Given the growing health and wellness movement among U.S. consumers, conventional wisdom would suggest that soft drinks would suffer. But in reality, the opposite is happening, particularly in the alcoholic beverage space. And amid the juxtaposition of the sober-curious consumers and the premium spirits drinkers, soft drinks have plenty of room to grow.
Soft drinks and health and wellness are an unorthodox couple. Many people abstain from alcohol because of health concerns, culminating in the rise of Dry January—in which one-in-five (21%) U.S. consumers participated in 2019. Among last year’s participants in the alcohol-free challenge, soda drinks were the most popular option, as nearly half (46%) consumed them, followed by water (43%).
Social moderation and health and wellness, however, are not limited to January, and the year-round lifestyle provides retailers and restaurants with a huge opportunity to grow soft drinks sales. At U.S. retail, non-alcoholic beverages are worth $7 billion more than just four years ago, and $3.2 billion more in the last year alone.
Whether at home or at restaurants and bars, soft drinks are performing well—55% of U.S. consumers enjoy soft drinks when eating and drinking out, and U.S. retail sales experienced 2.9% growth in the past year.
And as soft drink manufacturers and brands continue to evolve meet healthier lifestyles (with reduced-sugar, healthier and premium options), the opportunity to effectively and strategically engage both the regular and occasional abstainers will continue to grow.
Spirits Drinkers Eye Premium Mixer Options
But it’s not just the abstainers who are driving soft drinks forward; spirit drinkers are playing a big part too. While 21% of consumers participated in the last Dry January, 79% didn’t—and January is just one month in the year. Spirits are performing better than beer or wine, posting 5.7% sales growth at U.S. retail in the last year. They’re also the biggest category in several key channels in the on-premise alcoholic beverage space.
Different spirits demand different mixers, and spirit drinkers are willing to explore mixer variations depending on the spirit on offer, ranging from soda to fruit juice. In the U.S. on-premise market, vodka and whiskey are the biggest revenue drivers for spirits, as 20% of survey consumers drink vodka and 17% drink whiskey. Club soda and cola are among the favorites for mixer pairings.
In the off-premise realm, some non-alcoholic mixers are performing well at retail; cola sales are up 2.2%, club soda sales are up 7.1%, but beverages like orange juice (down 6.3%) and cranberry juice (down 5.8%) have some ground to make up.
Regardless of the base liquor, mixed drink consumers have very specific flavor preferences. Berry (54%) and fruity/sweet (50%) are top consumer flavor preferences for the cocktails they drink. At retail, assorted flavor soft drinks have posted an impressive 18.9% sales growth rate over the past year—followed by an increased affinity for ginger (sales of ginger beer are up 7.7%, and ginger ale sales are up 5.9%). The time is ripe for spirits and beverage manufacturers to increasingly capitalize on ready-to-drink cocktails that align with mixer and flavor preferences.
Soft drinks sit at the crux between health-conscious abstaining and premium mixing. The onus is on U.S. retailers, suppliers and manufacturers to maximize a sizable revenue opportunity, both this month and throughout the year.
The insights in this article were derived from:
- Nielsen CGA On-Premise Consumer Survey (OPUS), 2019.
- Nielsen CGA Channel Strategy Report, 2019.
- Nielsen Total U.S. measured off-premise channels, 52 weeks ended Nov. 23, 2019.