Decrypt 2018 Drink Industry Trends

Today, there are so many types of drinks available on the market and consumers are faced with increasing options from various beautiful branding glass door refrigerators. In recent years, natural mineral water, tea drinks, and other products are deeply favored by consumers. Based on the general trend of health and nutrition in the beverage industry, such categories as compound fruit juices will usher in explosive spots in the future.

In view of the current dietary trends, beverage manufacturers seek to find new ingredients for product development. They are looking for “the next hot spot” after invincible coconut water.

1. Growth Category: Natural Mineral Water

The advantages of natural health (NH) mineral water are 1) suitability for a variety of drinking occasions; 2) excellent hydration; 3) due to consumers’ concern about the sugar content and artificial ingredients in sports and energy drinks, it is also a hydration replacement during or after exercise. In fact, every natural mineral water brand has its own specific and identifiable resource, which allows the brand owner to shape the marketing story to build trust and traceability for the product. This approach fully caters to consumer demand for authenticity, traceability, and transparency. It is likely that non-gas natural springs will also grow rapidly. This trend is likely to prompt manufacturers to find new natural resources.

2. China’s Drinking Water Development Opportunities

The enormous growth opportunities for bottled water in China have attracted many market participants. It is one of the most diverse consumer markets in the country. However, drinking water companies also face regulatory challenges. The new pricing system requires larger users of water resources to pay higher extraction fees. In addition, there is no clear definition of different types of bottled water before. As a result, manufacturers often label their brands with a variety of “fancy / marketing-friendly” names.

In May 2015, the National Health and Family Planning Commission of the People’s Republic of China released the updated National Standard for Packaging Potable Water GB19298-2014. The new standard prevents companies (those selling non-gas bottled water) from naming their products commercially. And it clearly states that bottled water can only fall into two categories: natural mineral bottled water or other drinking water. This change places the natural spring (Euromonitor’s definition) in a marginal position.

In the case of product naming, the name of bottled drinking water products should be scientifically accurate in order to meet the requirements of the new standard. It does not allow water manufacturers to name their products by one or several ingredients. They could only use only the word “water”. Misleading behavior regarding the use of creative marketing for aquatic products will be regulated. This change puts pressure on manufacturers’ marketing strategies, especially as they want to expand into the functional water space.

3. Competition with Fortified Water

Consumer demand for diversification is a manufacturer’s opportunity as well as a challenge. Apart from using attractive point-of-sale materials, like eye-catching commercial beverage coolers and promotion gifts, marketing companies also need to make strategic decisions that are geographically based, and companies in this region plan to develop a category of natural health (NH) or intensive/functional (FF), or both. That is, NH food and beverage brands sometimes compete with FF products. Danone Pulse (FF) and Evian (NH) in the Chinese market is such a relationship, and Pulse is a more powerful brand. For bottled water, Coca-Cola is fully engaged in the field of fortified water rather than natural healthy water through its international brand Glaceau. Coca-Cola is also re-promoting Coca-Cola Plus, a sugar-free, fiber-reinforced soft drink in Japan. The competitor to this product is a natural high-fiber beverage.

Probiotics are increasingly used in packaged foods and beverages. Manufacturers need to determine what “unique sales proposition” (USP) to promote a new product to better fit the target market. This is the case with KeVita Sparkling Probiotic Beverages (acquired by PepsiCo), who claims to successfully combine the probiotics with nature.

4. The Rise of Mixed Products

Water from coconut and plant sources is a natural, healthy blend of both juice and water properties. This is becoming an important industry where investors come in one after another. Coconut water contains more potassium than bananas, no added sugars, no fats and cholesterol, and no preservatives. It shows rapid growth in many regions. For example, the Middle East and Africa grew by 17% in 2016 alone. Today, the further development of processing and packaging technology helps to extend the shelf life of coconut water. With the influx of pioneer brands, overwhelming publicity has positioned coconut water as a healthy alternative to fruit juices and sports drinks.

For any emerging area, the current fragmentation will go into the consolidation cycle. The speed of the merger is inconclusive; however, brands like Vita Coco are rapidly expanding and occupying the world. Most of the coconut water manufacturers will continue to rely on the cooperation of distributors to enter the market. The near future is unlikely to change.

5. Tea Drinks Show a Positive Trend

The trends show that the net increase of natural health hot tea between 2016 and 2021 will reach about 3.5 billion U.S. dollars, mainly due to the growth of China, India, Canada, the United Kingdom and Germany. China alone will contribute $ 1.6 billion in absolute growth during this period. Even in the countries consuming coffee, the consumption of tea beverage is also increasing. In stark contrast to the low-calorie Coke and Coke brands decline status.

Natural Health Ready-to-drink Tea is more commercial than Hot Tea category, and China and India have always had a large amount of unpackaged tea. The sales of individual instant tea brands far exceed the sales of natural health hot tea. Ready-to-drink green tea will be a growth driver in ready-to-drink tea due to its well-known health benefits as well as improvements in green tea flavor. Honey is added to the green tea to bring a pleasant flavor.

Chinese and Japanese brands have always dominated. Lipton’s hot tea sales are 64% more than its ready-to-drink counterparts, mainly due to the popularity of Lipton hot beverages throughout the world, whereas Lipton tea is such a humble brand in big ready-to-drink tea markets such as China, Japan, and Indonesia.

6. The Commercialization of Chinese Medicine

Globalization has given rise to more opportunities for the exchange of different cultures, the impact of traditional customs, the collision of food and beverages. Traditional herbal remedies, beliefs, health concepts and treatment in China, India, and Spain are gradually becoming more common in western countries. In this context, the diet and beverages associated with these cultures are progressively accepted.

The traditional preparation method of traditional Chinese medicine (TCM) is very time-consuming. So, with TCM’s modernized method and commercialization, the product will be convenient and portable meanwhile maintaining its efficacy.

7. Fruit Juice Recovery

In view of the fact that many markets impose or are likely to impose sugar taxes, reducing the sugar content of beverages has become a necessary task for drink companies in the industry. Mixing again, organic, clean labels and HPP (autoclaving) are all strategies to reproduce the juice.

Overall, natural healthy juices in the major developed markets showed a slow or declining trend due to concerns about sugar content and market maturity. The competition from other health drinks, as well as consumer expectations for product diversification, have also put pressure on the juice. However, super-fruits have been advancing triumphantly in different product categories, such as 100% fruit juices, fruit juices, and concentrated juices. The United States will see strong growth in the fruit juice concentrate segment. While Britain and China will see some growth in 100% fruit juice segment. Coconut water and other plant-derived water, as well as the continuous development of ready-to-drink tea, to a certain extent, contain consumers’ attention to natural fruit juices.

Manufacturers are looking for new hybrid products and new technologies, such as HPP juice, to attract and retain the attention of the juice consumer. As the concept of “drinkable salad” spreads in the United States and the United Kingdom, vegetables are increasingly mixed with juices to reduce the overall sugar content of a brand. The advent of protein and organic beverages, along with marketing strategies such as clean labels, has also helped fuel the competitive landscape in natural health.

8. Organic Juices: “Super Natural” Pass

In most markets, people consider organic juices as particularly good and natural juices. In 2016, the retail sales of organic juices packed globally with commercial packaging reached about 2 billion U.S. dollars. Of course, sales were mainly in developed countries. North America accounts for the highest sales share, accounting for half of the global sales. Analyses predict that in the next few years Russia, Brazil, and India will also be developing rapidly. While sales in the Chinese market will remain sluggish. Given the healthier positioning of organic foods and beverages and the importance of organic farming as a sustainable agricultural model, organic fruit juices offer growth opportunities both in terms of quantity and value in the long run. General Mills has invested recently to expand its organic sources.

However, in some countries, the mode of funding for organic agriculture is closely regulated. And insufficient invested funds limit the large-scale production of organic fruits and vegetables. The EU has its own organic labeling regulations and certification, while other countries have also made their own provisions. Therefore, there is a certain degree of difficulty in promoting a brand with organic certification label in the world.