Beverages Insights Report BLENDING, BREWING AND BLURRING THE LINES . . . CREATING A NEW BREED OF BEVERAGES From beverage technologies, to new fusions, functions and flavors, to personalized nutrition, the common denominator in the beverage category is that product formulators are breaking boundaries to provide consumers with more choices. But this is also making the category harder to define and more difficult for product formulators to anticipate what comes next. And that is important, because there is a lot at stake as beverages become inextricably tied to how we take in nutrition. More consumers now view beverages as an important and convenient substitute for both snacks and meals, one that can help them maintain health, and may also help manage their weight.
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Beverages Insights Report
BLENDING, BREWING AND BLURRING THE LINES . . . CREATING A NEW BREED OF BEVERAGES
From beverage technologies, to new fusions, functions and flavors, to personalized nutrition, the common denominator in the beverage category is that product formulators are breaking boundaries to provide consumers with more choices. But this is also making the category harder to define and more difficult for product formulators to anticipate what comes next.
And that is important, because there is a lot at stake as beverages become inextricably tied to how we take in nutrition. More consumers now view beverages as an important and convenient substitute for both snacks and meals, one that can help them maintain health, and may also help manage their weight.
2 Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages
The beverage industry is big business world-wide, with the global beverage market expected
to reach $1.9 trillion by 2021.1 The market for non-
alcoholic beverages alone comprises an $854 billion
category and ranges from bottled waters to ready-to-
drink coffees, teas and sports drinks.2 Although both
alcoholic and non-alcoholic beverages are predicted to
see solid market growth, beer is expected to remain the
top overall segment by value and emerging trends are
having a significant impact. This is especially true in the
non-alcoholic sector, where health and sustainability
concerns drive the use of natural flavors and sweeten-
ers, as well as interest in new functional ingredients and
exotic options.
The soft drink category has been at the epicenter of
changing consumption for nutrition and energy. This
has prompted the beverage category to lead the way
in product development trends like sugar reduction,
sustainability, label-friendly ingredients, function and
innovation. Now the alcoholic beverage sector is also
getting in on the action. This report offers insights on
where the overall beverage category is today—and
what’s in store for the future.
Consumers are driving beverage innovationConsumers across all generations are re-shaping the
landscape for beverage product development. Here are a
few key trends:
Sweetener opportunitiesConsumers are increasingly scrutinizing the sugar content of
packaged beverages. Coupled with health concerns regard-
ing alcohol consumption, this may hinder the growth of the
overall beverage market over the near term, but it also pro-
vides a solid opportunity for brands. Their choice of ingredi-
ents, especially sweeteners, will be critically important.
Consumer sweetener trends
80% of those surveyed are now limiting or avoiding sugars*
One in three consumers is cutting back on sugar more than last year**
Close to 30% currently check labels for the amount of sugar**
60% say artificial sweeteners are bad for health**
59% say they want to see more natural sweeteners in foods and beverages**
Sources: *International Food Information Council Foundation (IFIC). Food and Health Survey 2019; **Mintel. Consumer Trends in Sweeteners. Feb. 27, 2019.
These attitude shifts prompted a drop in artificial sweet-
ener use between 2014 and 2019 and a rise in use of natural
sweeteners over that time period, according to the Mintel
report, "Consumer Trends in Sweeteners." Interestingly, the
report notes that not all categories are equally affected by
concern over sweeteners: among the products that gener-
ate highest concern are beverages such as carbonated soft
drinks (49%) and juices (41%). Dairy drinks and energy bev-
erages, on the other hand, have significantly lower concern
at 25% and 22%, respectively.3
$3
Global soft drinks market
Source: Euromonitor International. “Examining Sustainability Challenges in the Non-Alcoholic Drinks Industry.” June, 2019.
USD IN BILLIONS
$50$19
Asia
n sp
ecia
lty
Bottl
ed w
ater
Carb
onat
es
Juic
e
Conc
entr
ates
RTD
coffe
e
RTD
tea
Ener
gy d
rinks
Spor
ts d
rinks
$224
$313
$138
$17 $22
$67
Proprietary Research Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages 3
That said, consumers do still want products to taste
good. This is evidenced by the fact that many do still drink
beverages containing sugar. What’s more, even though artifi-
cial sweeteners are under the microscope, many consumers
believe that sweeteners are a good way to reduce calories.4
This leaves brands and product formulators seeking the
“sweet spot” in what consumers will and will not accept.
To take advantage of these opportunities, brands are now
focusing on front-of-package claims for reduced sugar, low-
or no-sugar.
But claims remain a tricky area in an ever-changing land-
scape. At this point, claims that tout a product's naturalness
(like no artificial ingredients, no preservatives or all-natural)
resonate for approximately two-thirds of consumers. On the
other hand, claims noting less of a certain undesirable ingre-
dient (such as sugar-free, low-carb, or lower calorie), tend to
be important for at least half of consumers.5
Transparency is increasingly important and simple mes-
saging is now critical—especially when it comes to sugar
reduction.
Nearly 60% say it is misleading for a product that is high in naturally occurring sugar to be labeled as “no added sugar”6
48% now say that products labeled as “no added sugar” are more appealing than those with “low” or “reduced” sugar7
Ultimately, consumers want to know why products con-
tain the ingredients they do and how the specific ingredients
enhance the product.
SustainabilityA well-planned sustainability strategy is no longer optional
for companies in the food and beverage space. According
to New Nutrition Business’ “10 Key Trends in Food Nutrition
and Health 2020,” sustainability is one of four mega trends
impacting product development. This is especially pertinent
in the beverage sector. The idea of sustainable products
with ingredients that consumers recognize and understand
is certainly a new benchmark in beverages. More than half
of Americans now say that environmental sustainability is
important in products they purchase. Sustainability trends
52% say knowing where the products are from is “somewhat” to “very” important
46% want to know if a manufacturer has a commitment to environmentally friendly and sustainable production Source: International Food Information Council Foundation (IFIC), 2019
These beliefs are motivating consumers to become sav-
vier about evaluating products. Though sustainability still
means many things to many people, top attributes include
being labeled as locally grown (51%), sustainably sourced
(47%), non-GMO* (47%), organic (44%) and made with recy-
clable packaging (41%).8
But sustainability is presenting both opportunities and
challenges in the beverage space. The trend is particularly
important in the already disrupted dairy beverage category,
where consumers are now looking beyond the first gener-
ation of plant-based dairy alternatives to a next generation
of products made from more sustainable nuts, grains and
4 Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages
Beverage functionality 2.0Beverages that are inherently functional have seen
growing momentum, which has paved the way for new bev-
erage products touting specific health benefits, according
to the The Hartman Group's report, “Modern Beverage Cul-
ture.” Consumers are increasingly conscious of beverage
calories, and they now want a drink to do more—such as
provide energy, added protein, or provide other nutritional
benefits.10
Drinks that do more
Nearly one in four now say they are looking for products offering health benefits11
62% say beverages play a very important role in their health and wellness12
More than 40% say they are looking for products to support digestive health, energy and weight management13
pulses and offering improved texture and taste. Oat milk, for
example, has become a new darling of the alternative milk
space, with a number of products now on store shelves. Its
rise was driven by the success of Swedish oat milk company
Oatly, which offered consumers a chance to taste its “Barista
edition” oat milk creamer in high-end coffeehouses, while
also touting a strong sustainability story.9 Products made
from nuts or seeds that don’t require large quantities of water
to cultivate are also gaining popularity.
However, there are also three key challenges in sustain-
able beverage formulation, according to a report from Euro-
monitor International:
1The intersection of climate and agriculture, which will
increase focus on production, especially in coffee, tea
and fruit supply chains.
2 The role of consumer beverages in water security. While
beverages are not a main source of water use, producers
do have a responsibility to promote universal water access.
3 Packaging waste, particularly from plastics, has been
a flashpoint, and the beverage category has had an
outsized impact on creation and growth of plastic packag-
ing materials. This will boost further focus on new initiatives,
such as rPET and reusable bottles to remedy the crisis.
Source: Euromonitor International. “Examining Sustainability Challenges in the Non-Alcoholic Drinks Industry,” 2019.
With the continued popularity of beverages fortified with pro-
tein, probiotics and prebiotics/fiber, it follows that the cate-
gory will remain at the forefront of these trends, building on
successes like kombucha and creating new beverages with
added-value nutrition. Brands are utilizing new ingredients for
health promotion and support, including botanicals, whole
foods, fruits and vinegar. Powerhouse beverage categories
like coffee and tea are leading the way by working to provide
new consumption options, while addressing health and well-
ness trends. Coffee and tea have existing health halos; they
have been able to capitalize on this to support the creation of
healthier energy drinks, while also serving as a better-for-you
flavoring or mixer in high-end cocktails.14
With added nutrition, beverages are now also becom-
ing an eating occasion, as consumers view ready-to-drink
options as a snack. Currently, 28% report using beverages
to replace a meal. This is particularly high among millennial
consumers.15
Proprietary Research Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages 5
Mindful mashups: Mixing up drinking experiences
Consumers are not only changing why they con-
sume beverages, they are also shifting how and when
they choose to drink them. This is leading manufac-
turers to create new beverage drinking occasions that
meld traditional drink categories, such as positioning
coffee as a substitute for energy drinks, or tea as mix-
ers for alcoholic beverages.16
At the same time, ideas about food and bever-
age products have become increasingly fragmented.
Consumers are looking for beverages that go beyond
what’s expected . . . and they are taking a more mind-
ful approach to beverage consumption. For example,
while per-capita consumption of alcoholic drinks is on
the rise,17 people are also drinking more moderately,
have a beverage on-hand, compared to Gen Xers, who say this at a rate of 63%, and Baby Boomers, at 58%
Millennials regularly drink about 10 different types of beverages, compared to 8.3 for Gen X and 7.1 for BoomersSource: The Hartman Group. Modern Beverage Culture 2018.
Millennials also have a broad range of aspirations for the
beverages they drink:
6 Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages
Cross-functional beverage brands
Because these trends are largely driven by young consumers, it’s safe to say they will continue to gain momentum.
But for brands, keeping track of these innovations can seem daunting, as new products now focus on a cross-section of fads,
claims and science. A Euromonitor report on beverage innovation suggests that there is a three-step process to success in the
beverage space.23
Identifying how a product can meet key consumer needs or occasions,
including: energy/focus, nourishment/
hydration/replenishment, refreshment/
enjoyment and indulgence/relaxation.
Addressing these needs with in-
gredients that consumers trust, such
as caffeine, green vegetables, herbals,
fiber, water, electrolytes and natural
sweeteners.
Overcoming barriers to purchase, such as products seen as not healthy
enough, unsustainable, containing
unrecognizable ingredients or those
in an inconvenient format. Brands are
now balancing these demands to forge
new territory in beverage development.
Here are a few ways these trends will
play out in the marketplace:
Plant-based powerMore than half of consumers are now
using products made with plant-
based ingredients,24 and this trend is
only going to increase. While some
consumers are just becoming famil-
iar with plant-based proteins, more
than half are now at least open to
buying products with plant protein as
an ingredient.25 Consumers are also
becoming more receptive to a variety
of plant-based protein ingredients,
including corn, pea, chickpea, soy,
quinoa and flax.
Source: Cargill Proprietary Research. Plant-Based Proteins Research—Report on Consumer Attitudes and Usage. November 2018.
68%
57%
54%
47%
49%
44%
35%
20%
14%
50%
58%
48%
43%
35%
27%
8%
3%
Sources of plant protein
66%
INTERESTED IN HAVE TRIED
CORN
PEA
CHICKPEA
SOY
QUINOA
FLAX
CANOLA
ALGAE
LUPIN
Proprietary Research Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages 7
Clean and green energy
doing a better job of masking the
aftertaste in products. They can also
mask the taste of vitamins in certain
energy beverage applications.
Offering that inherent energy
boost, coffees and teas will also
continue to be important, and both
have forged new ground by mov-
ing into the cold-brew space. But
brands in these key segments are
also leading the pack by address-
ing sustainability issues with inno-
vative packaging formats, such as
single-use, disposable paper-based
filters that attach over the side of a
cup and allow pour-over-style brew-
ing without using a Chemex or large
filter. This format could prove to be a
convenient, recyclable alternative to
pod-based coffee systems.32
Whatever brands do with regard
to sustainability and label-friendly
ingredients, they should be as trans-
parent as possible and share the
unique stories behind the cup.
Nevertheless, energy beverages
now consistently contain lower
sugar content, and many strive for
fewer artificial ingredients. How-
ever, some drinks still contain less-
popular ingredients, like sucralose,
aceK and aspartame, as formulators
continue to use them to mask vita-
min flavors. As these challenges are
met, energy beverages will increas-
ingly feature “better” energy. Prod-
ucts are now showing up boasting
energy from ingredients like guay-
usa and mate.31
Improvements in natural sweet-
ener options are also helping to
address some of these challenges.
For example, next-generation stevia
sweeteners, made from the sweet-
est components of the stevia plant,
are now produced more sustainably
through the natural process of fer-
mentation. The compounds from
Rebaudioside M and D can reduce
calories by up to 100% while also
Plant-based ingredients are show-
ing up in a variety of different bev-
erages, but particularly sports and
nutrition drinks. In general, plant-
based proteins are well-accepted in
these categories, with more than one
plant-based protein—and pea protein
specifically—showing a particularly
strong impact on purchase.26
Pea protein has become a popular
product ingredient because of its mild
taste and versatility in applications.
Combined with its positive impact on
buying decisions, pea protein is now
a high-growth ingredient on a global
scale, with a 21% CAGR from 2016-
2018 and more than 3,000 product
launches over that time period.27 In
North America alone, it saw 713 new
product launches in 2018 (compared
to only 74 in 2010), with the largest
percentage of those launches (29%)
in the sports nutrition category and
another 5% in soft drinks.28
The acceptance of new protein
sources is leading to plant-based
ingredients showing up in new bev-
erage formats, such potent shots and
tonics.29 For the new beverage con-
sumer, this format offers a lot—it is
easy to incorporate, plant-based, with
healthy ingredients, as well as mini-
mizing sugar and calories while maxi-
mizing function.
Plant-based ingredients will also
play an important role as consum-
ers increasingly turn to beverages as
snacks. Beverages are now bridg-
ing the gap between plant-based
RTDs, foods, vitamins and OTC sup-
plements.30 Products such as add-
ed-value coffees and yogurt-based
fitness nutrition beverages can now
replace a meal or a snack with compa-
rable daily requirements for calories,
fats and fiber.
Energy continues to be an important benefit for consumers, with
59% saying they want to have enough energy for an active lifestyle, and 29%
noting that this urgently needs improvement. Because a truly healthy energy
drink is still a work in progress, it’s likely consumers will continue searching for
a “better” energy drink—and this is already a focus of innovation.
8 Beverages: Blending, Brewing and Blurring the Lines . . . Creating a New Breed of Beverages
References 1 Mintel. “Consumer Trends in Sweeteners.” February 27, 2019. 2 Ibid. 3 Steingoltz, M; Picciola, M; Wilson, R. LEK Consulting.
“Consumer Health Claims 3.0: The Next Generation of Mindful Food Consumption.”
4 Ibid. Mintel. 5 Ibid. Mintel. 6 International Food Information Council Foundation (IFIC).
2019 Food and Health Survey. 7 Franklin-Wallis, O. “White Gold: The Unstoppable Rise
of Alternative Milks.” The Guardian. Jan. 29. 2019. 8 The Hartman Group. “Modern Beverage Culture 2019.” 9 Ibid. IFIC. 10 Ibid. The Hartman Group. 11 Ibid. IFIC. 12 Euromonitor International. “Hot Drinks: Alcohol, Coffee
and Tea: Blurring Lines and Mindful Drinking.” March, 2019. 13 Ibid. The Hartman Group. 14 Ibid. Euromonitor International. Hot Drinks. 15 World Population Reviews. Alcohol Consumption by
Country 2019. http://worldpopulationreview.com/countries/alcohol-consumption-by-country/
16 Ibid. Euromonitor International. Hot Drinks. 17 Euromonitor International. “RTDs in the U.S.” July, 2019. 18 Ibid. 19 Ibid. The Hartman Group. 20 Ibid. 21 Euromonitor International. “Soft Drinks: Beverage Innovation and
Trend Spotting at Natural Products Expo West.” March, 2019. 22 The Hartman Group. Food & Technology 2019 Report. 23 Cargill Proprietary Research. Plant-based Protein Research—
Report on Consumer Attitudes and Usage. November, 2018. 24 Ibid. 25 Kraft Heinz Plant Protein Overview, July 2019. 26 Ibid. 27 Ibid. Euromonitor International. Soft Drinks. 28 Ibid. 29 Ibid. 30 Ibid. 31 Ibid. 32 Ibid. Euromonitor International. Hot Drinks. 33 Ibid. Euromonitor International. Soft Drinks.
* There is no single definition of “non-GMO” in the USA. Contact Cargill for source and processing information.
Conclusion
The lines are blurring, and beverage innova-
tion is crossing into new territory. The expecta-
tion of healthy beverages is now mainstream . . .
and growing numbers of consumers now seek
products that deliver on health, wellness, func-
tion and sustainability. Concepts like responsi-
ble indulgence and naturally healthy alcohol are
taking root, while coffees and teas will be posi-
tioned more like wine to enhance both beers
and spirits in premium products. Juices with
added-value herbs, vegetables and vinegars,
as well as daily drinks that offer function from
proven ingredients like probiotics, will become a
new norm. But it remains important to consider
that beverages must still offer great taste—and
even a bit of indulgence—as well as good quality
and science-based ingredients. Brands that find
the crossroads of these trends will be rewarded
with premium pricing and product success.
Function plus fun
Consumers are gravitating toward a more holistic, mind-ful approach to beverage consumption, and natural and wellness
drinks are now competing with alcoholic beverages. The win-win
may be to address consumers’ changing and variable aspirations
for beverage consumption with new drinks that mix both function
and fun (think tea-beer combos or hard kombucha). These products
will likely see growing appeal, especially among younger consumers.
This approach may also be a good formula for a much-needed
revamp of kids’ beverages. Big brands like Honest Kids are leading
the charge, with a new focus on reduced sugar and sweetness in
organic juice blends, but other brands are also looking at new ways
to make water appealing, with flavored waters and seltzers in for-
mats and packaging geared toward ease and convenience for kids.33
Learn more about Cargill’s portfolio of ingredients for beverages at cargill.com/beverages and cargill.com/sweeteners.