With the Americas accounting for 31% of global soft drink volumes and experiencing continuous growth, the industry faces increasing pressure to shift towards healthier options. This necessitates re-evaluating all factors from ingredients to marketing claims, recreating what are traditionally known as beverages. Consumer behaviour is crucial in determining product demand and influencing consumption patterns. Generation Z will shape the market for the next several decades. Their evolving behaviour significantly affects product choices, as they recognise the connection between their wellbeing and daily activities, encompassing both mental and physical needs.
Ingredients driving Gen Z's health choices in the Americas
In the Americas, especially Latin America, which comprises two of the top five consumer markets for soft drinks worldwide, Gen Z perceives “Being Healthy” mostly as mental and emotional wellbeing; a reflection of the economic and social realities of these markets and how it impacts their populations’ lives. Overall, being healthy is about taking care of oneself on multiple levels and this is also reflected in how Gen Z shops and what these consumers value in products.
Mental and emotional wellbeing are being driven by cannabidiol (CBD), as well as herbal extracts such as chamomile, and ingredients such as tyrosine, an amino acid responsible for supporting the work of neurotransmitters, in addition to L-Theanine. Healthier immune system claims are driven by vitamins and dietary supplements, such as vitamins C and D, zinc, and glutamine.
Innovation for indulgence: Future of carbonates
The Americas accounts for 45% of global carbonated beverage consumption, making it the most important region for the development and exploration of healthier soft drinks.
As the carbonates industry is pressured towards health and wellness, a major challenge is presented: how to develop an appetising product without the use of sugar, one of the main ingredients in most carbonates?
In 2022, Euromonitor International’s soft drinks data revealed that reduced sugar carbonates constituted 9% of sales in LATAM, contrasting with 26% in North America and 33% in Western Europe. However, apart from zero sugar, it is essential to consider what other health benefits carbonates can offer. Creating more natural carbonated beverages appears to be a strategy to meet consumer demands and reposition the product as healthier.
Euromonitor International’s Product Claims and Positioning data shows that in North America, 6.7% of carbonates claim to have zero artificial flavours, while 16.4% are marketed as natural. In LATAM, these numbers are lower, with only 11.4% positioned as natural. However, this situation is changing.
An example of this repositioning can be seen in Brazil with Guaraná Antartica, a guarana-flavoured carbonate by AB Inbev. In 2020, it introduced Guaraná Natu, a natural alternative with no added sugar, artificial flavours, preservatives, or dyes.
Looking ahead, carbonates requires more innovative solutions, considering its association with indulgence where flavour cannot be overlooked. Emphasising new technologies should be a priority for players to address the challenge of preserving sweetness without sacrificing flavour.
Reimagining sports drinks: Blurred lines and expanding limits
Consumer demand for sports and athletic beverages is changing. Energy drinks now include protein, BCAA, natural ingredients and less sugar. Similarly, milk products have transformed into protein drinks, offering high protein content from various sources such as whey protein, casein, and amino acids. These drinks often contain the claims of being lactose-free, sugar-free, and low in fat, appealing to health-conscious consumers.
Sports drinks, known for isotonic options and associated with hydration claims, increased by 30% in total volume sales, in LATAM over 2020-2021, and in North America by 8.7%, despite COVID-19 and inflation starting to hit both markets. The category is also predicted to record a 4.7% total volume CAGR in LATAM and a 5.5% CAGR in North America over the forecast period.
Analysing new SKUs and new product development in drinkable sports and nutrition products, it is clear there is a blurred line between isotonic variants focusing on hydration and other claims that might be more related to an energy drink or protein drink. This reimagined sports drink category, expanding its limits from the classic isotonic towards new areas, is responding to consumer demand for lower sugar diets, especially as the latter are followed to improve consumer fitness.
Looking at why Gen Z consumers in the Americas are searching for drinks instead of supplements is interesting: they are searching for simplicity of consumption, and prioritising RTDs (ready-to-drink) as the preferred feature, according to Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey 2022, which analysed which sports nutrition features Gen Z looks for, with a clear preference for RTD formats, while ranked fourth, is a transportable component. This trend follows the overall trend of consumers exploring and wanting a seamless healthy experience.
In 2022, YouTube star Logan Paul and rapper KSI launched Prime sports drink. It quickly sold out and became the official supplier of sports drinks for the UK football team Arsenal. By the end of the year, Prime rose to the top in terms of brand value. It stood out for its innovative composition, including 10% coconut water and BCAA, which expanded its applications and benefits. The brand further expanded its product line with a sports-focused energy drink containing 200mg of caffeine, 300mg of electrolytes, and no sugar.
Adapting to evolving consumer demands: New ingredients and experiences
Consumers are evolving to become increasingly complex, knowledgeable and critical regarding their own habits and what they consume. They are aware and have easy access to information - influencers, Wikipedia, blogs, news and more – advising them on what they should look for in what they eat and drink, with Gen Z, the digital natives, more susceptible to this.
Suppliers and players alike will have to review their focus on ingredients, looking for functionality aligned with naturalness. The format will also determine the product positioning, with a cross purpose between functional innovation and liquid supplements for convenience and a seamless healthy experience.
For further insight and discussion of soft drinks trends read our report, Hydration: The Gateway to Wellness.