Table of Contents
Executive Summary
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- Hybrids invigorate cluttered beverage aisle
- Budding yet low hybrid use
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- Figure 1: Non-alcoholic beverages consumed, November 2018
- Basic Functionality is Imperative
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- Figure 2: Role of non-alcoholic beverages in overall diet, November 2018
- Younger, ethnically diverse generations show high engagement
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- Figure 3: Hybrid beverages consumed, by group, November 2018
- But don’t forget consumers over 40
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- Figure 4: Interest in trying select types of hybrid/fusion drinks, by generation, November 2018
- Diverse opportunity for development and targeted positioning
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- Figure 5: Attributes driving choice of drink, November 2018
- Keep innovation on the fringe of familiar
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- Figure 6: Interest in trying different types of hybrid/fusion drinks, November 2018
- What it means
The Market – What You Need to Know
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- Hybrids trigger shifts away from larger categories
- Healthy living trends support BFY hybrid drinks
- Recovering economy helps buoy premium fusion drinks
- Younger, ethnically diverse generations are important to growth
- …but don’t forget those 40+
Market Perspective
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- In a crowded drink market, it’s a mixed bag of success
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- Figure 7: Total US retail sales and forecast of non-alcoholic drinks, by category, at current prices, 2012-22
- Struggling CSDs comprise largest drink category
- Concerns with sugar undercut sales in $18.7 billion juice and juice drinks
- Bottled water growth reflects popularity of BFY drinks
- Energy drinks continue to grow sales
- RTD renaissance brings new life to coffees and teas
Market Factors
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- Wellness for everyone
- Obesity rates remain high and propel need to reduce sugar consumption, lose weight
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- Figure 8: Trends in obesity prevalence among adults aged 20 and over (age adjusted), 1999-2000 through 2015-16
- FDA labeling and sugar taxes raise awareness and cost of sugary drinks
- Aging Boomers attentive to health and seek out low-sugar and diet drinks
- A holistic approach to diet and “Foodceuticals” Trend also shapes demand
- Recovering economy supports premiumization in hybrid drinks
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- Figure 9: Consumer Sentiment Index, January 2007-December 2018
- Demographic trends should help drive growth in hybrid drinks
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- Figure 10: US Population, by generation, 2013-23
- Younger generations are increasingly diverse
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- Figure 11: US population, by race and Hispanic origin, 2013-23
- Figure 12: Distribution of population, by age, race, and Hispanic origin, 2018
- Hispanic consumers represent a key opportunity
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- Figure 13: Non-alcoholic beverages consumed, by Hispanic origin, November 2018
- Opportunity for CBD ingredients still blurry
Key Players – What You Need to Know
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- Mainstreaming and acquisitions set the hybrid landscape
- Challenges in category reach to older consumers and women
- Nourishing, savory drinks and blurred lines with meals
- Fringe interest in CBD suggests education is needed, maybe
What’s Working?
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- Mainstreaming of Bai
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- Figure 14: Bai ad featuring Justin Timberlake, 2018
- Harnessing the power of RTD coffees/teas with functionality, flavor, and nutrition
- Tapping into healthy gut trend
- Pair energy with other functions
- Other hybrid drinks focus on hydration, recovery, and detoxification
What’s Struggling?
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- Missing the boat with health-focused Boomers, women
What’s Next?
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- Blurring the line between drinks and meals with robust nourishment
- Can CBD infused drinks be mainstreamed?
The Consumer – What You Need to Know
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- Hybrid drinks garner fringe use, but gaining
- Switching behavior is evident
- Hydration and refreshment are primary drivers, secondary ones are reward driven
- Consumers want energy, consumers want to relax
- Mainstream ingredients still top choice
- Growing use and positive feelings signal good signs for hybrids
Types of non-alcoholic beverages consumed
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- Water, CSDs, and juice are most widely consumed
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- Figure 15: Non-alcoholic beverages consumed, November 2018
- Men turn to a wide variety of non-alcoholic drinks, including hybrids
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- Figure 16: Non-alcoholic beverages consumed, by gender, November 2018
- Younger consumers enjoy a more varied selection of beverages
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- Figure 17: Non-alcoholic beverages consumed, by generation, November 2018
- Middle-income households anchoring the category, for now
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- Figure 18: Non-alcoholic beverages consumed, by household income, November 2018
- Parents twice as likely as those without kids to use fusion drinks
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- Figure 19: Non-alcoholic beverages consumed, by parental status, November 2018
- Hispanic consumers are highly engaged in many categories, including fusion drinks
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- Figure 20: Non-alcoholic beverages consumed in past three months, by Hispanic origin, November 2018
- Males 18-44 are primary hybrid drink consumers
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- Figure 21: Non-alcoholic beverage consumption – CHAID – Tree output, November 2018
- Figure 22: Non-alcoholic beverage consumption – CHAID – Table output, November 2018
Role of Beverages in Overall Diet
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- Basic functions can be supplemented with more unique ones
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- Figure 23: Role of non-alcoholic beverages in overall diet, November 2018
- Younger consumers cite more varied reasons for using drinks
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- Figure 24: Role of non-alcoholic beverages, by generation, November 2018
- Middle-income consumers use drinks for wide range of functions
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- Figure 25: Role of non-alcoholic beverages in overall diet, by household income, November 2018
- Parents seek drinks for energy, snacks, replacement meals, and more
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- Figure 26: Role of non-alcoholic beverages in overall diet, by parental status, November 2018
- Hispanics also use drinks for diverse dietary roles
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- Figure 27: Role of non-alcoholic beverages in overall diet, by Hispanic origin, November 2018
Functional Attributes That Motivate Choice
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- Hydration is key attribute, with calming or energizing also widely sought
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- Figure 28: Attributes driving choice of drink, November 2018
- TURF analysis indicates the ideal product mix
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- Figure 29: TURF analysis – Functional attributes of interest, November 2018
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- Figure 30: Table – TURF analysis – Functional attributes of interest, November 2018
- Energy is a key attribute for men, health and beauty valued by women
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- Figure 31: Attributes driving choice of drink, by gender, November 2018
- Calming and health-related attributes appeal to older generations
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- Figure 32: Attributes driving choice of drink, by generation, November 2018
- Parents looking for drinks to help manage busy days, lifestyle
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- Figure 33: Attributes driving choice of drink, by parental status, November 2018
- Hispanic consumers over index for interest in varied functional attributes
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- Figure 34: Attributes driving choice of drink, by Hispanic origin, November 2018
Key Ingredients Motivating Beverage Choice
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- Vitamins, caffeine, and antioxidants are top ingredients driving purchase
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- Figure 35: Ingredients driving choice of drink, November 2018
- TURF analysis shows drinks’ top five ingredients would appeal to 75%
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- Figure 36: TURF analysis – Ingredients of interest, November 2018
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- Figure 37: Table – TURF analysis – Ingredients of interest, November 2018
- Ingredient preferences shaped by gender
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- Figure 38: Ingredients driving choice of drink, by gender, November 2018
- Older consumers less likely to switch types or look at type of sweetener
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- Figure 39: Ingredients driving choice of drink, by generation, November 2018
- Interest in CBDs as ingredient highest among younger generations
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- Figure 40: Interest in CBD as ingredient driving choice of drink, by generation, November 2018
- Parents show high interest in a wide range of ingredients
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- Figure 41: Ingredients driving choice of drink, by parental status, November 2018
Interest in Trying Hybrid Drinks
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- Three quarters interested in trying different fusion beverages
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- Figure 42: Interest in trying different types of hybrid/fusion drinks, November 2018
- Gen X and Millennials most interested in trying new fusion drinks
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- Figure 43: Any interest in trying different types of hybrid/fusion drinks, by generation, November 2018
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- Figure 44: Interest in trying different types of hybrid/fusion drinks, by generation, November 2018
- Parents show ample interest in trying more fusion beverages
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- Figure 45: Interest in trying different types of hybrid/fusion drinks, part i, by parental status, November 2018
- Figure 46: Interest in trying different types of hybrid/fusion drinks, part II, by parental status, November 2018
- Hispanic consumers interested in trying functional, sparkling, and juice hybrids
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- Figure 47: Interest in trying different types of hybrid/fusion drinks, by Hispanic origin, November 2018
Consumption Occasions
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- Drink choice connected to time of day, hybrids don’t break beyond midday
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- Figure 48: Consumption occasion, for all types of beverages, November 2018
- White space for non-alcoholic beverages, especially hybrids found in evening occasions
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- Figure 49: Correspondence analysis – Symmetrical map – Non-alcoholic beverage consumption, November 2018
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- Figure 50: Non-alcoholic beverage consumption, November 2018
- Hybrid drink consumption patterns show importance of drink occasion
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- Figure 51: Consumption occasion, for hybrid beverages, November 2018
Attitudes toward Hybrid Drinks
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- Alignment with broader consumer trends, feel-good attitudes suggest solid hybrid potential
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- Figure 52: Attitudes among hybrid/fusion drink consumers, November 2018
- Gender shapes attitudes and behaviors of hybrid drink users
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- Figure 53: Attitudes among hybrid/fusion drink consumers, by gender, November 2018
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- CHAID methodology
- TURF methodology
- Correspondence Analysis methodology
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