Webinar Recap: Shifting from Traditional Soft Drinks to Healthier Alternatives

Host: Bojan Mijatovic - Global Market Analyst (Serbia)

Speakers: Mzingaye Ndubiwa - Global Market Analyst (South Africa)

Kevin López - Assistant Manager (Colombia)

Emad Fathy Abdelkader - Quality Control Specialist (Egypt)

Agenda:

• The Changing Landscape of the Soft Drink Industry
• Strategies for Success in the Health-Conscious Soft Drink Market
• Panel Discussion

In its September webinar, Tridge experts noted market trends in soft drinks, innovation, consumer insights, and healthier alternatives. This shift from traditional sugary drinks to health-conscious options is driven by growing health and wellness awareness, changing consumer preferences, and regulatory pressures. Tridge experts pointed out the rise of functional beverages, low-calorie options, and the impact of clean-label demands.

The Changing Landscape of the Soft Drink Industry

The shift towards functional beverages is transforming the beverage industry as health-conscious consumers seek enhanced health benefits beyond traditional drinks. These beverages offer advantages such as increased energy, better hydration, improved cognitive function, immunity boosts, and sports performance enhancements. They align with consumers' desires for healthier choices, featuring natural ingredients, reduced sugar, and vegan formulations. Beyond traditional categories, the market is expanding to include mood-enhancing and relaxation-inducing options.

Global sales are projected to grow from USD 131.47 billion in 2022 to USD 224.99 billion by 2027, led by North America. While energy and sports drinks are popular, concerns over caffeine and sugar content are leading to innovations like L-theanine and sugar reduction. Europe and Asia are also experiencing significant growth. The industry's future promises continued advancements and innovations to cater to diverse consumer preferences.

• Key drivers of the shift: Rising health issues, including obesity, diabetes, and heart disease, have pushed consumers to seek healthier alternatives. Government policies, such as sugar taxes, along with recommendations from health organizations, are further accelerating this shift.
• Consumer behavior trends The global decline in consumption of sugary carbonated drinks reflects increased awareness about the risks of high sugar intake. Younger generations, particularly Millennials and Gen Z, now prioritize health, wellness, and sustainability, seeking beverages with natural, organic ingredients and no artificial additives. Functional drinks like kombucha, coconut water, and enhanced waters are gaining popularity due to their benefits, like gut health, hydration, and immunity boosts.
• Market disruptions: Brands like LaCroix, Bai, and GT's Kombucha have capitalized on this health-focused trend by offering minimal ingredients and functional beverages. Their success is driven by innovative marketing, product development that emphasizes health benefits, and strong consumer engagement through digital platforms.
• Industry response: Major soft drink companies are reformulating their products to reduce sugar, introducing zero-sugar and low-calorie alternatives, and investing in new health-oriented beverage categories. This evolution reflects the industry's attempt to meet the growing demand for healthier, functional beverages while maintaining competitiveness in an increasingly health-conscious market.

Figure 1. Global Zero-Sugar Beverages Market

Source: Yahoo News

Success Strategies in the Health-Conscious Soft Drink Market

To succeed in the health-conscious soft drink market, brands must focus on natural ingredients, offering drinks with simple, recognizable components like fruits and botanicals while reducing artificial additives. Additionally, introducing functional benefits, such as improved hydration, energy boosts, and gut health, appeals to consumers seeking flavor and wellness. Transparency in labeling and honest marketing claims, like "No added sugar" or "Made with organic ingredients," further enhances consumer trust.

Sustainability is also critical, with eco-friendly packaging and practices gaining importance. Brands that emphasize environmental efforts, such as Coca-Cola's recycled plastic bottles or the use of biodegradable materials, can attract environmentally-conscious buyers. Leveraging social media to share wellness tips and collaborating with influencers helps create a solid emotional connection, positioning the brand as part of a broader wellness journey. Innovating through healthier options and sustainable practices will be vital to thriving in the evolving soft drink industry.

Figure 2. Coca-Cola’s 100% Recycled Plastic Bottle Initiative

Source: Canei

Panel Discussion:

Kevin López opened the panel discussion by tackling how raw ingredients, particularly fresh fruits, influence the current market trends. According to López, fresh fruits are significantly driving the new era of healthy drinks, especially exotic fruits. In the Latin-American market, new beverages include starfruit, mangosteen, pomegranate or lychee as ingredients, differing from traditional flavors like lemon, apple or orange in the soda industry. At the same time, using exotic fruits as ingredients may transform the consumer's perception of an everyday beverage into a healthier drink that justifies a higher price.

Emad Fathy Abdelkader added that the increasing availability and affordability of raw materials due to higher fruit and vegetable production has led to lower costs for manufacturers, making it easier to produce a wide variety of juices that cater to consumer preferences. This has driven market demand, particularly for healthier and more functional beverages. Advancements in climate-smart farming techniques, such as drone usage, new irrigation systems, and better prediction of flowering times, are also helping mitigate the effects of climate change and improving raw material consistency. Innovations in packaging and e-commerce have further expanded juice accessibility and boosted sales, particularly in non-carbonated segments like fruit juices.

In discussing the key challenges of sourcing and scaling the production of fresh fruit-based beverages, López emphasized that exotic fruits have limited global production. Their scalability relies heavily on specific agricultural and climate conditions to ensure a consistent supply throughout the year. Secondly, air transportation for such products as raw materials could become costly.

According to Abdelkader, the fruit and vegetable juice market faces challenges such as changing consumer preferences, supply chain issues, and regulatory challenges. Consumers are shifting towards healthier, natural products due to health risks associated with high sugar content. Supply chain issues include weather and climate change, while logistics and infrastructure issues affect production and distribution. Regulatory challenges include strict regulations governing labeling, health claims, and food safety. Companies must ensure product quality and safety through robust control processes, regulation compliance, and transparency.

Finally, in discussing about the outlook for the traditional soft drink market, López stated that the future of traditional sodas and sugary drinks would rely on different aspects. Currently, there is a trend to reduce sugar consumption globally to improve consumers' health. Governments are inclined to impose additional taxes on products with high sugar content in an effort to reduce the consumption of these items. He further added that International sugar prices will always play a role in the production and commercialization of these products, as well as trade contingents. Abdelkader concluded the discussion by discussing the expected outcomes of the global soft drink market. It is expected to rise by a compound annual growth rate (CAGR) of 4.2% by 2028, reaching USD 170.70 billion.

Click here to view the webinar recording, or click here to see the presentation slides.