Editor's comment: The beverage world in 2017

What’s big in beverages? Health, innovation and sustainability

By Rachel Arthur contact

- Last updated on GMT

Pic:Getty
Pic:Getty

Related tags: Ab inbev, Alcoholic beverage

What's driving the beverage industry forward into 2018? Here, we take a look at the biggest trends in the industry - and how they can be expected to develop.

1) Health and wellness

We all know that consumers are increasingly conscious about health and wellness. But what exactly does that mean for beverages?

In soft drinks it means reformulation to reduce sugar or remove artificial ingredients, developments in natural sweeteners (take for example Coca-Cola’s revelation last month that it will introduce a Coke sweetened entirely by stevia),​ and functional or fortified beverages to add value to products (Imbibe predicts ingredients with cognitive, immune or beauty claims​ will be ones to watch in 2018). It also means we can expect growth in bottled water​ to continue, leading to lots of innovation in making the beverage anything but plain.

In alcoholic beverages, there’s a drive to give consumers more information about the drinks they are consuming, such as calorie counts or ingredient information – bringing alcoholic beverages more in line with food regulation (see for example initiatives that have been launched this year in Europe​ and Australia​).

Early-success-for-non-alcoholic-Heineken-0.0_wrbm_large
Heineken 0.0%

Meanwhile, the rise of no- and low- alcoholic beverages​ is a small but fascinating sector to watch. Is the consumer base large enough to drive this sector forward? Have manufacturers truly conquered any issues with taste or consumer perceptions of inferiority? (a common cry among drinkers is ‘But what’s the point of a non-alcoholic beer?’ – so brewers: have your answers ready).

Certainly with big players (like Heineken with its launch of 0.0%​) are helping the category gain credibility,​ and retailers are increasing space dedicated to no/low alcoholic beverages.

And yet at the other extreme alcohol misuse continues to be a concern. Next year Scotland will become the first country in the world to introduce minimum unit pricing​ after a five-year journey through the courts, in an aim to reduce the harm caused by cheap, high strength alcohol. 

The drive to tax sugar-sweetened beverages has not lost any steam this year - rather the opposite in fact. A number of jurisdictions​ around the globe have introduced, or have confirmed they will introduce, a sugar tax. However, what’s also been interesting to note this year is the fight back against such taxes – with some victories for opponents already declared. 

In the US, Boulder, Berkeley, Oakland, San Francisco, the Navajo Nation, Seattle and Philadelphia now have or will have a soda tax. However, Santa Fe voted against a soda tax; Cook County repealed its tax just months after it went into effect; and opponents are planning to fight the tax in Philadelphia.  

Faced with a pressing obesity problem in many nations, encouraging healthy living is attracting new measures from governments as well. It will be interesting to see how calls for further legislation – such as warning labels on soda​ or even plain packaging for beverages deemed to be unhealthy – develop in 2018 and beyond.

2) Entrepreneurs and innovation

The drive pushing health and wellness is also pushing innovation, with new brands continuing to emerge in the hope of grabbing share from carbonated beverages. 

innovation

Essential checkboxes for emerging brands include low calorie, natural ingredients and clean label. But ticking these boxes is far from a guarantee for instant success - in fact, it’s rare for a new soft drink not​ to make these claims.

So entrepreneurs are turning to new ways to appeal to consumers: from functional ingredients and lesser-known superfoods to completely different ways of sourcing or producing beverages (take for example deep sea or alkaline water).

In the beer world, craft brewers have long staked their claim to being leaders in innovation with constant developments in flavors and styles and an entrepreneurial mindset. Meanwhile, the debate over ‘small independent brewer’ vs ‘big multinational brewer’ is not going away any time soon. Big brewers need to have small, innovative, well-built brands in their portfolios, while craft brewers seek the muscle and money of big brewers in order to grow.

To take some examples from 2017: AB InBev’s acquisition of Pirate Life​ (Australia, November); Molson Coors acquires Trou du diable​ of Quebec (Canada, November); Coca-Cola’s acquisition of Feral Brewing​ (Australia, October); AB InBev’s acquisition of 4 Pines​ (Australia, September); and Constellation Brands’ acquisition of Funky Buddha Brewery​ (Florida, August)… you get the picture. 

The big brewer vs craft brewer debate has taken on some interesting twists this year. In an amusing escapade, The Brewers Association - the trade association for US craft brewers - retaliated against craft beer acquisitions by launching its own tongue-in-cheek crowd-funding campaign to raise the $213bn needed to purchase AB InBev,​ the world’s largest brewer. The ‘Take Craft Back’ campaign has received the support from nearly 12,000 craft beer lovers. 

Meanwhile, AB InBev has just launched an initiative to boost its craft beer brands​ and highlight the values such brands stand for. It will pump $2m into community projects chosen by each brewery; and focus on sustainability with solar panels at all craft breweries and a transition to 100% solar and wind renewable electricity by 2020. 

Craft is still the cool kid, but the question always ligers – where’s it all going next? Certainly growth rates are not as impressive as they once were, but there’s still plenty of momentum around the world. Will there be a split between ‘mass craft’ and ‘true craft’? 

Premiumization deserves a quick mention here as well (with craft a classic example on how consumers are interested in quality over quantity) so expect continued innovation and developments across all beverage categories in this area next year.

3) Sustainability

Take a look at some of our most-read articles for each month of 2017 in the timeline below. Meanwhile, do leave your thoughts as to what areas you think will be on the agenda for 2018 in the comments box. 

Consumers - and in particular the all-important millennial category - are increasingly concerned about the values brands stand for.

So brands should be thinking more and more about what they can do to be ethical and sustainable, and also about communicating these credentials to consumers.

And as brands realise the importance of acting in a sustainable manner - and while consumers start to expect evidence of environmental considerations - the importance of standing up to scrutiny will increase as well.

There have been some encouraging milestones this year. We’ve got carbon neutral breweries (for example Heineken​ and Carlsberg​); carbon neutral brands (such as evian​); steps forward in degradable packaging (such as Waiakea​); and plans to reduce carbon emissions in transportation (Anheuser-Busch​).

And of course there are plenty of other less headline friendly - but just as important - aspects to sustainability in the beverage industry. Recycling rates in developed countries remain disappointingly low - so how can these be improved? How can we increase the use of rPET used in plastic bottles - without problems with price or availability? Can new materials or increased light weighting meet the durability standards for beverage packaging? Let’s hope 2018 is the year these projects truly gain the momentum they need for a sea change.

Related topics: Editor's Choice

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