Bright, intriguing flavor is in. Convenience is in. Instant gratification is in. Drinking a lot of sugar calories though, that’s on its way out.
The array of single-serve beverages available is vast: fruit juices, juice drinks, waters, flavored waters, fizzy waters, functional waters, energy drinks, sports drinks, coffees, teas, milks.
Soda pop consumption, which surpassed 50 gallons per capita in the late 1990s and early 2000s, fell to 38.5 gallons in 2016, as bottled water took the lead, international news agency Reuters reported on March 10.
Sugary carbonated beverage sales have suffered amid weight and health concerns, which have spurred soda taxes in some cities, according to Reuters.
Bottled water sales have been growing for decades, and total volume rose about 9 percent to 12.8 billion gallons in 2016, compared to 2015, Reuters reported.
Driven by an influx of news and trending stories about beverage sugar tax reform and articles showcasing the effect of these beverages on the human body, “consumers are now more aware than ever before about sugar content in many traditional carbonated soft drink offerings,” and as a result, consumption is declining, says Todd Mullane, vice president of private label for Dakota, Ill.-based Berner Food & Beverage LLC.
This compels retailers to search for innovative replacements for soda, Mullane points out.
In the case of single-serve coffee pods, the growth is all in private brands, notes Clay Dockery, vice president of retailer brands for Massimo Zanetti Beverages USA in Suffolk, Va.
“It is more critical than ever for private brands to have the right mix in terms of blends and sizes,” Dockery adds. “Quality is also critically important, as customers are continuing to pay a premium price for convenience.”
Retailers are trying to meet consumer demand for big, bold coffee tastes that work well in iced drinks, says David Goldstein, CEO of Barrie House Coffee Co. LLC in Elmsford, N.Y.
“Coffee quality in K-cups is a differentiator, and innovating new flavors to hold the attention of thrill seekers looking for exciting flavors instead of classical coffee flavors will influence sales,” Goldstein adds.
Coffee consumption is on the rise in many formats, especially single-serve, as nearly one in three Americans own single-cup brewers, says Jonathan White, executive vice president, White Coffee Corp., Long Island City, N.Y.
Not only is coffee a calorie-free beverage, studies support its beneficial health effects, White adds.
Another growth area for single-serve pods is hot chocolate. “It serves a wider age range,” White says. “It’s a fun, relaxing kind of drink, and people are looking for a release from their very busy lives. Hot chocolate allows you to do that.”
Espresso-compatible pods are another important new trend, says Reid Chase, U.S. partner for Euro-Caps, based in Rotterdam, The Netherlands.
Consumers want “a premium experience and ethical sourcing,” in their single-serve espresso, Chase says. Euro-Caps provides a private label program for a top national U.S. grocery chain.
Espresso has been growing in popularity among U.S. consumers over the past five years, amid a growing appetite for “a better cup of stronger coffee in different roasts for different palates,” Chase says.
Product improvements are focused on environmental and social certifications, indicating whether a product is organic, fair trade and/or naturally flavored, Goldstein says, noting that retailers are requesting more transparency in product sourcing.
QR codes can also be effective marketing tools, communicating a brand’s farm-to-cup “story” and enabling retailers to leverage their packaging to engage with consumers, Goldstein says.
Coffee quality continues to improve, Dockery says. “Consumers today, especially millennials, have grown up with experiential moments with coffee. It’s critical that the quality of the blend continues to meet their expectations.”
Packaging improvements within single-serve beverages are focused on the conveyance of quality to the final user, Mullane says. “Glass packaging does this effectively, showcasing the product to consumers in a hefty, yet fragile container,” he notes.
In the alcoholic beverage category, 42 percent of consumers consider glass packaging to be the strongest indicator of quality, ahead of all other factors, Mullane says, citing market research firm Mintel’s figures from its January report “Beverage Packaging Trends, U.S.”
“It is not unreasonable to expect a resurgence of bottle-packaged single-serve beverages as more private brands enter the category looking to compete as premium options,” Mullane adds.
Private brands could also benefit from marketing the recyclability of their glass bottles, or if applicable, the bottling of their beverages in a solar-powered facility, Mullane adds.
In the coffee pod subcategory, “retailers recognize that the single-serve ecosystem has not been environmentally friendly, so many roasters are pursuing sustainable solutions,” Dockery says. Massimo Zanetti’s Purpod 100 is 100 percent compostable, Dockery adds.
Flavor and functionality are major purchasing factors for single-serve beverage consumers, Mullane says. Flavor is likely the bigger influence, but functionality is becoming especially important to brands as a way of bridging the gap from the negatively perceived “unhealthy” soft drinks to beverages such as ready-to-drink teas, sports drinks, energy drinks or fusion beverages, he adds.
“Instead of consuming a beverage that is potentially harmful to one’s well-being, a beverage purchaser can now be actively investing in their health with ingredient components intended to positively impact the human body,” Mullane explains.
Coffee has been validated as providing many health benefits, specifically for brain and liver function, to adults who drink about three cups daily, Dockery adds.
Health is the underlying driver of much of the recent shifts in single-serve beverages, Mullanesays. “U.S. consumers have identified sugar content and the presence of high fructose corn syrups as a key factor in what types of beverages they are not willing to consume. One unifying characteristic amongst newly released beverages seems to stem from what added health benefit a product can provide.” SB
Cvetan is a freelance writer from Barrington, Ill.