Niche beverages key to improving flat soda sales in Canada: Mintel
Carbonated soft drinks are second only to milk in dollar share of non-alcoholic beverages consumed in Canadian homes but niche beverages present one opportunity to improve sales, says a new report from research firm Mintel.
Despite their current leads, milk and carbonated soft drinks are forecast to have lower growth rates than competitive non-alcoholic beverage categories, including coffee, bottled water and tea, the report says.
Volume sales of carbonated soft drinks (CSDs), specifically, have been impacted in recent years by broader consumer trends toward healthier diets and lifestyles. In fact, nearly two thirds of adults characterize CSDs as a “treat,” according to the research. The perception of CSDs as “treats” may be influencing Canadians to drink them less frequently and to consume lower volume servings when they do drink them.
Shopping habits are also changing as Canadians become increasingly mindful of their health and wellness. Three in four agree that living a healthy lifestyle requires sacrifices, according to Mintel’s Healthy Lifestyles Canada 2016 report. For some, these sacrifices likely incorporate changes in dietary choices, such as CSD consumption. Per capita CSD consumption was just 93 litres in 2015, as compared to 101.4 litres in 2007, according to Mintel Market Sizes.
Calorie-conscious consumers now have more options with the growth of introductions of low, no or reduced calorie offerings since 2011. Between November 2015 and October 2016, one quarter of Canadian CSD launches had low, no or reduced calorie claims, as compared to just nine per cent from November 2011 to October 2012, according to the company’s Global New Products Database. Consumers who are looking for fewer calories now also have the option of smaller volume packaging.
While reduced calorie claims have grown, the share of CSD launches with low, no or reduced sugar claims has remained relatively steady, highlighting untapped potential for more low, no or reduced sugar CSD formulations.
Among the reduced sugar launches are a few sparkling juice introductions, such as Awa Sparkling Coconut Water with Natural Mango Flavor made with coconut water and natural flavor. Instead of added sugar or sweeteners, the 19 grams of sugar per serving in Awa Sparkling Coconut Water comes from the coconut water. Formulations that rely on juice for sweetness could connect with sugar-conscious consumers.
Taking advantage of craft beer’s growth in Canada, the CSD category also could benefit from craft formulations that offer the authenticity of local, small batch production. Quebec is home to several companies that produce craft soda brands with an emphasis on local heritage and production quality. While these brands lack the mass recognition that The Coca-Cola Company and PepsiCo benefit from, the more premium “craft” positioning may better align with occasional “treat” occasions that some Canadians associate with CSDs.
As shown by Bull’s Head Natural Cola, some craft-positioned CSDs also promote formulations made with natural ingredients. While just three per cent of CSD launches in Canada from November 2015 to October 2016 carried all-natural product claims, the natural CSD segment is due for growth with two thirds of Canadians saying CSDs are artificial. While completely natural formulations are rare, the incorporation of natural flavours, colours or sweeteners can help to address the concerns that some consumers have about the CSD category.