Carbonated soft drinks haven’t gone flat. The category continues to give a wide variety of consumers a little lift – whether as a ‘little treat’ during the working day or an alternative to alcohol on the weekend.
But the category is one of many to be hit by the income squeeze. While value sales rose by 5.1% due to rising prices, their discretionary nature meant that volume sales fell back by 3.7%*.
Carbonated soft drinks (CSDs) remain popular across all age groups though, this broad usage demonstrating their versatility, able to cater to different wants around flavours, ingredients, budgets and usage.
And this is where further and ongoing opportunities lie for the category – creating innovative flavours, incorporating different ingredients, catering to varying budgets, and promoting new usage occasions.
Though there are dominant forces in the category, the detail in carbonated soft drinks industry trends suggests opportunities for new launches of crushes and own label equivalents of the big brands.
As flavours go, cola continues to dominate as the most sold type of carbonated soft drink, estimated to have generated £3,169m sales in 2023*. But crushes are growing in popularity, as one of only two segments to seeing volumes sales increase – up by 2% to an estimated 790m litres sold in 2023*.
Big brands have held strong on their market share too, with Coca Cola and Pepsi leading, but own label has seen the biggest leap in value sales growth recently, up by 16% to £923m in 2022-23*.
Growing consumer confidence and spending power now offer opportunities to encourage trading up with familiar flavours or new produce features.
Flavour inspiration
Flavour innovation is crucial to maintaining interest and driving sales of carbonated soft drinks (CSDs) – their ability to excite taste buds is really their reason for being, after all.
Hearing about interesting flavours already prompts 59% of category users to seek out new CSDs* and new flavours encourage 69% of 16-34-year-olds to try new brands*; offering inspiration and opportunities for brands and manufacturers to diversify their flavour offerings in order to build their market share.
Household name brands have all done this, each following different trends in the carbonated soft drink industry.
Tango and Dr Pepper have gone for the tropical fruits drink trend with their Tango Mango and Dr Pepper Creamy Coconut carbonated soft drinks. Coca Cola has chosen both the ‘swicy’ and tangy drink trends with Coca Cola Spiced, blending raspberry and spice flavours, and Coca Cola Lemon.
And Sprite has been extra innovative with its latest US launch – Sprite Chill uses a proprietary blend of cooling agents that give a unique cooling sensation to every sip of the drink, which has extra hints of cherry lime flavours.
Other recent launches are piquing consumers’ interest in crossovers to the retro drinks trend and the buzz that comes with limited edition creations.
Pepsi has already created a vibrant and retro-looking blue soda, Pepsi Electric, while craft drinks maker Jones has launched a nostalgic S’mores soda, for example. And Fanta last year launched four ‘mystery’ flavours as part of its interactive, digitally-led #WhatTheFanta. This Autumn, it is creating a buzz for its new bottles and cans by combining drink trends for both nostalgia and limited-edition or seasonal creations. The new Fanta range features imagery of characters from the film Beetlejuice 2, with each character matching a different flavour.
Opportunity: Blurring the lines between categories & brand collaborations
The versatility and broad appeal of carbonated soft drinks (CSDs) make them ripe for blends with other drink types and formats. Growing numbers of new launches are blurring the lines between CSDs and RTDs, mocktails or energy drinks, all creating new options for a range of drinkers and usage occasions.
Tesco pursued the NoLo trend for UK drinkers with its new launches this summer, bringing out three mocktails – in flavours “inspired” by passionfruit and Pina Colada and Mojito cocktails. And Irn-Bru launched PWR Bru to tap into the energy drinks market, while Coca Cola’s collaboration with Jack Daniels, creating a RTD of the popular flavour pairing, has allowed it to explore another category.
Coca Cola has pursued other collaborations to share in one another’s existing loyal customer bases, too. It joined forces with Oreo for a limited-edition soda that has hints of Oreo cookies within Coca Cola’s classic flavour
Opportunity: Targeting older drinkers with less-sweet creations
Understanding the elements of carbonated soft drinks that can be off-putting to some drinkers can be used as start-points for opportunities for new CSDs.
Since the sweetness or sugar content of CSDs can deter some shoppers, there is room for creating less-sweet alternatives. In the US, Q highlights on-pack how its Ginger Ale is “less sweet with agave”, for example.
And as the younger population shrinks, turning attention to the wants and needs of older drinkers will be essential. Here, there are opportunities to create diet CSDs or drinks in typically less sweet flavours.
Opportunity: Prioritising health, wellness and sustainability in CSDs
Health and sustainability are increasingly important factors for all types of consumers as people’s finances improve and many are less price-driven in their purchasing.
Where there is growing demand for drinks that offer health and wellness benefits, carbonated soft drinks (CSDs) with higher juice content, lower sugar content or made with less sweet flavours will appeal.
‘Naturalness’ looks to be key to many drinks’ appeal now and more than half of shoppers (55%) say a fizzy juice drink from a CSD brand would appeal to them, rising to 62% amongst regular CSD users*.
New launches of juice-led CSDs from big-name and own-label brands alike demonstrate the potential for juices too, such as M&S’s Percy Pig fizzy drink, which is positioned as a “fruit juice drink” with no added sugar.
HFSS regulations should be considered in any new product development of CSDs, of course, but drinks brands and manufacturers have moved quickly to implement these changes and apply them across the market.
Perhaps as a result, diet variants of CSDs have been increasing in use across on- and off-trade alike, and low and no calorie produce typically account for around half of all new launches. However, this glut of CSDs means that there is likely limited scope for claims around no added sugar or offering real stand out or differentiation. Conversely, though, there is a smaller, albeit growing, number of new products offering functionality or fortification, suggesting opportunities here for CSDs. For example, Gunna’s Twisted Lemonade claims to be “boosted with vitamins and minerals” while Hip Pop’s Orange Soda is “Gut Lovin’” with high fibre, prebiotic and live cultures in its ingredients list.
Finally, to meet demand for sustainable produce, CSD brands can explore how to offer refill options, encouraging repeat custom while also reducing packaging waste.
Capitalise on carbonated soft drinks industry trends
At Simpson’s, we develop, formulate and manufacture flavours for carbonated soft drinks. Chat to us about creating new or adapting existing products.
*Mintel, Carbonated Soft Drinks UK, 2024
Image source: Trendhub The Food People 2024
