appeal, often aided by charismatic founders. This also applies to taste, with consumers increasingly willing to try less-sweetened beverages, whether it be herbal sodas or even drinking vinegar. Natural is both about the literal makeup of the product and the aesthetic/branding. Consumers are looking for products with natural ingredients.

Clear growth potential

Emerging segments offer greater relevance to consumers, relative to traditional carbonated soft drinks (CSDs). This could be through better functionality, from an energy drink with more caffeine, the new experience of a cold-brew coffee, or the natural credentials of a plant-based beverage. We expect continued growth in the energy and RTD coffee segments, and notable growth potential in plant-based beverages, functional water, and value-added dairy.