The report Carbonates – Global identified reduced sugar, natural ingredients, clean labels, new flavours, and functional ingredients such as fibre and gut health.
As consumers age, they are less likely to maintain a regular soft drink consumption habit, creating pressure for global brands to build everyday consumption among younger generations.
Innova said Gen Z consumers remain highly receptive to innovation and are attracted to brands offering fresh and engaging experiences.
According to the report the carbonated soft drinks brands that stand out best are those that offer a variety of flavours, have reformulated with health in mind, and position themselves as premium products.
Despite the innovation in the category carbonated soft drinks face challenges, such as the fact that consumers continue to perceive that soft drinks have too few healthy options.
To drive sales, brands are increasingly focusing on flavour variety, limited-edition launches and low-risk co-branding partnerships. Flavour remains the single biggest purchase driver, with consumers seeking both familiarity and novelty.
The report also suggested that challenger brands wanting to innovate in the market would have greater success in regions such as East Europe or the Middle East where dominance of the larger beverage companies is less pronounced.
As health concerns continue to influence consumers, Innova highlighted opportunities for brands to stand out by incorporating well-being benefits, indulgence experiences, and clean label ingredients and credentials onto established products.
Functional and well-being claims can also make a product seem more premium, the report said. This, in combination with natural and clean label messaging, can attract consumers who are willing to pay more, while helping manufacturers boost profit margins without threatening their core product line.
Innova said that successful brand positioning will need to increasingly target Gen Z consumers who are attracted to contemporary culture, fandom, and “shared moments with friends”. Opportunities include collaborations linked to gaming, streaming franchises and products positioned around mood enhancement and emotional wellbeing.
Innova predicts that flavour innovation will remain a key growth driver, while cola continues to serve as the category’s anchor. Dessert-inspired flavours and limited-edition launches are also forecast to shape future flavour trends.
Brands are also expected to reformulate products to be offer more broader health benefits not just sugar reduction but also other functional benefits such as protein, fibre, and gut-friendly ingredients.
Clean label claims are expected to evolve separately from sugar reduction messaging, with manufacturers emphasising simple ingredient lists, real ingredients and the absence of artificial colours to appeal to increasingly engaged label readers, the report said.
Companies looking to boost margins through additional consumption occasions are also likely to expand into different dayparts such as breakfast with premium higher-caffeine offerings, mid-morning snacks, and late-night snack options that are lower sugar for calming benefits.
Marieke Bokkes, Market Analyst at Innova Market Insights, said: “A lack of healthier options is the reason consumers most often give for cutting back on soda, cited by 36% globally.
“What’s striking is that health barely registers as a reason to drink it. Only 7% say they choose soda because it’s healthy. Therefore, health isn’t bringing people into the category; it’s quietly pushing them out. The brands getting this right are treating reformulation as a retention play rather than a repositioning one and keeping flavour front and centre while they do it.”