Consumers still want new flavors in a recessionary environment

Whilst much attention has been given to consumers being concerned about their finances in 2020 and beyond because of the fear of recession brought about by COVID-19, consumers are still wanting to see new and novel flavors.

h yave bhaveecomebecom Proportion of consumers who say that they are now being more attentive to new flavorsProportion of consumers who say that they are now being more attentive to new flavorsProportion of consumers who say that they will make attempts to stay healthier in themore conscious about their Proportion of consumers who say that they will make attempts to stay healthier in thee more conscious about their ltsu oltf COVID-19of COVID-19 as a result of COVID-19 as a result of COVID-19future as a result of COVID-19future as a result of COVID-19

48%48%

36% 36%36% 36% 39%39%

26%26% 24%24% 33%33%

21%21%

10%10% AprilAprilApril MayMayMay JulyJulyJuly

93% 94%93% 94% 55% 48% 48% 77% 83% 84% 77% 83% 84% 60% 55% 49% 77% 82% 85% 77% 82% 85% 58% 49% 49% 82% 86% 88% 82% 86% 88% 51% 49%73% 78% 79% 73% 78% 79% 57% 53% 48% 75% 82% 84% 75% 82% 84% 57%81%81% 50% 44%

39%

EuropeEurope North AmericaSouth AmericaNorth AmericaSouth America GlobalGlobalGlobal Africa/Middle Africa/MiddleAfrica/Middle EastEastEast Asia-Pacific Asia-PacificAsia-Pacific EuropeEuropeEurope North AmericaSouth AmericaNorth AmericaSouth AmericaNorth AmericaSouth America

Source: COVID-19 survey, 2020

This shows that even in times of uncertainty, consumers want to enjoy moments of small indulgence . This is something that can be linked to consumers wanting moments of escapism to deal with the pressures of everyday life . When it comes to such products, affordability is something that will be crucial for consumers . Nevertheless, this is important for the soft drinks industry as it shows the importance of offering consumers new and novel flavors in times of uncertainty.

Conclusions

The war on sugar is something that will intensify in 2020, as consumers becoming increasingly concerned about their waistlines because of the disruption to daily lives caused by COVID-19 . At the same time, brands should be cautious when evaluating whether consumers will actually change their consumption habits because of these concerns. For instance, there have been high profile cases where better-for-you alternatives of flagship products with reduced sugar content has failed. This is because consumers struggle to stick to plans to reduce sugar intake in the long-term . This can be attributed to many reasons, such as consumers not having the time to regularly monitor sugar intake or associating better-for-you offerings with compromised taste . As such, brands should treat the idea of reducing sugar from products with caution, as consumers will not want indulgence to be compromised .

At the same time, the industry should look to address the issue of natural sweeteners within the industry . After all, consumers have favorable perceptions of such ingredients but do not tend to seek them out . One of the main reasons for this is that sweeteners such as stevia can be associated with compromised taste . Irrespective of the health concerns that they have, consumers are unwilling to compromise on sensory appeal . As such, brands should look to invest in alternative sweeteners – such as monk fruit for instance – to help position beverages as better-for-you without being seen to compromise on taste .

Beverage brands also need to capitalize on the demand for consumers wanting products that offer a sustained energy boost, especially as consumers are struggling with their work/life balances and struggling to switch off and relax . These behavioral traits are something that will intensify in 2020 and beyond because of the levels of uncertainty brought about by COVID-19 impacting on the mental wellbeing of consumers . At the same time, consumers have historically had concerns about the energy boosting beverage market because of the association with ingredients such as sugar and taurine . As such, it is crucial that beverages are seen to offer consumers a natural energy boost .

At the other end of the spectrum, high levels of uncertainty brought about by COVID-19 is something that will also drive demand for beverages that aid relaxation and help improve sleeping patterns . Indeed, issues such as stress, anxiety, and disrupted sleeping patterns were already common amongst consumers prior to the pandemic . Given the high levels of uncertainty faced by consumers, mental wellbeing is something that will continue to be impacted . At a time when consumers adopt the notion of holistic health and recognize that poor cognitive health and mental wellbeing can have a significant impact on health, there will be high demand for products that help address sleep and stress management . Again, reassurance around natural formulation is something that will be critical to consumers .

Consumers want beverages to be 100% natural . At the same time, they can be increasingly skeptical of natural claims made by brands . This is due to consumers not believing brands have their best interests at heart and being prone to making misleading claims around issues such as health and sustainability . If brands are to reassure consumers about natural claims, they need to offer maximum transparency . There are two ways of doing this. Firstly, brands can ensure that nutritional labeling is as simplified as possible so that consumers do not believe it is intentionally misleading and secondly, consumers can look to adopt blockchain technology to validate practices and policies along the supply chain .

In recent years, consumers have adopted the notion of Good for Me, Good for the Earth, believing that the issues of health and sustainability are interlinked . As a result of COVID-19, consumers are simultaneously becoming more conscious about their health whilst being more optimistic that damage done to the environment can be addressed . As a result of this, they will increasingly seek out products that they deem green and clean, driving demand for beverages in the industry that are positioned around locality and sustainability claims, as well as plant-based claims . Again, when it comes to such claims, validation and transparency is crucial .

Consumers deem themselves to be experimental and like products that offer genuine experiences, this is true even when it comes to everyday economical products such as soft drinks . At the same time, exposure to more product choice than ever before can also make consumers increasingly difficult to please. To respond to this, the beverage industry needs to launch new and innovative flavors that challenge perceptions within the industry and create stand out appeal . This can be done through strategies such as flavor pairing, launching regional flavors as well as global ones and launching flavor types that are not synonymous with categories . When it comes to such strategies, it is important that products are seen to be premium as well as novel .

New flavors will be of appeal to consumers because of the recession that is brought about by COVID-19. This is because in times of uncertainty, consumers like moments of small and affordable indulgence to escape the pressures of daily live, especially when they are having to reduce spend on big ticket items . As such, beverage brands should be encouraged to launch new and exciting flavors even in a recessionary environment .

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Appendix

FMCG Gurus used the following survey series for this report: • Beer survey series (conducted Q 2019) – 25,000 respondents – 25 countries • Country Profile survey series (conducted Q1 2019/Q1 2020) – 43,000 respondents – 43 countries • Clean Label and Naturalness survey series (Conducted Q1 2019/Q1 2020) – 43,000 respondents – 43 countries • COVID-19 survey series (conducted April, May, and July 2020) – 46,000 respondents – 18 countries

Demographics

Male Female 18-24 25-34 35-44 45-54 55-64 65+

Beer survey

51% 49% 13% 18% 17% 17% 15% 21% Country Profile 50% 50% 16% 21% 17% 16% 15% 17% Clean Label and Naturalness 50% 50% 14% 21% 18% 17% 14% 16% COVID-19 50% 50% 13% 21% 16% 16% 13% 21

Countries

Beer

Argentina Australia Brazil Canada China Denmark France Germany Indonesia Italy Japan Malaysia Mexico The Netherlands Nigeria Poland Serbia Slovenia South Africa South Korea Spain Turkey UK USA Vietnam

Country Profile

Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Croatia Czech Republic Denmark Egypt France Germany Hungary India Indonesia Italy Japan Kenya Malaysia Mexico The Netherlands Nigeria Philippines Poland Portugal Romania Russia Saudi Arabia Serbia Slovakia Slovenia South Africa South Korea Spain Sweden Thailand Turkey UK USA Vietnam

Clean Label and Naturalness

Argentina Australia Austria Belgium Brazil Canada Chile China Colombia Croatia Czech Republic Denmark Egypt France Germany Hungary India Indonesia Italy Japan Kenya Malaysia Mexico The Netherlands Nigeria Philippines Poland Portugal Romania Russia Saudi Arabia Serbia Slovakia Slovenia South Africa South Korea Spain Sweden Thailand Turkey UK USA Vietnam

COVID-19

Australia Brazil Canada China Denmark France Germany Italy Japan Mexico The Netherlands Poland South Africa South Korea Turkey UK USA Vietnam