Consumers Give Natural CSDs Healthy Marks

CHICAGO — With carbonated soft drinks (CSDs) facing mounting negative perceptions, craft and natural options are showing promise among soft drink consumers, according to Mintel’s Carbonated Soft Drinks: Spotlight on Natural/Craft US 2015 report. Research shows that three in five (57 percent) U.S. adults agree that CSDs that are made with natural ingredients are healthier than those made with artificial ingredients, and 34 percent of consumers are interested in carbonated soft drinks with added benefits, such as protein, vitamins or minerals.

Other key findings include:

• 66 percent of consumers do not drink craft sodas;
• 44 percent of non-craft drinkers are interested in trying craft products;
• 40 percent of consumers do drink craft sodas; and
• Parents (60 percent) and millennials (58 percent) drink the most craft soda.

In 2015, craft soda consumption increased to 34 percent, compared to 30 percent in 2014. CSD industry sales dropped 3.6 percent from 2011-2014, as cornerns surrounding artificial sweeteners, such as aspartame, strengthen natural and naturally sweetened CSDs’ positioning as a better-for-you alternative to regular and diet sodas, Mintel reported. Of those who consume craft soda, 54 percent indicate that natural or real ingredients are important to them, including 50 percent of parents. 

"The definition of health is changing from desiring low/no-fat and -sugar, to ‘real’ or unadulterated ingredients,” explained Elizabeth Sisel, beverage analyst for Mintel. “Natural and craft brands tend to feature ingredients in more natural forms, to position products as a better-for-you option. Craft and natural sodas also provide new flavor experiences, including blends of fruits, spices and herbs, while hitting naturally sweetened and premium ingredient trends. However, the segments are still too small to generate a huge impact on category sales, although interest in natural/naturally sweetened and craft options is promising. Positive health perceptions are on the side of craft and natural soda, but manufacturers need to justify high prices and build awareness to grow sales.”

Aside from sugar perceptions, Mintel found that increased craft consumption stems from two distinct conceptions. The first is that consumers see craft sodas as an alternative to alcoholic beverages. Nearly three in five consumers agree that craft soda allows them to enjoy a unique type of non-alcoholic beverage, with 66 percent of millennials in agreement. The second is that consumers like to pair craft soda with meals (49 percent), with 42 percent interested in creative flavors.

Mintel research indicated that parents (55 percent) are more than twice as likely as non-parents (23 percent) to be craft soda consumers. Consumers who start families look for non-alcoholic alternatives, including 70 percent of parents, who said craft sodas allows them to enjoy a unique type of non-alcoholic beverage vs. 50 percent of non-parents. Additionally, more than half (53 percent) of non-craft drinking parents report that they are interested in trying craft sodas, compared to 42 percent of non-parents.

“Craft CSDs have the potential to peak interests similar to the craft beer segment, offering consumers artisanal beverages that often support local communities and provide a complete taste experience through premium ingredients, unique flavors and small-batch quality,” said Sisel. “Similar to the progression of craft beer, consumers are veering away from big brands and seeking smaller brewers that are perceived as more authentic.”

Product Unfamiliarity

Primary consumer disinterest in natural and craft sodas is driven by product unfamiliarity and premium pricing, according to Mintel. Among non-craft drinkers, 26 percent said that they are unfamiliar with craft soda brands, craft soda flavors (23 percent) or don’t know what craft soda is (22 percent). Additionally, more than half of consumers (55 percent) said that natural and craft soda options are too expensive to purchase regularly.  

What also hinders consumers from embracing craft and natural options is comparisons to regular carbonated soda. Forty-two percent of consumers worry that natural versions of their favorite soda brands will not taste the same. Additionally, 18 percent of non-craft drinkers not interested in craft products because they prefer the taste of regular soda.

“While the carbonated soft drink category is facing consumer perception challenges, opportunities exist to strengthen brand trust, authenticity and experience through trending natural and craft segments,” noted Sisel. “However, natural and craft manufactures are tasked with justifying higher prices and increasing familiarity through better exposure. The predominant negative attributes of craft soda could be curbed in time as more products enter the market and pricing evens out.”