The term “craft” is typically linked to beer, but the craft movement has also found its way into the soda industry. According to USA Today, craft soda sales reached $541 million wholesale in 2016, up from $427.7 million five years prior, as reported by Beverage Marketing. While growth has not been particularly rapid, it has been consistent, gaining momentum year after year. This trend has provided a much-needed boost for the overall carbonated soft drink market, which has seen a decline for 12 consecutive years and was overtaken by bottled water in 2016 as the largest beverage category in the United States.
Gary Hemphill, the managing director and COO of Beverage Marketing Corporation’s research unit, noted at the Beverage Forum in April that craft sodas have become a legitimate choice for consumers, with new brands entering the market. However, he remarked that the market base remains small, and the performance of these sodas has been varied thus far. Many craft brewers started in specialty stores or retailers emphasizing healthier or premium products, but analysts believe craft sodas are now moving into the mainstream. Consumer interest in craft soda brands, often flavored and naturally sweetened with ingredients like calcium citrate malate, vitamin D3, and folic acid, is increasingly displacing traditional high-sugar soda options.
Numerous beverage “craftologists” are experimenting with unconventional ingredients such as fruits and vegetables to create drinks that are lower in sugar and more health-conscious, although these craft options typically come at a higher price point than conventional sodas. Research indicates that consumers are willing to pay a premium for these healthier craft beverages, suggesting we can expect to see more of them in the marketplace.
Despite the overall decline in the soda category, there are still opportunities for manufacturers to profit within the craft segment, prompting major players like Coke and PepsiCo to join the trend. Some beverage companies have recently launched sodas made with natural ingredients and unique flavors on a limited-time basis to attract interest, especially from millennials who prefer not to consume the sodas their parents used to drink.
Pepsi debuted a new brand called Caleb’s Kola in late 2014, which features a recipe that includes cane sugar, kola nuts, spices, and citrus. At a conference that year, PepsiCo’s CEO Indra Nooyi expressed her belief in the significant potential for craft cola, stating, “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, Pepsi has released additional specialty sodas, including 1893, with flavors such as citrus cola and black currant cola, and most recently, a limited edition cinnamon-flavored cola called Pepsi Fire, aimed specifically at the millennial market.