Every year since 2008, retail volumes of ginger ale have grown faster globally than CSDs overall. This trend is set to continue and, in the years between now and 2021, ginger ale will grow faster than every other sector of carbonates, with the exception of seltzers.
On one level, this is quite strange. Seltzers are sugar-free and more similar to carbonated waters than they are to cola or lemon/lime, but ginger ales are not. While not as sugary as other CSD segments, a 12oz can of Canada Dry still contains 35 grams of sugar. How is a full-sugar CSD segment able to do well at a time when consumers are increasingly rejecting sugary carbonates in favour of healthier alternatives?
Ginger ale usage turns Dark ‘N’ Stormy
The short answer is cocktails. Ginger ale-based cocktails have become increasingly trendy in a variety of markets. In Spain, the world’s fastest-growing market for ginger ale, the Gin & Ginger is taking share from the Gin & Tonic.
Americans are doing something similar with cocktails like the Dark ‘N’ Stormy, while Peruvians are mixing ginger ale with the local spirit pisco to make a cocktail known as the Chilcano. In the Middle East, meanwhile, ginger ale is outperforming colas in Israel and the United Arab Emirates, countries that, not coincidentally, have cocktail consumption well higher than all their neighbours.
Consumption occasions involving cocktails tend to be indulgent occasions when people are less concerned about the nutritional content of what they are drinking. Therefore, being so closely bound with cocktails has helped ginger ale shield itself from some of the larger anti-sugar trends plaguing the broader CSD category. A consumer who has switched from soda to bottled water for an everyday beverage is not likely to make the same switch for an alcoholic beverage when out with friends on the weekend. There is still a space for carbonates, even among health-conscious consumers.
Ginger ale also has some health-related advantages over its fellow CSDs. While it remains unhealthy compared to bottled water or unsweetened tea, all the leading brands have less sugar than leading brands of carbonates like Coke or Mountain Dew. That means while it is not a guilt-free drink, it does represent a healthier alternative when compared to most other CSDs.
Ginger itself is also an increasingly trendy health ingredient, valued for its ability to aid digestion – hence another popular usage; to calm upset stomachs. While mass brands do not usually contain actual ginger, many craft brands do. Therefore, there is a level of functional benefit to craft ginger ale that most other carbonates do not have.
Ginger ale cannot save CSDs on its own
None of this is to overstate the potential of ginger ale to mitigate the larger woes of the carbonates category. Even with strong growth forecast, ginger ale will be responsible for only about 1% of global CSDs volumes in 2021. Nearly all sales will come from North America, despite fast growth in places like Peru.
Ginger ale is also not entirely immune from some of the wider anti-CSD backlash. In particular, it remains vulnerable to sugar taxation. The risk here is twofold: first, the normal fall in demand that accompanies a price increase, but second, the possibility that being lumped together with other carbonates when being taxed will hurt ginger ale’s ability to distinguish itself as a healthier alternative to colas and lemon/lime drinks.
Instead, the lesson of ginger ale is a reminder that it is not all doom and gloom when it comes to traditional CSDs. Consumers still enjoy drinking carbonates; they are just re-defining the occasions on which they are consumed.
The beverage landscape is changing. For CSDs to survive, the category will need to figure out its new place in that landscape.