Has modern soda become the third pillar of America’s carbonates market?

Modern Soda’s rise: Overview

• Modern soda has grown into a $1.8bn US category, with sales up 83% year-on-year.
• Taste and enjoyment are increasingly driving purchases ahead of health benefits.
• Prebiotics dominate innovation, but brands are exploring protein, collagen and mood-focused ingredients.
• The category is expanding soda occasions rather than replacing traditional soft drinks.
• Future growth will depend on taste, price and accessibility as competition intensifies.

North America has created and embraced the soft-drink segment: “modern soda”. Ever since Walmart first introduced the concept five years ago, it has become a recognisable category, valued at $1.8bn in 2025, with an 83% year-on-year increase in dollar sales.

So much has its popularity grown that it’s been hailed as a potential third pillar of soft drinks, alongside its established counterparts: full-calorie varieties and diet soda options.

Reduced sugar content, functional ingredients and bold branding have helped modern soda carve out a stand-out place in the US beverage market. But is the category merely a fad or does it have staying power? And where, and how, is its success resonating with shoppers?

A new take on soft drinks

Modern soda, a relative newcomer in the soft drinks category, combines the familiarity of carbonated soft drinks (CSDs) with functional or better-for-you (BFY) positioning.

“As for whether it is a new segment or not, I would say it is a bit of both,” says Brandt Maybury, Co-founder and Managing Director of Tastehead.

Sugar reduction and premium soft drinks are well established, but bringing these together, often with added functionality, has created a recognisable subsection of CSDs.

“Modern soda is giving consumers more reasons to buy by solving need-states they feel compelled to satisfy,” Alex Beckett, Principal Strategist at Mintel Food and Drink, explains.

Electrolytes, prebiotics, antioxidants and collagen all promise small, incremental gains. “And right now consumers take any perceived win they can get,” Beckett says.

Far from stagnant, though, modern soda has adopted lessons from other wellness categories to shift spending away from traditional soda and adjacent drinks. “The sector is definitely evolving,” Beckett shares.

In the year to September 2026, market intelligence provider Mintel found that functional claims appeared on 40% of US CSD launches, marking an all-time high, with much of this driven by prebiotics.

“Modern soda has offered a fresh take on the soda experience consumers know and love,” Erica Grundish, General Manager of poppi, says.

It is bringing something new to the soda aisle by combining the flavours and ingredients consumers demand.

Health gets shoppers through the door, but taste keeps them coming back

Reduced sugar and gut health have been important drivers of modern soda’s emergence and growth. However, Tastewise’s social, menu and online retail shelf data for the US suggests health is becoming a less prominent purchasing motivation.

“The clearest story in our data is that modern soda is being chosen for fun and refreshment first,” Miriam Aniel Oved, Senior Consumer Trends Analyst at Tastewise, says. “Health is the cue going backwards.”

Analysis from August 2025 to September 2026 shows that ‘healthy’ as a purchasing driver for modern soda products is down about 23% year-on-year and now accounts for under 4%. Wellness still works, but as a supporting note on a drink people want to enjoy, not the reason they pick it up.

Through its consumer focus groups, Tastehead has found one consistent pattern: shoppers seeking a healthier soft drink still prioritise lower sugar over other health benefits.

“Where it becomes divided, however, is how you best achieve that,” Maybury says.

Many consumers want zero sugar, while others are happy with a smaller amount of sugar over sweeteners. Some want to avoid artificial sweeteners, while others dislike natural ones too, due to taste or their perception of the ingredient.

“Equally, one consumer will see agave or coconut sugar as a better option, while another will say that ‘sugar is sugar’,” Maybury adds.

Today, ‘fun’ is among the top reasons US consumers give for choosing modern soda, cited by around 5% of consumers, according to Tastewise data. This represents a year-on-year increase of approximately 9%.

Hydration is being overtaken by joy, with ‘refreshing’ sitting roughly flat at about 5%. ‘Nostalgia’ also remains a relevant driver, at about 3%, suggesting consumers still expect modern soda to deliver the familiar CSD experience.

Beneath the health appeal, these drinks are recognised for their good taste, too.

“The functional claim brings the rationale, the tantalising flavour brings repeat purchase,” Beckett shares.

Modern soda brand poppi has found this. “Our packaging and cultural presence sparks curiosity, and our ingredients give consumers a reason to try us,” says Grundish. “But our great taste is what keeps them coming back.”

A sought-after taste is particularly important today as consumers become more discerning about functional claims and whether products justify their premium price.

Prebiotics lead functional formulations, but what comes next?

Gut health has been the dominant functional proposition, with prebiotics leading new product development (NPD).

“This is partly due to the ease of adding prebiotic fibres to a beverage formulation, without overly disrupting taste, texture or ingredient costs,” Maybury says.

According to Innova Market Insights, 69% of modern soda launches in the US carry a gut-health claim, and 57% of consumers in the US and Canada say they are actively trying to include fibre to improve their gut health.

“The shelf is moving faster than the conversation,” Oved says.

According to Tastewise data, prebiotics is the single most common claim on new US CSD launches, with 21 new products in the last 12 months, against six for postbiotics and four for fibre.

However, differentiation will be an ongoing struggle as prebiotic claims become more commonplace. Consumer scepticism around functional claims is another challenge, particularly if brands cannot substantiate the benefits they promote.

“The biggest opportunity is moving beyond gut health into other functional needs,” Mimi Bonnett, Senior Director of Insights at Innova Market Insights, says.

In addition to digestive health, consumers are interested in nutritional benefits such as protein and fibre.

Demand for increased protein in these products is rising fast, for instance, Tastehead details. But it can be more challenging for brands to execute in acidified beverages, creating a current manufacturing challenge. Other emerging opportunities include collagen, adaptogens, nootropics and ingredients that strive to target mood and focus.

“The supplements market is booming, and that will continue inspiring beverages, but brands must be vigilant to consumer cynicism around claims, especially regarding mood,” Beckett warns.

Genuine incremental growth or taking share?

In the US, Mintel data show that 19% of CSD drinkers consumed functional soda, such as Olipop or poppi, in 2026. While this represents a lower usage than the 51% who drank regular full-calorie sodas, such as Coca-Cola or Pepsi, the consumption of functional soda jumps to 29% among 16- to 34-year-olds.

Modern soda versus the wider US carbonates market:

Source: Tastewise, August 2024-July 2026. Figures are approximate and represent tracked social, menu and shelf signals, not beverage sales or market share. Tastewise confirms this data interprets modern soda as prebiotic soda, functional soda, and Olipop and Poppi together.

“Across 23 months, there’s no pattern of modern soda rising while another line falls,” Oved says.

It moves in the same direction as full-sugar and zero-sugar soda month to month, and the aisle as a whole is gaining. However, social signal cannot prove incremental volume. That needs sales data.

“So the careful answer is that we see no sign of share taken from the other soda lines in consumer behaviour,” Oved adds.

“I would expect growth to come from a mixture of occasions,” Maybury shares.

Someone might replace a traditional soda with one; choose it instead of water, juice, or kombucha; or have an additional drink during the day.

Accelerating mainstream ambitions

Modern soda is moving beyond niche discovery to become more established in mainstream retail, making it more accessible to everyday shoppers.

Walmart was an early adopter, helping validate the category and create a dedicated in-store destination for brands. Convenience retail is an important growth channel for modern soda brands. Tastewise data shows modern soda products are disproportionately popular with convenience store shoppers, over-indexing in US stores including Speedway, Casey’s, Kwik Trip and Circle K.

“It’s also a category with a lower barrier to entry for new, innovative brands,” says Maybury, with lower minimum order quantities making modern soda an accessible category for launches.

Third-party beverage co-packers can have minimum order quantities (MOQs) as low as 1,000 litres, whereas accessing similarly small production runs can be considerably harder for categories such as extruded snacks or industrially manufactured confectionery.

Incorporating functional ingredients into a liquid can also be easier, generally involving fewer structural and textural challenges than incorporating them into confectionery or bakery products. The potential for a long ambient shelf life is another advantage.

“What’s interesting is how much of the innovation has come from smaller brands, while the larger businesses are now responding in different ways,” Maybury says.

PepsiCo acquired Poppi and launched Pepsi Prebiotic Cola, while Coca-Cola has entered the market through Simply Pop. This creates a competitive environment in which emerging brands must defend their differentiators while larger players bring substantial distribution and marketing resources.

Can modern soda become the third pillar of the carbonates market?

“I believe modern soda is already establishing itself as a third pillar of the CSD category,” says Grundish.

Today, poppi sees an opportunity to extend beyond the grocery aisle, appearing in stadiums, on college campuses and anywhere where shoppers already consume soda. “We’re also seeing encouraging business results,” Grundish adds.

However, on whether modern soda is a new segment or simply repackaging, Oved offers a cautious look: “Our honest read is that the data doesn’t settle it”.

Modern soda behaves like part of the soda aisle and holds a small share of its own that has grown steadily over two years, from about 0.07% in September 2024 to about 0.10% in July 2026.

“Scale is the challenge for the ‘third pillar idea’,” Aniel Oved adds.

By this definition, modern soda is roughly 1 in 58 the size of diet soda, 1 in 45 the size of full-sugar soda and 1 in 48 the size of zero-sugar soda.

“It’s growing at broadly the same rate as full-sugar and zero-sugar soda, but from a far smaller base,” Aniel Oved confirms.

Tastehead’s Maybury is unsure whether the sector will end up with three neat pillars: “The lines between diet, functional and energy drinks are becoming increasingly blurred.”

In the UK market, for example, PerfectTed’s matcha-based energy drinks offer a different approach to the energy occasion.

“I would expect more of that crossover, rather than each category staying in its own lane,” Maybury adds.

Modern soda may not need to displace traditional carbonate categories to establish itself as a lasting category. Its real opportunity could lie in creating additional drinking occasions and giving shoppers a new reason to choose soda.

“Traditional full-calorie and diet sodas will always have their place, and modern soda is creating another reason for consumers to reach for a soda,” Grundish says.

However, as the novelty of gut health and BFU positioning wears off, brands will increasingly have to compete on the fundamentals: taste, price, accessibility and loyalty.

“We expect brands to place increasing importance on the sensory experience, with those delivering the best-tasting products likely to be in a stronger position to retain consumers,” says Maybury.