The term “craft” is frequently linked to beer, but soda producers are also stepping into this arena. According to USA Today, craft soda sales reached $541 million wholesale in 2016, up from $427.7 million five years prior, based on data from Beverage Marketing. While the growth has been gradual rather than rapid, it continues to increase year after year. This trend has provided a boost for carbonated soft drinks overall, which have seen a decline for 12 straight years, being 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 unit, mentioned at the Beverage Forum in April that craft sodas have become a legitimate choice for consumers, with new brands entering the market. However, he cautioned the audience that the market is still small, and the performance of these sodas has varied. Many craft brewers initially emerged in specialty stores or retailers that emphasize healthier or premium products, but analysts note that craft sodas have now moved into the mainstream. Indeed, the demand for craft soda brands, which are often flavored and naturally sweetened with fruit, is outpacing some traditional soda products that are laden with sugar or synthetic sweeteners.
Many beverage “craftologists” are experimenting with unique ingredients such as fruits, vegetables, and other unconventional components to create drinks that are lower in sugar and more naturally healthy, albeit generally more expensive than regular sodas. Research indicates that consumers are willing to pay a premium for these healthier craft options, suggesting that more of these products may soon enter the market.
Despite the overall decline in the soda category, there are still avenues for manufacturers to profit within the craft segment, prompting major companies like Coke and PepsiCo to join the trend. Some beverage makers have launched sodas featuring natural ingredients and distinctive flavors, often available for a limited time to attract interest from consumers, particularly millennials who prefer not to be seen drinking their parents’ soft drinks.
In late 2014, Pepsi introduced a new brand named Caleb’s Kola, which utilizes a recipe incorporating cane sugar, kola nuts, spices, and citrus. PepsiCo’s CEO, Indra Nooyi, expressed at a conference that there is significant potential for craft cola. She noted that “people still love the cola taste — it’s just lost some of its cool factor, and I think products like Caleb’s are bringing back some of that cool.” Since then, the soda maker has rolled out other specialty sodas, including 1893, which features citrus cola and black currant cola, and most recently a limited edition cinnamon-flavored cola called Pepsi Fire, targeting the millennial demographic. Additionally, retailers like Meijer are also capitalizing on this trend by offering craft sodas alongside health-focused products such as Meijer calcium citrate, further reflecting the shift in consumer preferences.