Cold drinks, hot sellers
By Taylor Richardson Fredericks
Emerging trends in Canadian beverages
By Taylor Richardson Fredericks
With warmer weather just around the corner, it’s time to start thinking about which refreshing beverages will help your customers survive the dog days of summer. And while it’s hard to go wrong with a good, old-fashioned pitcher of iced tea or lemonade, the increasing diversity of cold beverage options in Canada should give both consumers and vending operators something to think about when it comes to choosing their beverages this summer.
With that in mind, here are five emerging trends in the Canadian cold beverage landscape, and what they might mean for vending operators.
1. Drinks to our health
Beverages that offer consumers some kind of health benefit have been on the rise in recent years. Often referred to as supplemented beverages, these products contain added vitamins, antioxidants, or proteins, giving consumers a chance to enjoy a refreshing beverage without the guilt sometimes associated with sugary pops and juices.
“We’re definitely seeing a big increase in the sale of supplemented beverages,” says Jim Goetz, the president of the Canadian Beverage Association. “Those kinds of products are increasingly coming to the market, so much so that Health Canada is moving forward with new regulations around supplemental beverages and the category as a whole.”
While many are already familiar with vitamin water and protein shakes, Goetz believes Canadians consumers will see more diverse and expansive supplemented beverage offerings in the very near future.
“Once those regulations are finalized, it’s going to give the industry more confidence to bring more and different products to market, so we expect that category to accelerate in relatively short order.”
2. Fewer calories, more flavour
In line with consumers’ desire for healthier beverages, the Canadian market has also witnessed a proliferation of low- and no-calorie beverage options in recent years, whether in the form of low-calories alternatives to old favourites, or new product offerings that strike a balance between consumers’ health concerns and their taste buds.
“Almost half of the products we now have on shelf in Canada are low- or no-calorie options,” Goetz says. “Beverage makers are always looking for new ways to achieve that balance of sweetness that consumers want while at the same trying to reduce calories and sugar content.”
The key to developing low- and no-calorie beverages that still taste delicious, says Goetz, lies in constantly innovating and rethinking what’s possible.
“Bottled water has been a growth category for some time now, but now you’re seeing offerings with just a splash of flavour, whether it’s hint of raspberry or strawberry. Again, it’s that innovation, trying to find that sweet spot of giving people a little bit of flavour.”
3. The choice is yours
Perhaps the biggest shift in the Canadian beverage landscape has been the amount of choice now available to consumers when it comes to what they drink and when.
“The nature of the business is changed,” explains Gary A. Hemphill, the managing director of research with the U.S.-based Beverage Marketing Corporation. “Consumers are much more open to variety. They aren’t drinking the same beverage throughout the day – they switch up their repertoire depending on their needs. People want variety, and they want choices. We’re really seeing a splintering of the market.”
This consumer desire for variety has created opportunities for smaller producers with niche products to infiltrate markets that have traditionally been monopolized by larger companies with more traditional offerings.
“They represent fairly small, niche markets here in Canada, but we are seeing growth with beverages like coconut water and maple water, for example,” Goetz says. “It’s encouraging to see some smaller players getting their legs underneath them in the market.”
Consumers’ interest in diverse beverage options has in turn influenced Canadian vending machines, creating opportunities for operators to stock their machines with premium products.
“I’ve had a couple accounts who have recently asked me for San Pellegrino, which is a carbonated juice beverage,” says Sharon Langer, the owner-operator of Calgary-based Sweet Treats Vending. “And they’ll pay more for a San Pellegrino than they will for a pop, even though they’re close to the same thing.”
4. A crowded market (and vending machine)
The newfound diversity of beverage options is not without its pitfalls, however. The wide array of beverage options now available on the market creates unique challenges for vending operators, who have limited space with which to diversify their offerings.
“I think in some ways we’re reaching a tipping point,” Goetz says. “What’s going to be interesting in the next several years is that, with more products coming on to the shelf and into machines, the competition for that space is going to get more substantial.”
From his perspective, Hemphill believes the continuing diversification of the beverage market puts vending operators in the unenviable position of trying to make everybody happy, which can prove a challenging task.
“With vending, I think it ends up being a bit of a balancing act,” Hemphill says. “Operators like to stock what’s tried and true, and tend to stick to what sells in high volumes. At the same time, vending machines are often a place where consumers are willing to experiment. It’s complicated. You want to embrace volume, but you also understand that consumers are open to experimenting with new products through these channels.”
5. Judging a beverage by its label
One challenge facing beverage producers is how they can make their products stand out in an increasingly crowded market. As a result, many producers have started to rethink common approaches to product packaging.
“I know many bigger beverage companies are starting to experiment with smaller package sizes,” Goetz says. “All of our larger members now have smaller mini-cans, as well as smaller, old-school bottle sizes.”
Hemphill adds that many newer companies are also experimenting with their packaging in hopes of catching consumers’ eyes.
“Companies have to look for ways to get their products noticed without spending great sums of money on marketing,” he says. “One of the ways they can do that is through packaging. We’ve seen a greater use of proprietary packages that have a distinctive look.”
And while those tactics may work when it comes to attracting attention in a supermarket, Langer says that non-traditional packaging has the potential to create headaches for vending operators trying to manage their machines.
“Unique packaging can make certain products hard to carry, because if an item won’t fit into a pop machine, you’re forced to put it in a cold food machine. That means displacing another product you might refrigerate, such as a sandwich or a muffin.”
Whatever beverage you decide to stock this summer, it’s clear you’ll have no shortage of options. But consumers and vending operators are going to have to make increasingly challenging decisions about which beverages best hit the spot. Thankfully, there are still a few old classics that don’t appear to be going anywhere anytime soon. It’s a whole new world, sure, but there’s always lemonade.