The world of beverages has seen a lot of twists and turns over the years, and right now we’re in the midst of another beverage revolution. Americans used to have a few simple categories of beverages like water, tea, coffee, soda, and alcoholic beverages, but as new ingredients become readily available and desires for healthier options become more popular, the beverage industry is putting new twists on classics and revamping the industry altogether.
Q3 2021 hedge fund letters, conferences and more
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More
New Beverage Trends
According to 2019 reports, US sales of alcoholic beverages reached $250 billion and sales of non-alcoholic beverages reached $919 billion. While Americans are increasingly disinterested in sugary drinks like sodas, we are very much interested in 5 newer categories of beverages. These are functional waters, organic beverages, a variety of coffee formats (mushroom coffee, anyone?), teas, and innovative alcohol flavors.
Drinking plain water is a struggle for quite a large percentage of Americans, particularly those who used to drink sugary drinks and are now trying to be more health conscious. As the societal health consciousness increases, functional waters are gaining massive popularity. In fact, the functional water market is expected to reach $18.24 billion within the next four years. Functional waters contain common additives such as vitamins, minerals, acids, fruits, herbs, and vegetables.
Organic beverages are on the rise also due to the increased health consciousness and the increased availability of organic products. This market is expected to reach $32.78 billion by 2027. Consumers are going for these beverages as part of their efforts to reach particular wellness goals. They are also very aware of the benefits of choosing organic, and they are looking for drinks without added sugars.
Coffee has already had a long history of running the world, but the newer varieties of types and formats are driving up demand and interest in coffee with a new gusto. By 2027, the coffee market will reach $133.9 billion. Consumers are still delighted with the energy boost, the availability of organic products, the variety of flavors and ingredients, and the lack of sugar.
Demand for the age old tea is also on the rise as brands are addressing the consumer’s demands for organic and plant based. The tea market will reach $68.95 billion by 2027 and many are calling tea the new coffee. Cold brews, functional additives, and plant based milks are giving tea a new face and a rising popularity.
The fifth category is of course alcoholic beverages, which remain a staple of our society. Now, alcohol companies are also jumping on the healthy additives trend as well and they’re creating new flavor profiles with ready-to-drink beverages. It’s now more common than ever to find alcoholic drinks paired with fruits like apples, tropical fruits, citrus fruits, and berries.
Of course, we must also mention the rise of the mocktail. As consumer’s desires for healthy options are affecting even the alcoholic category, many are turning to mocktails for a non-alcoholic option with an equally sophisticated flavor.
Infographic source: Mocktail