While the market may be ready for vast amounts of NPD, soft drinks sales are flat or declining in areas. As such, manufacturers need to balance higher value, premium products in developed markets against growing per-capita volumes of standard variants, according to Euromonitor International’s World Market for Soft Drinks report.
Growing trends among consumers, such as those complementing physical health, gut health, and physical endurance are providing a profitable backdrop for drinks manufacturers.
Energy drinks, beverages good for gut health and sports or active products are gaining momentum as younger consumers focus more on their personal health and wellbeing.
Boundaries are blurring between segments such as energy and sports, “with energy drink-like ingredients finding their way into sports beverages and low-sugar and low- or no-alcohol options”, said ADM’s 2024 Beverage Innovation Report.
That's not to say shifting boundaries is a bad thing, rather it's “priming the market for even bolder new entries”, predicted ADM’s report.
Consumers' long-term wellness goals are also opening new revenue streams for drinks makers. Some 71% of the Gen Z consumers globally claim to be taking a “proactive approach” to their health through prevention (FMCG Gurus Top Trends for 2024). Meanwhile, Gen Z and millennials continue to reduce alcohol intake to follow a healthier lifestyle.
Social influencers are also opening new market growth areas. “The rise of [the] Prime sports drink is a recent example of celebrity-backed product innovation in non-alcoholic drinks, with a devoted online fanbase producing strong retail growth,” said Euromonitor.
The four non-alcohol and functional drinks trends growing sales:
1. Active hydration
Sports nutrition continues to broaden its reach beyond athletes and into the mainstream, driving category value to $14bn in 2023, Nielsen Revenue Growth data shows.
Consumers seek more functional benefits from their sports drinks. This includes added vitamins, proteins, weight management claims, cognitive or digestive health support.
Within protein, consumers continue to veer towards plant-based. “People increasingly want varieties that offer ‘mindful consumption’ with lower climate or environmental impact,” according to Tetra Pak’s 6 trends transforming soft drinks report.
But rapid hydration is also on the rise and eroding the lines between soft drinks segments. “Further muddying the waters is the growth of rapid hydration beverages,” says ADM’s report. “With electrolytes increasingly available in other beverage categories, consumers aren’t seeking sports drinks for electrolytes alone.”
Across all sports drinks consuming age groups, rapid hydration is a leading function with three-quarters or more of Gen Z, millennials and Gen X drinkers seeking this benefit (Mintel US Functional Drinks 2023).
But performance recovery and digestive health are gaining traction within the sports drinks category.
2. Hydration
Hydration remains the main driver of most non-alcoholic drinks purchases by consumers, with 54% purchasing for this reason and 17% interested in exploring rapid hydration options, according to ADM.
“Increasingly, non-RTD formats, such as powder mixes and tablets, and high-electrolyte oral replenishment solutions are taking share from standard sports drinks,” says Euromonitor, highlighting the importance of hydration within functional beverages.
Juice and bottled water remain among the top 10 most consumed soft drinks globally, according to Innova Market Insights. “Bottled water showed the most growth in consumption among soft drinks over the past year, with unflavoured water and functional water being consumed the most,” its Sipping the Future report said. “Key consumption trends for soft drinks such as water are health and quenching thirst.”
The category’s complexity continues to grow in line with drinkers' needs for beverages with pro and prebiotics, protein spiked juices or electrolytes.
Waters that can elevate or lower moods and emotions, such as helping consumers tap into feelings of calm or provide stress relief, are also emerging. In fact, calming and relaxing claims are sought by over 60% of Gen Z, millennial and Gen X consumers in the US (Mintel US Functional Drinks 2023).
Dominating flavours, according Innova:
- Tea
- Spice
- Flowers
3 Mental and physical energy
Energy is the second most popular beverage claim after hydration, encompassing both physical and mental stamina. Mental health beverage claims have grown sharply, with 57% of consumers looking to improve mental wellbeing compared to 36% in 2021 (FMCG Gurus, Top Trends of 2024).
“Energy drinks remains the fastest-growing area of non-alcoholic drinks, with a new wave of innovation in advanced hydration beverages,” said Euromonitor.
While the energy drink category has faced criticism and concern in countries including the UK – with potential age bans or tighter restrictions – unit sales are up and the category’s value estimated to be worth $24bn, according to Nielsen Market Value data for 2023.
“Energy drinks are no longer only associated with caffeine, they’re now more likely to also include support for mood, focus and mental clarity,” according to ADM.
Flavour is a big part of the segment, and energy leads above all other non-alcoholic segments due it its many launches of novel and often “wild” flavour combinations.
Mintel US Energy Drinks data for 2024 shows the energy drink segment resonates more with male millennials, though innovation has proven to attract other generations and demographics, specifically when it comes to clean-label ingredients.
Top areas for innovation in energy, according to ADM, include:
- Performance – boosting physical performance and recovery
- Cognition – helping consumers to stay alert or focused, with a lower reliance on caffeine
- Holistic well-being – promoting stable energy levels through natural caffeine sources like guarana and yerba mate
- Flavour – berry and candy-inspired flavours are hot sellers
4 Digestive health
A feature across all key non-alcoholic drinks trends, specifically for digestive health and gut microbiome support, with 38% of consumers seeking products making these claims, ADM’s report says.
Demand for carbonated soft drinks with digestive health claims have grown 141%, between 2022 and 2023, according to Nielsen Revenue Growth 2023 data.
“With the functional beverage segment growing, plant-based immune health, prebiotic and high fibre claims are emerging in the soft drink category,” says Innova.
The increasingly growing Kombucha trend is testament to gut health’s current and future role within beverages. But so too is the introduction of prebiotic sodas, which are making gains across the west as well as in Asian markets.
In fact, the prebiotic soda market in the US is projected to grow from $246m in 2023 to over $500m within the decade, Market US data suggests, with other outlets predicting higher gains.