The beverage industry is not just progressing; it’s evolving at a rapid pace to meet the new customer’s needs. This underscores the need for businesses in the beverage sector or any business associated with the beverage sector to stay up-to-date with industry affairs and continuously adapt and innovate.
Presently, the global beverage industry is thriving. With a CAGR of 4.33%, it’s on its way to reaching a staggering valuation of $2,213.306 billion by 2029. This growth is driven by a variety of factors, from the rise of nutraceuticals to the increasing popularity of health-oriented options. For businesses that will definitely experience the impact of this market growth, understanding these beverage industry trends is not just interesting; it’s a critical factor for future success.
A Look at how much Consumers are Spending on Popular Beverages
The table below highlights a significant trend in the US market, where consumers are increasingly choosing healthier drink options over alcohol. This shift, which is not limited to a specific age, gender, or income group, and is contributing to the popularity of sparkling beverages and seltzers. This trend resonates across demographics, except for households earning below $50,000 annually.
9 Key Trends Shaping the Beverage Industry
The beverage industry is evolving rapidly, driven by changing consumer preferences and innovative technologies. This evolution encompasses sustainability initiatives, the rise of functional beverages, and more. To stay ahead, it’s crucial to explore the key drivers behind these beverage industry trends in the following section and understand how they influence the future of the industry.
1. The Sober Revolution: Shifting Preferences in Beverages
- Consumers who prefer drinking alcoholic beverages: 63%
- Consumers who prefer only drinking non-alcoholic beverages: 36%
Both market trends and consumers are pointing towards a shift in preferences, with non-alcoholic beverages gaining traction and alcoholic beverages experiencing a decline in spending and consumption. This shift is further highlighted by the projected 10% CAGR growth of worldwide zero ABV (Alcohol by volume) “spirits” between 2023 and 2033.
Terms like “sober curiosity” and “damp lifestyle” highlight the growing demand for non-alcoholic and low-alcohol beverages, such as beer, wine, and seltzers. These beverages offer the experience of alcoholic beverages without the health risks, such as feeling unwell the next day and impaired driving ability. This shift towards healthier alternatives is a positive sign for the industry and mankind in general.
Generational Beverage Preferences: How Different Ages are Shaping Beverage Trends
However, understanding the beverage preferences across generations is crucial for organizations in the beverage industry and organizations working with the beverage industry. It’s not just a strategy, but a marketing trend that can lead to exponential business growth. Here’s an overview of the drinking habits of Baby Boomers, Generation X, Millennials, and Generation Z, supplemented with relevant statistics. This knowledge is vital for your business’s success.
Baby Boomers (Born 1946-1964):
Baby Boomers exhibit higher alcohol consumption rates compared to younger generations. Research by NPHiC indicates that 72% of Baby Boomers have consumed alcohol in the past month, surpassing the 65% of Generation X and 53% of Millennials.
This generation shows a preference for wine and beer, often choosing these beverages for relaxation and social gatherings. Notably, there has been a steady increase in alcohol use among Baby Boomers, particularly among women, with binge drinking rates rising from 12.5% to 14.9%.
Generation X (Born 1965-1980):
Generation X consumers are known for their appreciation of wine, purchasing more than any other generation, including Baby Boomers. Approximately 48% of Gen Xers report drinking wine at least once a month.
They also enjoy beer and spirits, with a tendency to select beverages based on established tastes rather than current trends. This generation often consumes alcohol for relaxation, making them more likely to drink alone compared to younger cohorts.
Millennials (Born 1981-1996):
Millennials are characterized by their openness to diverse alcoholic beverages, including craft beers, spirits, and wine. They are significant contributors to the global alcoholic beverages market, leading a 12% rise in global alcohol consumption post-COVID-19.
However, there is a noticeable trend towards moderation, with health concerns influencing their choices. The rise of non-alcoholic beer and cocktails aligns with Millennials’ preference for healthier lifestyles.
Generation Z (Born 1997-2012):
Generation Z exhibits a marked decline in alcohol consumption compared to previous generations. Only 18-20% of legal drinking age Gen Z individuals report regular consumption of beer, wine, or spirits, significantly lower than older cohorts.
This generation prioritizes health and wellness, often opting for non-alcoholic alternatives and participating in sober social activities. The emergence of sober bars and alcohol-free events caters to this demographic’s preferences.
2. Wellness in a Bottle: The Rise of Functional Beverages
Products that support health and wellness are on the rise, presenting a significant opportunity for business growth. According to a study by NIQ, 46% of customers prioritize physical and mental wellness, driven by the fact that 47% of Americans have three risk factors for heart disease. This shift towards functional beverages opens up new avenues for business in the beverage industry.
These beverages are marketed for their numerous health benefits that go beyond hydration, such as boosting energy, cognitive function, gut health, and improving immunity. For businesses in the beverage industry, aligning your brand offerings with these consumer needs is crucial. However, it’s not just about making claims, but ensuring they are backed by science. This reassures consumers and builds confidence in your brand.
3. Plant-Based Power: The New Beverage Frontier
The plant-based food and beverage market is experiencing an unprecedented surge, indicating a significant shift in consumer preferences. Despite inflationary pressures in the market, the milk-alternative sector has shown remarkable growth, reaching a total of $3.1 billion in US sales last year. This growth trend is also evident in other sectors, with coconut water witnessing an 18.10% growth rate increase and lemonade up by 7.1% . These figures underscore the potential of the plant-based market and the opportunities it presents for businesses.
On the other end of the spectrum, beverages like dairy grew by only 0.04%. This decline in the dairy market underscores the importance of considering customer preferences. The beverage brand functioning in this sector has a unique opportunity to align with the growing demand for plant-based beverages. As the growth of the dairy industry has really slowed down, it’s crucial to keep an eye on it and adapt to the changing market.
4. Bitter is Better: The Rise of Unsweetened Beverages:
The current wave of health consciousness is reshaping the beverage industry, with a noticeable decrease in the consumption of sugary drinks. This shift is largely due to the understanding that high-sugar beverages are a leading cause of obesity. In response, beverage companies are innovating and introducing zero-sugar drinks, contributing to a healthier society.
People are not just stirring away from sugar; corn syrup is another major culprit in the beverage industry. This particular sweetener is extensively used in the beverage industry, and it is specifically the kind of sugar that makes it difficult for the body to break down. It’s interesting to note that Europe has banned the use of corn syrup, while it is widely used in other parts of the world, highlighting the global differences in health regulations and consumer preferences.
Supporting this trend, a study from the Journal of the Academy of Nutrition and Dietetics found that heavy consumption of sugar-sweetened beverages in the U.S. declined significantly between 2003 to 2016.
5. Your Drink, Your Way: How Personalization is Shaping Beverages
Personalization is a big movement in the consumer packaged goods (CPG) segment. These days, 64% of global consumers are seeking out personalization more than ever, as they want beverages tailored to individual needs and preferences. These tweaks are mostly done on the basis of health and wellness.
This is also the reason for the drive for at-home beverage creation, like kombucha brewing kits, as well as infused Tea, water, and mocktails. One of the interesting areas of development is the AI-powered platform, which can analyze user data on dietary restrictions, health goals, and taste preferences to create unique flavors.
Coffee and Tea are the areas where these beverage customization tools are seeing the most utilization, but in near future energy drinks and other functional beverages may also offer some opportunities for personalization.
6. Your AI Barista Awaits: The Tech Revolution in Beverages
Imagine a virtual mixologist or barista powered by AI, ready to cater to your beverage preferences. This AI entity is capable of not only answering your queries but also crafting your beverage exactly as you like it, all at your convenience.
With 27% of businesses investing in AI tools, the landscape of customer engagement is evolving. AI has successfully reshaped email marketing, customer support, and more. Moreover, the ROI from this AI-powered experience is substantial, offering a unique and exciting way for customers to interact with brands. The data collected from these interactions is incredibly insightful, enabling brands to continually refine their offerings and marketing strategies.
7. Eco-Friendly Flavors: Why Sustainability Matters in Beverages
Sustainability is one of the major factors in today’s beverage industry, and it’s not going away anytime soon. To some extent, it is due to the increasing awareness of today’s consumers about the environmental impact of their choices, with 69% of consumers stating sustainability is more important than ever before. Equally important, government regulation across the globe is also on the rise, providing a reassuring support to the industry’s commitment to sustainability.
Presently, many beverage brands are already focused on adopting sustainable practices. These mindful approaches not only reduce the environmental footprint but also enhance the brand image, paving the way for a more sustainable and positive future for the industry.
8. World of Flavors: The Globalization of Beverages
Thanks to the improved supply chain and import-export, every major country now has access to a wide variety of global flavors. This development has significantly increased the availability of global flavors, keeping you informed and aware of the diverse options at your disposal.
The United States, with its increasing diversity, is playing a significant role in the global food market. Notably, 1 in 4 consumers are drawn to exotic tastes in their beverages, reflecting a broader interest in international flavors. Drinks that were once difficult to find on American shelves are now available to consumers in both online and offline stores.
9. The Boom in RTD (Ready-to-Drink) Cold Beverages
The retail beverage aisle is expanding, with projections indicating that the global energy drinks market will grow at a compound annual growth rate (CAGR) of 7.9% from 2024 to 2030. Energy drinks usually powered by taurine and caffeine are one of the major consumer preferences. Second is cold coffee, as traditionally coffee requires brewing time, but RTD cold coffees have become a game changer, attracting many new consumers to the coffee world.
For organizations venturing into the RTD cold beverage market, the key challenge is to differentiate themselves from competitors in the retail aisle. However, this challenge can be effectively addressed by prioritizing customer experience and first-party data collection, which have the potential to curate game-changing businesses strategies.
Wrapping Up
As the beverage industry continues to evolve, driven by trends like health-conscious choices, functional drinks, plant-based options, and sustainability, businesses must be proactive in understanding and adapting to these changes. These shifts are not just fleeting trends but fundamental changes that will shape the future of the beverage market. For the beverage industry to thrive, businesses within and outside the sector have to come together and collaborate, a task that requires them to harness trustworthy data-driven solutions. As these solutions will help businesses establish strong connections with key decision-makers, anticipate shifts, make informed decisions, and innovate effectively.
So, wait no more! Dive deeper into the evolving beverage industry trends that are transforming the industry!