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Round-Up - NPD: Is “Craft” the Next Big Thing for Soft Drinks and Fruit Juices?

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The success of craft beer may be one of the biggest success stories in packaged beverages in the last 50 years. Craft beer currently accounts for over 14% of the overall beer market in the US and craft beer production nearly doubled between 2011 and 2014, according to the country's Brewers Association.

Craft beer has clearly captivated beer consumers. But, can craft beverages do the same for consumers of carbonated soft drinks fruit juices?

You can’t blame producers of non-alcoholic beverages like CSDs and fruit juices for looking at the beer category for innovation inspiration. Both of these sectors have run into difficulty from consumers who are either bored with existing offerings, or scared off by health concerns ranging from sugar consumption and its role in promoting obesity to the perceived safety of artificial sweeteners. And, neither CSDs nor fruit juices are exactly burning up the sales charts in the US, as Datamonitor Consumer expects continued sales declines for CSDs and an estimated compound annual growth rate of less than 1% for fruit juices for the period from 2013 to 2016.

Craft beverages are increasingly seen as a way out of this no-growth ghetto. Some evidence suggests that consumers are open to beverages that ring the same marketing bells that craft beer does, such as the use of “real” or “authentic” ingredients. One rich vein of innovation in soft drinks has been “real sugar” extensions like Pepsi Throwback, which debuted in 2009 and was recently replaced by Pepsi-Cola “Made with Real Sugar”, as well as Dr Pepper made with Real Sugar, the latter a 2010 launch. Myriad smaller producers have launched CSDs made with real cane sugar over the past decade, including Hansen Beverage Co and Jones Soda Co, as well as newcomers like Boundary Waters Brands, with its Joia All Natural Soda in offbeat flavours like Lime, Hibiscus & Clove, and Proper Soda Co with its Hop Soda.

Craft soft drinks have yet to pose even a moderate challenge to the established order in CSDs, but that could be changing. PepsiCo itself is placing a vote of confidence in the future of craft soda with the debut of Caleb’s Kola, an offering named after Caleb Bradham, the North Carolina pharmacist who came up with the original formulation for Pepsi back in the 1890s. Old-style glass bottles differentiate Caleb’s from the pack as does the beverage’s unique formulation, which blends Fair Trade cane sugar and kola nut extract from Africa with a “special blend of spices” from around the world. Conspicuously absent is any mention of PepsiCo parentage and, while Caleb’s may be crafty, it is definitely not aimed at sugar-averse consumers. One bottle of Caleb’s Kola contains 29 grams of sugar (although it should be noted that the bottle size is 10oz versus the more typical 12oz package size).

The hope is that Caleb’s Kola will connect with younger consumers, especially so-called Millennials in their 20s and 30s, who are driving the craft beer market. Indeed, these consumers seem to understand the craft concept better than any other age group. 

According to Datamonitor Consumer’s 2014 Q4 global survey, just 11% of American consumers in the 25- to 34-year-old age group responded that they “do not know what this is” when asked about what qualities they associate with the term “craft”. This compares to 28% of 18- to 24-year-olds, and 32% of 65-plus-year-old consumers. Moreover, the 25- to 34-year-old age group was also the most likely of any age group to equate the term “craft” with the word “authentic.”

Intriguingly, the word “artisan” rings the authenticity bell even louder for this group of young consumers, as the latest Datamonitor Consumer survey found that 30% of these Americans equated “artisan” with “authentic”, versus 26% that associated “craft” with “authentic.”

Fruit juice marketers may also be able to capitalise on burgeoning interest in the “craft” concept. Already, there are indications that juice is picking up inspiration from the craft beer sector. On 15 November, the city of Pittsburgh, PA held its first 'Juice Fest' as a way to celebrate the “booming (juice) scene around town”. Much like various craft beer festivals that emphasise sampling, Juice Fest offered samplings of new and novel juices as well as awards for the best overall juice, the “meanest green” juice, best smoothie, most unique product and “People’s Choice.”

Packaged juice makers are beginning to pick up on craft-type verbiage, as is the case with new Project Fresh Craft Juice from New Haven, CT-based FreshBev. This range of raw, “fresh pressed daily”, 100% organic juices is cold pressed instead of heat-pasteurised (the latest rage in the juice world) and comes in various fruit and vegetable blends. Offering flavours like Carrot Apple Ginger Blend and Whole Deep Kale Blend, Project Fresh may be the first so-called “craft juice” to hit the US market.

It may also be the last, as the company has secured trademarks for “a craft juice”, “juice crafters”, and “craft juicer,” according to Trademarkia.com. The line may also be the first to flag the use of “micro-milled” ingredients. Micro-milling is said to reduce selected vegetables into “micron-sized particles” that reportedly deliver fibre and protein without affecting the nutrition or taste of the fruit juices they are mixed with.

Craft production techniques may connect with juice consumers, but whether or not this is enough to sidestep health issues like sugar contents remains to be seen. Much like CSDs, fruit juices have an issue when it comes to sugar content. 

Datamonitor Consumer’s 2014 Q4 global survey revealed that 50% of American consumers characterise the sugar content of juices and smoothies as “high” versus “medium” or “low.” While that compares favourably to carbonated drinks, which 78% of Americans put in the “high” sugar column, it shows that fruit juices and smoothies are vulnerable if worries about sugar continue to escalate.


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