Sparkling Beverages: Anything But Still

By Lindsey Pfeiffer

"SPARKLING BEVERAGES" Anything But Still

Every time we step into the grocery store, it feels like a new sparkling beverage has made its way onto the shelf. Gone are the days when the choices for a carbonated drink fell between a can of Diet Coke and a bottle of San Pellegrino. Recent data around Americans’ soda consumption shows that consumers are in fact ready for something new, with annual consumption of traditional soda continuing to decline YoY (Statista), while sales of sparkling beverages were up 9.6% YoY in 2021 (NielsenIQ).

Now, there are more sparkling beverages available to consumers than ever before. But it’s not just new flavor combinations that have been added to the lineup; brands are pushing the boundaries of the category, from culturally-inspired ingredients to healthier versions of classics we know and love.

Within such a saturated category, key trends and rapidly expanding sub-categories have helped some beverage brands find their niche and reach potential new customer segments.

But how can brands find the opportunity to bring something new and fresh into and drive velocity within such a competitive market? In this article, we’ve broken down these up-andcoming trends and some of the brands in our community that are successfully innovating within them.

DOWN TO EARTH

Healthier alternatives to Big Soda are nothing new. For many consumers, finding replacements that boast natural ingredients and little to no sugar is top of mind. Fresh Fizz, a Brooklyn-based startup, was born out of that exact desire: “I had opened our facility with the intent of producing hard seltzer” says Founder Yoni Schwartz. “During the months it took to get licensed, I had equipment sitting idle, so I was looking for something else to produce. Coming from my wife’s ‘clean food’ household, I decided to create a soda she would allow in the house — and Fresh Fizz was born.” Fresh Fizz’s unique selling point? Unlike other alternatives to traditional soda, the company uses only natural sweeteners in their products, like honey and maple syrup.

Seeking out beverages that focus on natural ingredients isn’t unique to Schwartz and his wife, consumers are actively looking for clean-label drinks. Strategically placing ingredients at the forefront of both online and offline messaging has helped Fresh Fizz get into the hands of shoppers. On their packaging, this looks like direct callouts to their short and sweet ingredient deck. Online, they are transparent about where they source their ingredients, including sourcing their fresh herbs from SubHerb Farms and their locally-produced honey from Dutch Gold Honey. For the pair, in-store demos are also key for driving initial trial and ultimately, velocity.

Those in-store connections are especially important for the company, given their weighted focus on retail over DTC. “We view DTC as a marketing channel more than a profit generator, as it’s challenging to maintain strong margins when factoring in the cost of shipping liquis,” notes Schwartz. As a recent semifinalist in BevNET’s New Beverage Showdown, a competition sponsored by Coca-Cola’s Venturing and Emerging Businesses division, the company has gained momentum towards building its retail distribution throughout New York and the greater Northeast region in the coming months.

LET’S GET FUNCTIONAL

These days, consumers crave beverages that can support their physical and mental wellbeing, not just those that pack in great flavor. That’s where functional beverages come in. By definition, functional drinks are those that are “marketed to highlight specific product ingredients or supposed health benefits.” And as a subcategory, these beverages are growing in popularity. Let’s take a look at some of the numbers (from Beverage Industry):

l Between July 2020 and June 2021, consumer interest in immune-boosting ingredients, like ginger and turmeric, and their use in beverages increased by 51% l Consumer interest in gut health grew 77% between 2019 and 2021 l 29% of consumers identified calming/relaxing as a key product attribute in beverages they purchased

While functional beverages had already begun to take off prior to 2020, for many brands and consumers, the COVID-19 pandemic accelerated that growth. Some companies – like NEOPOP, producer of better-for-you sodas that draw on classic flavors and promote relaxation – were even a product of it: “NEOPOP was born out of my personal need to manage stress during the pandemic. Our mission is to make it convenient and accessible for Millennials and Gen-Z to relax during the day,” says Founder & CEO Adamya Sharma. NEOPOP uses nootropics and adaptogenic ingredients, including L-Theanine and ashwagandha, both “proven to reduce stress, improve concentration and boost energy levels,” Sharma adds. Additionally, their beverages are often more affordable than those infused with CBD.

But relaxation isn’t the only benefit consumers look for in their favorite sparkling drinks. Gut and immune health-fo-

cused beverages have become so desirable, it seems every other can on the shelf features probiotics, prebiotics, or some blend of both. Enter Mayawell. Founded by Oaxaca-native Vicente Reyes, Mayawell focuses on providing a delicious beverage that supports a healthy gut. Within their range of flavors, including pineapple mango and raspberry cucumber, Mayawell’s sodas pack 5g of prebiotic fiber per can through the use of their proprietary Active Agave™. “Our proprietary Active Agave™ is both low glycemic index and low fructose, which makes it a great option for a wide range of consumers with diverse dietary needs,” explains Co-Founder and CEO Oliver Shuttlesworth. The company’s use of agave helps it differentiate from its competitors twofold, since most prebiotic sodas on the market use stevia as a primary sweetener. “Many consumers shy away from stevia because of its flavor profile, but perhaps less known is that stevia has also been shown to create an imbalance with gut bacteria,” says Shuttlesworth.

For products like Mayawell’s that center on providing health benefits, education is key for driving consumer adoption – and retention. Shuttlesworth notes that communicating that in a retail setting can be challenging, especially with limited time and space: “In most cases, there are limits to what you can include on the shelf, so we’ve worked to incorporate as much information on our cans as possible to educate customers about what makes Mayawell unique.” This includes callouts like “made with Organic agave,” “4g of natural sugar,” and “supports improved digestion,” among others. In-store demos have also helped the company connect with consumers in real time to provide that education on a deeper level. Mayawell has also successfully sought out other in-store opportunities: “We packed out an entire end cap cooler at one of our key retailers with just under 1,000 units and sold through in less than a week,” says Shuttlesworth.

Mayawell’s focus on retail expansion over DTC channels has always been part of the company’s strategy, but has become even more essential in recent months. “Generally speaking, shipping liquid is difficult. With gas prices through the roof and staffing issues layered on top of that, we’re getting hit with extra costs and surcharges that make DTC fulfillment cost-prohibitive,” Shuttlesworth explains. Aside from meeting consumers where they already are with in-store sampling, the company is also testing the use of digital coupons to bring in a wider net of potential customers. Now, Mayawell looks to continue expansion on both coasts, building on their current distribution in select Whole Foods and other local retailers.

NEW NOSTALGIA

Even though consumers are looking for beverages they can feel good about drinking, that doesn’t mean they are ready to sacrifice their favorite flavors. That’s where brands like NEOPOP come in. The company toes the line between what consumers love about sodas of the past and what they want from the ones of today. While a good chunk of brands that are reimagining soda work towards developing unique, never-before-seen flavor offerings, NEOPOP focuses on meeting consumers where they already are — with nostalgic, tried-and-true flavors like Cola and Lemon Lime. “After speaking with hundreds of consumers pre-launch, we identified that [they] don’t like the artificial ingredients of diet sodas, but love the full flavor and crisp carbonation,” says Sharma.

Brands like NEOPOP know that capitalizing on consumers’ desire for a more health-conscious beverage and their love of sweetened, carbonated drinks means playing up nostalgia while playing down the use of added sugar and unnecessary ingredients. For them, successfully reaching consumers and driving velocity means innovating – to a point. “The relaxation beverage category is fairly new, and there exists some friction points for consumers to enter the category. We [carefully and specifically] chose well-known, established soda flavors to get more consumers into the category due to the level of awareness they bring,” notes Sharma.

HERITAGE-INFUSED

Once boxes for taste and health are checked off, many upand-coming beverage companies look to the past to create drinks inspired by – and infused with – cultural ingredients and processes. One such brand, Halmi, creates light sparkling beverages inspired by traditional Korean flavors. “‘Halmi’ is a loving nickname for grandma in Korean, and our drinks are a nod to my halmi’s recipes and the wonderful ingredients she helped me appreciate,” explains founder Hannah Bae. The brand currently offers its signature flavor, Cinnamon, Ginger, Jujube, Persimmon. “It’s a sparkling take on Korea’s beloved SuJeongGwa; a sweetened spiced punch that has been brewed for generations to aid digestion and ward off colds.” While the creation of Halmi’s sparkling drinks has in large part been influenced by Bae’s own experience as a daughter of Korean immigrants, she feels strongly that those experiences aren’t hers alone, but rather shared by Asian Americans seeking more representation around what they grew up eating and

drinking. “Seeing yourself represented and being able to share a part of your culture, especially when you’re part of a marginalized community, is gratifying but also bittersweet that it took this long,” Bae shares.

Halmi has been a labor of love for Bae, who started the company on her own in 2021 and continues to own all aspects of the business today. “My passion to start Halmi came from a very personal, emotional and cultural place rather than any calculated career move into the food and beverage industry,” she says. “There was a lot to discover, including that the space I’m entering is traditionally male-dominated, that ingredients like jujube and persimmon aren’t commonly used, and that it was rare for an Asian American female to bootstrap the entire workflow from my home on my own,” explains Bae. But more than anything, seeing members of her community and beyond rally behind Halmi’s products and mission has continued to fuel Bae’s passion for not only creating beverages that connect her to her own culture, but inspire others to do the same. “The long term goal is to have Halmi be a platform to reconnect with our ancestry; to celebrate our hyphenated identities as Asian Americans.”

“When Halmi first launched, I was giving DTC more attention as I get to speak to customers directly, gather data points and have more control over the shopping experience,” Bae says. But after learning that consumers had a desire to experience the brand firsthand and in-person, Bae has begun to emphasize an equal play for retail. “Besides the flavor, the biggest response I’ve received is that our branding stands out on a crowded shelf,” notes Bae. “Pursuing both DTC and retail as complimentary verticals is our way of creating visibility, brand awareness, and strengthening word-of-mouth and enthusiasm for our beverages.”

Bringing cans to more aisles throughout the country is top of mind for Bae. “Halmi may be niche as of now, but I want to make sure our beverages are accessible regardless of where folks live.” While she currently ships orders across the U.S. from her New York City apartment, Bae recently signed a lease on a warehouse space so she can scale up and work towards expanding Halmi’s physical retail presence from coast to coast. For Bae, successfully driving velocity in those spaces means creating deeper connections and relationships with retailers that are mission-aligned with her brand. “Creating lasting and intentional relationships with owners that can speak to our story and ingredients has been crucial,” she says. “And forming these connections allows for more opportunities to have in-person tastings, activations and events where potential customers can trial our product and drive additional sales.”

From health and wellness to nods towards heritage and all the flavors in between, sparkling water is quickly filtering to the top.