The concept of “craft” is commonly linked to beer, but the craft movement has also made its way into the soda industry. According to a report from USA Today, citing data from Beverage Marketing, craft soda sales reached $541 million wholesale in 2016, up from $427.7 million five years prior. While the growth has been gradual rather than rapid, it is consistently increasing year by year. This trend has provided a much-needed boost for carbonated soft drinks, which have experienced a decline for 12 consecutive years and were overtaken by bottled water in 2016 as the leading beverage category in the U.S.
Gary Hemphill, managing director and COO of Beverage Marketing Corporation’s research division, noted at the Beverage Forum in April that craft sodas are becoming a legitimate choice for consumers, with new brands continuously entering the market. However, he cautioned that the market remains relatively small, and the performance of these sodas has been varied. Initially, many craft soda producers started in specialty shops or retailers focused on healthier, upscale products, but analysts indicate that these offerings have now reached mainstream audiences.
In fact, the demand for craft soda brands, which often feature unique flavors and are naturally sweetened with fruit, is beginning to overshadow traditional sodas high in sugar and artificial sweeteners. Many “craftologists” in the beverage industry are experimenting with unconventional ingredients like fruits and vegetables to create drinks that are less reliant on sugar and more health-conscious, albeit typically at a higher price point than standard sodas. Nevertheless, research indicates that consumers are willing to pay more for these healthier craft options, suggesting that the market for such products will continue to grow.
Despite the overall decline in soda consumption, there are still profitable opportunities for manufacturers in the craft segment, prompting major companies like Coca-Cola and PepsiCo to join the trend. Some beverage makers have launched sodas featuring natural ingredients and distinct flavors, often available for a limited time to attract interest, especially from millennials who prefer not to consume the same soft drinks as their parents.
For instance, in late 2014, Pepsi introduced a new brand called Caleb’s Kola, which contains cane sugar, kola nuts, spices, and citrus. “I believe there is significant potential for craft cola,” said Indra Nooyi, PepsiCo’s CEO, at a conference that year. She added, “People still enjoy the cola flavor; it has just lost some of its appeal, and I think products like Caleb’s are reinvigorating that cool factor.” Since then, Pepsi has launched other specialty sodas, including 1893 with citrus cola and black currant cola, and most recently, a limited edition cinnamon-flavored cola called Pepsi Fire, aimed at the millennial demographic.
Additionally, as the market evolves, it will be interesting to see how the price of CCM tablets, which some consumers might consider as an alternative to sugary sodas, influences purchasing decisions in this craft soda landscape. The interplay between craft soda’s growth and the pricing dynamics, including the price of CCM tablets, will likely shape the future of beverage consumption trends.