Welcome to the Community Call Podcast.
I am Melissa Travers, Director of Community here at BevNET & NOSH, here with my co-hosts, Mike Schneider and Monica Watress.
If you're enjoying the show, please follow and review us on Apple Podcasts or your listening platform of choice.
So I read an article in the New York Times a few days ago on what being sober means today.
So before, that typically meant full abstinence from intoxicants, whereas now we have California sober, sober curious, folks who may shun alcohol but embrace other mind-altering substances.
I'm one of those people.
Yes, Mike is one of those people.
So I'm interested to hear what mind-altering substance is.
Not that one.
So this is new.
I tried new brew euphoric seltzer.
We have a fridge in the BevNET offices that's full of...
I call it the danger fridge.
So I was checking out the danger fridge and I saw a new brew euphoric seltzer.
It contains kratom leaf and kava root, and it has a warning on the back that says it can be habit-forming, consume it mindfully, don't drink it every day, avoid it if you're sober or in recovery from substance abuse.
So that just drew you right in.
Yeah, I was like, clearly this is the beverage for me.
I was like, I was just there, how did I miss that?
Yeah, I definitely would have tried that if I had seen that can.
You know, so I tried it, like I got home, and there was a bunch of traffic, and I was all frustrated, and I would have liked to have a drink, but I tried to only drink on Fridays and Saturdays.
So I tried this.
I think maybe it had a bit of a relaxing effect, but it's sort of hard to know.
Oh, it wasn't one of those that just kind of melted you into the floor like, well, that's happened to me before.
No, that's what I was hoping for, but it was like a gentle breeze through a window of like, oh, maybe you feel a little better now.
Have you tried Crater Monica?
No, I haven't.
I've had a Cava beverage, True Cava.
You could buy it at Sprouts now on the Innovation Table.
I can't say that it gave me a relaxing effect.
I thought it tasted pretty good.
It was like a ginger flavor, which played well with the Cava.
But how did this one taste, Melissa?
You know, this one actually did taste pretty good.
I have the mango version in front of me, and I know that Cava has a very strong bitter flavor, and it can be really tricky from an R&D perspective to mask that.
And I think they did a really good job with that.
Part of my sober curiosity is just being a control freak and wanting to, again, control what's going into my body.
So the combination of Cava and Kratom is what scares me.
I do one or the other, but I just I don't understand the blending.
That makes perfect sense.
Kratom to me seemed like the more esoteric ingredient and the one that seems to come with more warning.
So it's banned in six states.
It could have a high addiction potential.
It could be a substitute for prescription opioids.
So that seemed like that was where I drew the line.
Yeah.
Oh, word.
And I think I saw some vice piece on it years ago about, yeah.
This isn't obviously a beverage for everyone, but it was a beverage for you.
What was it that drew you in about?
The can's beautiful, first of all.
And you can tell that there's something psychedelic going on in there.
I thought it was going to be a THC beverage, but it clearly says on the front, in orange, cannabis free.
And that doesn't mean that they're not making you pay for the cannabis.
Dad jokes.
It says cannabis free right on the top.
It's a 21 plus beverage.
The combination of the Cava and the Kratom is where I drew the line.
And I wonder if consumers will understand, because we're not sure exactly what Cava does or what Kratom does, if the combination of those two would be something that brings you in or something that pushes you away.
That's a great point.
They're both unknown ingredients to so many people.
I know Monica, you had magic cactus this week, speaking of alternatives to alcohol.
Yeah, and I paid for the cannabis and that.
So, ba-dum-bum.
So magic cactus is a sparkling cactus water.
It was one of the finalists in the New Beverage Showdown at BevNET Live this past year.
And it contains two milligrams of THC, four milligrams of THCV, and six milligrams of CBD derived from natural hemp.
So the flavor is fantastic, but what really blew me away is the fact that I, well, so it claims to be grog-free, low dose.
I had a can of this on Friday night, and after maybe a half hour, I felt like just so calm.
I can't describe how...
I can.
You talk about the gentle breeze feeling, Melissa.
It just was really relaxing, and not in an intoxicating way, just in a very just...
You're just nailing it all right now.
So I get that from CBD too.
Not quite to that level.
The THC just maybe is picking that up or whatever, but I really like Magic Cactus.
And for someone who, as we all know, has melted before, that and Colexo and even Drippy that we had also at BevNET Live, if you dose it properly, it's just like, I think these beverages have found a way to make it so that, first of all, you know what you're putting in your body.
Second of all, it's pretty fast acting.
So it's not one of those things where you're just like, you ate a brownie and you're like, oh, it's not doing anything.
And then you eat another brownie and then you want to go to the hospital.
Yeah, it was a very reliable high.
I don't even know if you can call it a high.
It was more of a gentle breeze.
A gentle buzz, a gentle breeze.
That's fantastic.
Yeah, Magic Cactus, I think they do such a great job with the flavor and with the dosing as well.
Well, this is all information that we chat about in this upcoming community call.
This one was with Kaitlin Morgan of Spins on the top product trends in beverage, including functionality, sweeteners, and flavor, and how entrepreneurs can use the data they share to make smart business decisions.
There was also a companion presentation for this community call.
You can find that in our Slack community, slack.bevnet.com.
Please enjoy.
Today on Community Call, we are talking to Kaitlin Morgan, Insights Manager at Spins, about data-backed trends in beverage from 2023 and the insights entrepreneurs can use to help drive business forward into 2024.
Kaitlin, thank you so much for joining us today.
It is a pleasure to have you here on Community Call.
Hi, I'm so excited to be here.
So let's start off with an introduction.
Could you tell us a little bit about what you do over at Spins in your current position as an insights manager?
Absolutely, yeah.
So I have been with Spins for just over three years now, and I am overseeing a division of our business that acts as client insights managers.
So you can think of those as data consultants, but we are working side by side with brands each day to help them grow their business, secure additional distribution, innovate in a smart way, form their pricing and promotional strategies.
So we like to think of ourselves as the right hand man to all of our brand partners.
Well, this is certainly a two-for-one show.
Not only will we get access to some really interesting and helpful data, but we'll also be able to help brands understand how to use it.
So thank you again so much for joining us.
Why don't we start off with a quick overview of what we will be looking at today?
What areas are we going to be covering?
So first, I just wanted to set the stage for what are the various paths that you can leverage as a brand to either innovate, expand your assortment, evolve your portfolio, and distinguish yourself and stand out itself.
So at a high level, setting the stage for different avenues for that.
And then I wanted to chat through a couple areas that I'm seeing in the trends in our data today, specific to beverage.
So a lot going on with functionality, a lot around sugars and sweeteners, and lastly, how you can leverage flavor to grow your business.
So I want to talk through the high level framework and then some specific data trends and how you can take those back to your business.
So why don't we dive right into it?
Our first area to cover is disruption.
It seems like so many folks and brands talk about how disruptive they are in the marketplace, but you have laid out here very well the drivers of disruption.
Can you walk us through the different ways disruption can present itself in beverage?
Yes, absolutely.
So we're all familiar with the original four piece, but these are what I call the four piece of disruption.
And so the goal when you're launching a new brand or a new product is to evolve the category and of course expand it with the engulfing incrementality.
And so these four piece, product, pack, price, and preference, are the ways that I like to advise brands of identifying how they're going to distinguish themselves versus the current assortment today.
And it's important to note that with a lot of products and a lot of innovation, it covers multiple of these boxes at once.
But at a high level, starting with product, a lot of the ways that we see product diversification are what can you add to the product?
How can you make that product sticky by killing two birds with one stone?
So think of, you're getting your morning coffee, but we're also providing you protein first thing in the morning.
Or you're getting your afternoon soda, but we're also helping you meet your daily fiber goals.
So adding functionality and added benefits is one way to diversify with products.
You can also do this through expanding your line.
Is it going to be a kid's specific launch, expanding who it's intended to reach, or through flavor, which, like I mentioned, we'll talk about in more detail later.
But flavor is a great way to distinguish your product from the current assortment with that product lever.
And then the second one is pack.
So a lot with sustainability right now, a lot of questioning on packaging types, but that's a huge distinction avenue, is taking an existing proposition and differentiating through the packaging material or the pack size or offering.
So a lot of, you know, grab and go ready to drink coffee was done in a single serve format for a long time.
And we've seen this evolution to a value offering where you're getting a multi-serve of, in this case, mochas or ready to drink.
So diversifying either in packaging materials or sizes is another avenue to disruption.
And then the third one, price.
You know, here, I think a lot about this as is there a premium offering?
Is there a value offering?
Like, do we have a good, better, best?
Can we currently capture every possible consumer given the pricing and premium landscape on shelf?
So taking a product, evolving it, again, through packaging, through enhanced benefits, through ingredient sourcing, and then adding a premium or value-positioned item is another great way to distinguish yourself at shelf.
And then the final one, my personal favorite, is preference.
So at Spins, we've been talking a lot about a values-oriented shopper who is reading the label.
They want to know what's in the product.
They're always seeking the next best thing.
So ensuring, once again, that there is an offering for every conceit, meeting them where they're at.
Are they watching their product?
Are they avoiding all artificial ingredients?
What avoidance criteria are top of mind?
So evolving a product to meet a specific consumer preference is another way to disrupt a category.
And how are you seeing the brands in your ecosystem balance some of these?
So, for example, pricing is huge right now with inflation and folks watching their wallets.
But how are you seeing brands balance a differentiator like price with something like preference or product?
If I wanted to use the highest quality ashwagandha in my beverage, how are you seeing brands kind of navigate all of those buckets to come out with a final winning product?
Yeah, it's a great question.
And I think in beverage specifically, a lot of it comes down to value and pack size differentiation.
So with beverage, it's definitely par for the course to start with a single serve format.
It's going to be an approachable price point, low commitment, and it'll drive trials.
So in a crowded space, it is important to start with that trial driving format.
But I think successful brands evolve their portfolio in terms of pack size and count.
So once they capture that initial wave of consumers, offering them a four pack, an eight pack, a 12 pack at a value proposition.
So it's still the premium product.
They're having the consumer evolve to buy this more frequently, consume more frequently, and in exchange are getting a value offering or a price cut.
So that's one way.
And then of course, promotions are top of mind, especially when you're trying to drive trial.
Initially, getting, you know, having that upfront spend to get the consumer to make the decision at shelf and trial the product is paramount to growing the brand, especially at a premium price point.
Excellent.
And just for any folks on here who aren't fully aware of where Spins pulls data from, can you explain where you're getting the data from that you'll be presenting throughout this Community Call?
Absolutely, yes.
So when we get into trends and specific data, we wanted to paint a picture of total US market.
And so we have our proprietary data at Spins.
That is our natural channel with natural retail partners.
And then we also have a partnership with Surcona for conventional data.
So we're combining the natural channel and the conventional channel to paint a full picture.
And then today, when we're referring to beverages, we're talking specifically about ready to drink beverages.
So soda, energy drinks, water, coffee, tea, functional beverage, and combining all of that into one beverage set.
All right, Kaitlin, you just talked a little bit about disruption, but of course, the nature of disruption means that it's always evolving.
How have you seen the evolution of disruption in beverage take place?
Yeah, great question.
And so I think to spotlight a category, I think soda is a great one to illustrate that disruption is not a moment in time.
It's ongoing and has waves on top of waves.
And the end goal is to retain current category buyers, reengage lapsed buyers, get new buyers to join, and ensure that there is a set that can reach every possible consumer in a category.
And so when we think about the way that the soda category has been disrupted over time, initially, you know, soda was created, it has a great taste, consumers are hooked.
And then we find the first lull questioning, okay, it is a lot of sugar.
How can we make this offering, but have one where consumers can feel a little bit better about themselves?
And that hewed or was the impetus for this wave two of diet soda.
So how can we leverage alternative sweeteners, ingredients to have a diet soda format?
And then there was another pause in question of, okay, well, what is this and what is it made of?
And so there was room for this third wave of disruption.
So not only premium sodas, but wellness positioned sodas.
So you still get that taste and satisfaction.
You don't have the controversial sweeteners that some consumers were hesitant to try from wave two.
And this further disrupted and expanded the soda category and how consumers engaged with it.
And then most recently, if we think back to that disruption framework of what can we add to products and how can we evolve products to meet consumer preferences, this really came about in wave four.
So now not only do we have a new wave of soda with brands like Olypop and Poppy and Culture Pop, disrupting soda with better for you ingredients, but they're also posing added benefits, things like prebiotic fiber, giving that consumer another reason to purchase.
And so I think this is a really good illustration of waves of disruption in a category.
Let's get right into it.
We can cover the three buckets of product trends, functionality, sweeteners, and flavors, and then help brands understand how to use those as disruptors and differentiators.
So let's get right into functionality.
Where do we start here with functionality?
Functionality, or this idea of beverages as medicine, has been very prevalent, especially in the last year.
And so this helps brands position themselves as a staple in the consumer's routine.
It increases the value proposition, the stickiness of the product, and we're seeing it emerge across so many beverage categories.
And so think of things like, okay, now you have your afternoon's sparkling water, but it has L-Phenene in it.
So it's helping calm you down after a long work day.
You have your morning coffee or juice or shake, but now we're adding adaptogens, we're adding protein, we're adding fiber.
So when the consumer is consistently remit with that price point, they're choosing this because of all of the benefits that it's providing.
And so I think functionality is really huge.
It's especially important if you're hoping to command a premium price at shelf.
And I think there's so much messaging going on right now about functional ingredients, what they can do for people, and why they're important.
And I think this has been a huge trend observed in beverage.
And even sort of right from the beginning, sodas and tonics, as far as I understand, sort of emerged as medicinal beverages like Coca-Cola and Moxie.
I mean, if we look back to the beginning, that's sort of where this all started.
So it makes perfect sense that we've continued on that trend.
You know, like, everyone knows to drink your water.
A lot of people need their coffee or caffeine, but beyond that, it's giving the consumer a reason for purchasing, a reason for consuming.
And so I think the and factor of you're getting fruits and vegetables and things that could help you unwind after a long day, you're getting a sweet treat and additional protein.
You know, that power of and is really important.
Let's get into the specifics on functional benefits.
Please walk us through the data and help us understand where the expansion has been in beverage as far as functionality goes.
Yeah, absolutely.
So at Spins, we code for a lot of attributes.
That's definitely our bread and butter.
So we have so many attributes in ways that we can slice and dice our data.
And one of those is an attribute called health focus.
And so this attributes, you know, what is the product intended to solve for or help or benefit for the consumer?
We can see that when we're talking about ready to drink beverages, they're growing 8% versus a year ago.
And so anything growing at a faster rate than 8% is driving that category growth, outpacing it.
And so here we're seeing, you know, not only the dollar sales or the maturity of this health foci, but also how fast it's growing.
And something that's really fascinating to me about all of this is, you know, things like energy support.
Traditionally, we think of energy drinks, but then watching how each of these has bled from category to category, you know, so now we have tea with added energy to it.
We have kombucha plus energy, juice plus energy.
So adding energy as, you know, a functional benefit across categories.
And so we see this happening everywhere.
I think three that are especially important to call out are digestive health, mood support, and cleansing detox.
So digestive health, things like probiotics, prebiotics, added fiber, the removal of inflammatory ingredients has been top of mind for several, several years now.
And so we're seeing that be very prominent across categories.
And then also seeing some smaller health foci that have substantial year over year growth.
And so to me, these really highlight what could potentially be an additional way of functionality disrupting the beverage space.
So things like mood support, cleansing detox.
I think mood support is especially interesting lately.
I think it's been very top of mind, challenging.
We're consuming a lot of caffeine, a lot of energy.
How do we balance that?
And recognizing with the wave of meditation and well-rounded wellness trends that this is an important area as well.
When we take a look at, for example, two of the categories that have the highest uptick in traction, mood support, and cleanse and detox, it seems to me like it might be easy to position your product in either of those directions with a fairly similar ingredient panel.
How do you help brands understand which path to take?
Is it cleanse and detox?
Is it mood support?
So when I'm working with brands, especially around things like this, I'm thinking about what is the ideal state?
Who do you see yourself in a planogram sitting with?
What space are you hoping to play in and compete against?
And then just understanding what is the current landscape and where does the white space lie?
So I think that's the most important part right now is again, back to that distinction point of differentiation, but ensuring that you're pursuing a functional benefit that is distinct or unique from who you'll be shelved with side-by-side or adding something additional if it is similar.
And so I think understanding the current competitive landscape is the most important first step when deciding.
And in terms of the volatility of these functional benefits, how can brands understand how to use this information, extrapolate the right pieces of information to help drive innovation, but also understand that this is year-over-year data?
Perhaps it doesn't make sense to jump right into doing a line of cleanse and detox because we don't exactly know what's going to happen next year.
Yeah, absolutely.
It's very important to contextualize.
And I think that's why it's really important when you're looking at data to look at not only the size but the growth rates as well.
I think a lot of times brands are just looking at growth rates, and it's very exciting to see 375% growth.
But if it was non-existent a year ago, that's a risky move.
We don't know how that's going to play out.
If you look at Google Trends, any trends data, how it's popping up in full store.
Digestive health originated with probiotics years ago, and it has built and built and built since.
There hasn't been anything in the last five years that's challenging the importance.
It's over a billion dollars.
So it's more mature and still seems sustained double-digit growth year over year, almost three times the rate of the total beverage set.
So that would be less risky.
And so identifying, is there a space in beverage that could play on digestive health that's not doing it, or we think could do it better today, versus, again, on the far right, recognizing that these are smaller with growth.
And I think this is where multi-year trends are important.
So let's see if the trends sustain themselves year over year, month over month.
And then, most importantly, what is driving the growth?
So initially, we're going to see a lot of growth being driven by distribution.
So either it's available in more places or there's more products meeting the criteria.
And so a lot of times, we like to pause and wait for that distribution growth to boom and then watch velocities.
How fast is it selling?
How well is it actually performing once it is available?
And so level setting and always circling back to understand what's driving the growth and how long has it been around isn't for.
Terrific.
We have a question from Alex Brass.
And this question will probably have its answers later on as well, but I wanted to touch on this now.
So Alex Brass wants to know if there are any emerging or promising trends in RTDT that have yet to be fully tapped into.
And since we're talking about functionality, is there an alignment there for ready to drink tea and functionality?
And we can get to the rest of it later on too in our conversation.
Yeah, absolutely.
I think if we look at the data, there are multiple avenues for disruption in every beverage category still.
I can see further paths even in soda, even though we just talked about it.
And so I think tea, absolutely.
I think there's a lot with packaging and sustainability.
I think with tea especially, just given how people are consuming it, the resealability of it is important too.
So I think there's a lot going on in tea right now, with costs of things like glass, the need for sustainable evolution, and then some consumers needing that resealability, especially with return to work, busy lives, things like that.
So that's from a packaging angle alone.
I think with functionality, there's so much runway for tea.
I think tea is functional to begin with, and it attracts a consumer who is inherently health-focused to begin with.
And I think there's so much runway to leverage that existing consumer base and then upsell them, show them more premium offerings, show them that power of and what else can be added to tea, as well as playing with flavors.
I think tea has a lot of core flavors that are very successful, but room for innovation there as well.
That hinges on the second part of Alex's question.
He wants to know if you have any thoughts on what the most effective way to launch a functional RTD tea is with minimal funding.
You mentioned packaging and making something resealable seems like an attainable goal.
Are there any other cost-effective innovations or differentiators that might be helpful for launching your ready-to-drink functional tea?
Yeah, I think so much of it is communication on pack.
I think we're at a point right now where consumers are consuming a lot of media and a lot of education around food and beverage.
You know, there's a different trend on TikTok every week, but we're really seeing this moment in time where people are incredibly educated and aware of functional ingredients, sustainability, quality ingredients sourcing.
And so I think ensuring that you're communicating those benefits on pack is very important because there are so many beverages, so much beautiful packaging out there.
But in order to shift attention from what they were going to buy to your new product, having that benefit clearly communicated on pack is incredibly important upfront.
So I would just make sure that any ingredients or components of your products that are functional, that you are communicating that front of pack if possible.
And we'll be getting into those ingredients in just a minute.
I do have another question from Blake Bush.
What type of sustainability attributes do you code into the SPINs data?
Yeah, so we can look at upcycleds if we're talking ingredients, but for packaging, we also code out for all packaging types.
So we're looking at aseptic, paper, boxes, for things like boxed water, glass, aluminum, plastic.
And then we can combine those attributes.
So oftentimes, I'll do a cut of ones that are recyclable and look at that versus non.
Sometimes I'll look at plastic versus glass versus aluminum, just at a high level to understand that.
And so being able to look at the packaging type is how we first look at things, especially with beverage.
Excellent.
All right, let's get right into those ingredients for RTD beverages.
Tyrosine is having the highest dollar year over year growth, which I don't see a whole heck of a lot of in my day-to-day.
So that's super interesting.
Can you walk us through some of these trending functional ingredients and what we can understand from them?
Yes, absolutely.
So I think, first, the most important thing that I advise beverage clients is keep a pulse on what's happening in the vitamins and supplements space.
So I think over time, we've seen this trend that a lot of the education and the interaction and the adoption occurs in the vitamins and supplements space for the consumer.
And then as a next step, it bleeds into the beverage space and then full store.
So if we think about gut health, for example, taking a daily probiotic, the probiotic supplement is where that originated.
And then we saw it quickly bleed into beverage and spread throughout beverage.
And now we're seeing probiotic wellness bars in full store.
Ashwagandha, same thing.
It started as a supplement you could take, and now it's in functional beverage.
And then we have brands like Oshapoops adding it to snacking and food as well.
So I think something that's really important is keep a pulse on what is emerging in the vitamins and supplements space to be on the cutting edge of the next functional ingredients.
And so with that, back to mood support as this smaller but emerging functional area, we looked on the left of this slide.
First and foremost, let's look at the last few years and see how our mood support supplements doing in the VMS space.
And so we're seeing they have a keger of double digit growth.
And so that is important to see.
Again, back to your question about risk, seeing that they are building steadily double digits year over year in the VMS space.
And then shifting on the right of the slide to ready to drink beverages.
And seeing that a lot of these top growing functional ingredients in beverage are for mood support.
And so I think pairing these data points is really important because it first has the foundation of, this is growing, but it's sustained growth year over year that's reaching substantial sales in the vitamins and minerals supplement space.
And then we're seeing this extreme growth over in beverages in much smaller sales.
And so this gives me a lot of confidence in some of these ingredients and their potential, especially with magnesium.
Like just seeing the evolution of magnesium, I personally think there's a whole market for ready to drink evening magnesium ashwagandha, 5-HTP L-P-N-E beverages.
And so I think, well, not all of these functional ingredients will sustain themselves for the next 10 years.
The overarching theme here is there are definitely ones around mood support, and we're seeing them grow, not only in VMS, but beginning to bleed into beverage as well.
If I'm putting together a deck for a retail pitch that I have coming up, and let's say I have three of these mood support ingredients in my product, let's say it's magnesium, reishi mushrooms, and theanine, what's the best way for me to present that information to a buyer so they can see the opportunity in my product?
I like to start with overarching trends.
You know, mood support is growing.
This is across full store, how fast it's growing.
You know, the three-year ____ in the VMS world is very important.
And then as a step to create the white space picture.
So, wow, this is really growing.
It has 8% share call it in VMS.
It's not currently anywhere on your shelf in beverage.
You know, so that creates that need, and then your product is positioned to fill that need.
So starting big, paint the trends, paint the picture, then create the white space at shelf and fill that white space with your product.
And I think that's the best way to leverage, you know, detailed attribute and trend data to a buyer.
And I know you touched on this earlier, but let's say I'm looking to launch another skew in my beverage lineup.
Should I include tyrosine in the next skew because that has the highest year over year growth?
How would I take a look at all of these metrics and these ingredients and have an idea of what inclusions I might think about?
Yeah, I think if you have any consumer panel data, even if you're going out and getting it yourself with a notepad, play to your strengths, be authentic to your brands and how it's positioned today.
So ensure that as you're evolving, you have at least an idea of who is buying the product, who is your consumer, what benefits and points of differentiation do you already have at a baseline, and ensure that you're building upon that consumer base.
You don't want to just throw a curve ball and have everyone confused.
So I think it's very important to contextualize all trends with what is your brand, what is it standing for, and who's buying it today.
Excellent.
We have a question from Virginia Morris.
She wants to know, what is your consumer perspective on organic products versus regeneratively farmed?
If you could do only one, which one would you launch?
I know that doesn't necessarily specifically apply to the beverage data we have here.
Do you have any anecdotal thoughts on that based on the data that you've seen?
Yeah, it's so case specific.
I mean, so much of that comes down to like, what is the price at shelf, and who are you hoping to appeal to?
Because if you're not an ultra premium brand, and we always have this in our data, it's important to understand, there's always going to be a highly conventional shopper.
There's always gonna be a shopper who doesn't know about ingredients sourcing and what's going on, and they're fully following marketing and claims, and there's always gonna be a better for you shopper.
I think organic is certainly interesting.
I think the people who are that values-oriented consumer, there's been a lot of messaging on the confusion of different organic claims and how valid each of them is.
And so I think that confusion has caused at least some questioning on some level with consumers.
And so I think some of the newer claims feel a little bit more concrete if you are coming in at a very premium price point.
And I think the shopper who is very focused on environmental impact, sustainability, those claims are probably more appealing at this point today.
But all that to say, there's a very substantial base organic consumer, but I do think that organic claim is more relevant in produce, meat, dairy than it is in beverage.
So I would probably air with the more up-and-coming claims.
And certainly, I think it depends on what your resources are, not just budget, but in terms of time, energy, with something like regenerative that requires a lot of education, even for the natural consumer, that would have to be a factor in your decision because it'll certainly take some significant efforts to help consumers understand what the benefit is.
Absolutely.
All right, let's move on to sweeteners as a product trend.
This is certainly a big one for all of us.
What have you seen in sweetener trends?
Yeah, so sugar has been top of mind the last several years.
The demonization of sugar has been huge across full store.
And so this really challenged brands to innovate and find alternatives to meet zero sugar or low sugar claims.
And a huge initial wave of that was artificial sweeteners and sugar alcohols.
You could meet that criteria for zero sugar, but maintain taste of your product.
And so that wave was obviously a huge boom, but I think we're seeing now this growth of natural sweeteners.
And so as the education cycle continues, we've all seen it in the media.
There are questions being raised about artificial sweeteners.
And I think we're seeing kind of a back to basics shift is what I call it, of consumers questioning, what is this product that I'm putting into my body?
Where does this come from?
I can't pronounce this.
And I think it shows here in the data is a great example.
This is one of my favorite attributes to look at in beverage, but we have our nutrition buckets.
So how many calories does the product have for serving?
How many grams of added sugar does it have for serving?
And so seeing for so many years that zero calorie, zero sugar bucket was driving tremendous growth.
And now we're seeing one shift to the right where the growth is really stemming from that low sugar, low calorie offering.
And so what this tells me is consumers are willing to have some calories, some sugar in exchange for real ingredients that they can recognize and pronounce.
And so I think we're having a very interesting shift in dynamics with how beverages are sweetened based on this trend, because there is a huge, malleable beverage consumer who is receptive to messaging and evolving constantly.
And I think there's a huge bucket of them that was fully on board for no sugar and is now transitioning to real food, real ingredients, with my new trade-offs as a result.
And I do want to underline that that highest growth area is 0.5 to 5 grams of sugar.
So certainly modest still, but perhaps just enough sugar to add to the flavor and kind of give folks a feeling of security around what they're consuming.
Absolutely, absolutely, and again, it's important to note that all buckets are growing.
So it's not like you have to fit into just this bucket, but directionally seeing the shift from the green bar being 0 calories, 0 sugar to that low, I think really speaks numbers to this movement of real food, real ingredients will prevail regardless of the fats.
And in terms of natural sweeteners, we see that allulose, inulin, and agave nectar are the sort of top three drivers in natural sweeteners, followed by stevia and other natural low calorie sweeteners.
Any insights or takeaways that we can get there?
Yeah, I mean, I think this just really takes the hypothesis or the directional trend from the previous slide and confirms it when we're breaking out by actual sweetener types.
So sugar alcohol has had a massive boom, and now they're flattening in performance, still sustaining modest growth, artificial and controversial.
Again, there will always be a market for these.
The trade off here is price at shelf, taste.
There's always going to be a market for these.
But we're really seeing the boom come from natural sweeteners derived from real ingredients, the education cycle.
I think a lot of consumers at this point can recognize agave.
They can recognize stevia, and then natural low calorie sweeteners like a monk fruit, they can recognize as well.
And then I think if we were to build upon, because even further things like fruit juice concentrate, we just added sweetened with fruit juice as an attribute dates.
There's a lot that goes beyond just these buckets of natural sweeteners.
There's a lot of runway to continue to evolve products.
With those natural sweeteners, like fruit juice and dates, for example, would those fall into that last bucket that's up 9% in natural low calorie sweeteners?
Things like the honey and maple syrup dates, those would not fall into the low calorie claims.
So they will still have the naturally occurring sugars, and that will come with calories as well.
But I think there's a space for each of these sweeteners to exist, once again, based on who your consumer is.
So the highly evolved, very educated consumer, they understand, oh, it's okay that it has this many naturally occurring sugars.
Those aren't added sugars.
That's par for the course when it's sweetened with maple syrup or a date, for example.
And then you still have people who are glued to the nutrition fact panel, and they are looking for that low number.
And so leveraging some of these in the bucket of natural sweeteners for that consumer might be more beneficial.
Fantastic.
Let's move on to our last product trend, which is flavors.
Please walk us through the growth avenues that help us understand how brands can leverage flavor.
Absolutely.
So I think flavor is so important, especially in beverage.
We're seeing an infusion of global flavor across full store.
But in beverage right now, I think there's three distinct avenues of how you can use flavor to grow your brand.
And so the first is back to disruption, that reinvention.
So taking a tried and true flavor that is established, consumed, has a high velocity in a category, and evolving it based on your product point of differentiation.
So the reinvention of the classics is avenue number one.
Opposite of that would be novelty.
So taking something and saying, I'm introducing soda, but rather than do a spinoff of core flavors, I want to introduce new and exciting flavor to the category.
Use that as a way to ignite incremental purchase, increase purchase frequency, bring back lapsed consumers, or just excite current consumers.
And then I think the third that is especially important in beverage is limited releases or seasonal flavors.
Think of the Trader Joe's business model, but how can we leverage flavor, especially in a limited release format, to really ignite excitement, increase velocities, and drive further trial for the brand?
Terrific.
Let's move right along to the flavor revolution.
So skipping over that reinvention of classic flavors and getting right into novelty for flavor diversification, we're just seeing in the data global flavors as a way to diversify the consumer base, engage shoppers, and create excitement is booming, especially in beverage.
So when we look at, we code for the international alignment of products in our data as well.
And so seeing so many global influences, infusing flavor into beverages.
And so I think that not only broadens the consumer base, engages more shoppers, but I think it's very, very exciting to people and keeps the velocity of the full beverage set up at large.
Let's touch on seasonality and then wrap this up and get some key takeaways for our audience.
Yeah, absolutely.
Talking about seasonality and we code for flavor profiles.
And so we just took a look at, in 2023, some of the flavor profiles that are highly seasonal and seeing substantial growth across the board with those.
So I feel like in the last few years, seasonality has really emerged and become more established in beverage.
And so we're seeing that paralleled in the specific flavor profiles across data.
But once again, I think seasonality, limited launch release is a great way to get some brand recognition, again, generate excitement, drive trial, and hopefully increase purchase frequency for existing consumers.
Fantastic.
Well, that was a great dive into those three key buckets.
In closing, can you wrap this all up for our audience?
What are the key takeaways for entrepreneurs and folks working for beverage brands right now?
Yeah, absolutely.
I would say start with that disruption framework, identify the current landscape today, and keep a pulse and an ear out for trends that are occurring across full store.
Especially VMS, if you're in the functional space.
And I think when we look at specific buckets of data trends, we're really seeing it come down to adding in the good and taking out the bad, and ensuring that you're effectively communicating both of those on-pack.
So what can you add in?
What power of and or benefit can you couple with a pre-existing consumed product to create more product stickiness and engagement, taking out the bad, just keeping a pulse on what's real, what are the shifting dynamics for the consumer, and how can we prioritize real ingredients and communicating that?
That is our target market.
And then lastly, standing out on shelf, whether it is through flavor, packaging, functionality, ingredient profile, making sure that you're identifying the path of the white space you carved out for your brand, how you're going to fill that, and then effectively communicating that in hopes of succeeding.
Kaitlin Morgan, thank you so much for joining us from Spins today.
That was incredibly helpful information, and I hope that our audience is able to use that as they move forward in their innovation and branding strategies.
That concludes another episode of the Community Call Podcast.
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