Declining Soda Consumption Opens the Door for Functional Beverage Sales

CONCORD, N.C. — Declines in soda consumption has presented operators with the opportunity for incremental sales in functional beverages, cold coffee and more.

According to S&D Coffee & Tea's How to Deliver a Better Beverage Experience, soda consumption reached a 31-year low in 2016, leaving ample room in the better-for-you beverage space.

Operators can boost beverage sales, and the meaningful incremental profits that come with them, by focusing on three key areas:

Functional beverages

Within functional beverages, there are three main areas of focus: botanicals (to be used as health and flavor agents), protein (namely the use of collagen in beauty drinks) and superfoods (think charcoal lattes and mushroom coffee). These ingredients have experienced significant menu growth in recent years, with turmeric and charcoal use increasing by 200 percent.

Twists on old favorites

Six ways that operators can elevate staple beverage offerings, include craft sodas, custom-blended juices and trendy cold coffees like nitro and cold brew, a category projected to grow by nearly 80 percent by 2021. Water also sparks opportunity: With the explosive popularity of natural sparkling waters comes interest in exotic alternatives like maple, coconut and cactus water.

Making an emotional connection

More and more customers, particularly Gen Zers and millennials, are interested in the story behind the food and beverages they purchase. This is where creating an emotional connection is key, according to S&D Coffee & Tea. Delving into an item's origins and sustainability story can create a lasting impression on even the savviest consumer.

Other findings from How to Deliver a Better Beverage Experience include:

• Demand for authentic beverages made with real, better-for-you ingredients is not going away any time soon. On the contrary, a growing number of consumers are seeking a better beverage experience every day. Along with flavor and convenience, consumers are seeking beverages with benefits.
• Nutrition-packed superfoods like turmeric and charcoal and botanical agents like lemongrass, elderflower and hibiscus are now being infused in everything from cocktails to coffees and teas. Not only do these health-forward ingredients pack nutritional properties, unique flavors and brilliant colors, they also play well on social media, leading to a surge in trending Instagram posts featuring charcoal lattes turmeric teas and more.

"Operators can take advantage of these trends in the form of limited-time offers (LTO) that can create buzz or are craveable," said Helen Griffith, vice president, marketing, S&D Coffee & Tea. "An LTO creates a sense of urgency and highlights the special craft nature of these drinks."

The white paper suggests that operators test their customers' thirst for premium beverages with LTO offerings like turmeric iced tea or a vanilla collagen latte. 

"These trends put to rest the notion that customers are hesitant to spend money on nonalcoholic beverages," Griffith added. "For example, menu mentions of craft soda have increased by 40 percent over the past four years, while lemonade appears on 60 percent of menus. Clearly there is great interest in premium, nonalcoholic beverages, especially those with artisanal appeal that tell a great story."

Click here to view the complete How to Deliver a Better Beverage Experience white paper.

A subsidiary of Cott Corp., S&D Coffee & Tea partners with more than 110,000 customers, delivering beverage solutions to some of the world’s best-known foodservice operators. It is based in Concord.