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Functional beverages must deliver flavor, nutrition

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Beverage consumers spur category innovation thanks to frequent brand switching and product exploration.

Overall, the retail beverage market saw a positive upswing during the COVID-19 pandemic as consumers relied more on home meal prep and consumption, and turned to familiar ready-to-drink (RTD) beverage brands that offered a replacement for foodservice, a recent report from Mintel noted.

As 2021 hits its stride, consumers are maintaining the focus on health and immunity they cultivated during the pandemic, and are seeking out beverages that provide some of these attributes—but not at a cost to flavor and enjoyment.

Mintel reported berry, citrus and tropical profiles still top consumers’ most wanted flavors, and beverages embracing new functional ingredients will find favor in the market more quickly if they adhere to these in-demand flavor profiles. The result? An ever-blurring beverage market defined by a new focus on functionality, introduced with natural flavor profiles and familiar formats.

Food & Beverage Insider spoke with several brand leaders—including from Teakoe and Rowdy Mermaid—on how they’re navigating this new hybrid market.

Food & Beverage Insider: How do consumer demands of beverages differ from those of CPG food products?

Pete Jokisch, founder and president, Teakoe: Historically, it’s better to consume your calories through food as opposed to the “empty" calories in beverages. Many drinks have been heavy in sugar, providing no benefit to your daily diet, but the rise of sparkling water swung the pendulum toward zero everything. We believe this is an overcorrection that will settle somewhere between the two (10-30 calories) because if consumers want their beverages to serve multiple functions, the cost of that may come in the form of some caloric value if they want the benefits to actually be substantiated. So, we believe a differentiation for beverage is bringing more to the table (let's call it healing hydration) in regard to balanced nutrition. Although it will never replace the value food provides, it can now certainly contribute more, thus providing a balanced approach to the items people consume on a daily basis.

Jamba Dunn, founder and CEO, Rowdy Mermaid: We see a much higher rate of demand for innovation within beverages than other categories. With CPG food companies, there is stronger brand loyalty and households will often stay with a tried-and-true brand. In beverages, however, there is frequent brand switching and product exploration. This is due in part to the plethora of beverage choices, and in part due to a lower price point that equates to more product trial compared to food categories. At the same time, consumers consistently demand and expect that new beverages deliver increased function, improved nutrition panels (like lower sugar) and stellar taste. Those demands, combined with the crowded category, lead brands to constantly innovate with new flavors, function and form, particularly in the refrigerated functional category.

To read this Q&A in its entirety, along with other articles in the niche, click the link to visit the “Raise a glass: Innovation in healthy beverages” digital magazine.

Melissa Kvidahl Reilly is a freelance writer and editor with 10 years of experience covering news and trends in the natural, organic and supplement markets. She lives and works in New Jersey.

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