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America's Changing Drinking Habits - US - February 2009

The non-alcoholic beverage market has been in a state of flux since the past decade, with a paradigm shift in consumer preferences for non-alcoholic beverages. While beverage manufacturers need to fine-tune their offerings to align with the changing trends in consumer preferences for different non-alcoholic beverages, marketers also need to tailor their messages based on changes in consumer habits and needs.

In this report, Mintel looks at consumer trends influencing the changes in the non-alcoholic beverage market that have generally emerged during 2003-08. In this report, stakeholders in the non-alcoholic beverage market can expect to find insights related to the following:

  • Analysis of evidence suggesting changes in consumer non-alcoholic beverage drinking habits
  • Analysis of drinking habit changes by different demographic groups
  • How health and wellness factors influence changes in consumer non-alcoholic beverage preferences
  • Analysis of consumer price sensitivity toward non-alcoholic beverages
  • How consumer non-alcoholic beverage preferences are related to the recession
  • Which market factors influence consumer beverage sustainability trends
  • How consumer loyalty trends affect their relationship to their favorite brands and their attitudes toward exchanging those brands with private label variants
  • How the convenience trends has shaped consumer drinking habits with respect to purchasing beverages for both immediate consumption and at-home consumption

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Consumer survey data
          • Advertising clips
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                    • American consumers exhibit change in (non-alcoholic beverage) drinking habits
                      • Health and wellness trends prompt consumers to choose healthy beverages
                        • Obesity pandemic has caused a shift in consumer preferences
                          • Consumers are moving away from artificial ingredients in beverages
                            • American consumers are price sensitive in purchasing beverages
                              • The need for economy can negatively influence brand loyalty
                                • Consumers turn “green”; plastic packaging may receive consumer backlash in all beverage types
                                • Insights and Opportunities

                                  • Men shift to drinking low-calorie beverages, signaling growth potential for diet beverages
                                    • Figure 1: Trends in personal consumption of soda and bottled water, by gender, 2003 and 2008
                                    • Figure 2: Attitude towards health, 2004 and 2008
                                  • Current economic climate and a search for the silver lining…
                                      • Figure 3: POM Wonderful for heart health, Television Ad, 2008
                                    • Aging population needs convenient packaging
                                      • Figure 4: Desirable functional packaging attributes, by age, December 2008
                                    • Proliferation in portion control packaging can bring change in drinking habit
                                      • Figure 5: Attitudes toward the role of packaging in informing about the right serving size, December 2008
                                    • “Medicated” beverages are likely to remain a small niche
                                    • Inspire Insights

                                        • Search for the next magic ‘Superfruit’
                                          • Beyond feelings of logic
                                            • Exploring the Amazon…
                                              • ...and beyond
                                                • A simple balance for health
                                                  • What's it about?
                                                    • What we've seen
                                                    • Change in Drinking Habits: An Overview

                                                      • Non-alcoholic beverage consumption trends indicate a change in drinking habits
                                                        • Soda continues to enjoy the highest consumer penetration, but exhibits decline in consumer base
                                                          • Bottled water has expanded its consumer base in the past five years
                                                            • Consumers embrace energy drinks with enthusiasm; sports drinks continue to broaden consumer base
                                                              • Ready-to-drink iced tea and coffee drinks
                                                                • Figure 6: Trends in personal consumption of RTD beverages, 2003-08
                                                              • Household consumption of fruit juice, milk, and coffee also points toward change in consumer preference
                                                                  • Figure 7: Trends in household consumption of RTD beverages, 2003-08
                                                                • Non-alcoholic beverage dollar and volume sales trends suggest shifting consumer preferences
                                                                  • Figure 8: FDMx dollar sales trends for non-alcoholic beverages, 2003- 08
                                                                  • Figure 9: FDMx volume sales trends for non-alcoholic beverages, 2003-08
                                                                • Energy drinks, bottled water top 2008 new product introductions
                                                                  • Figure 10: Trends in number of new products in non-alcoholic beverages, by segment, 2003-08
                                                                • Market factors influencing changes in consumer purchase beverages
                                                                • Health and Wellness: Market Factors

                                                                  • American consumers grapple with growing waistlines
                                                                    • Figure 11: Percentage of population who are overweight or obese, 20-74 years of age, 1988-2004
                                                                    • Figure 12: Attitude towards health, 2003 and 2008
                                                                  • Growing consumer concern about the negative side effects of obesity
                                                                    • Figure 13: Reasons for watching/controlling diet, 2004 and 2008
                                                                  • Obesity among children—concern for future obese adults
                                                                    • Figure 14: Prevalence of overweight among children and adolescents, 2-19 years of age, 1976-2004
                                                                  • Obesity and related diseases and beverages: there is a connection
                                                                    • Sugar in beverages is the culprit—how much sugar do we need?
                                                                      • Figure 15: Average sugar* intake on any given day by drinking certain non-alcoholic beverages, by age, 2006
                                                                    • Growing skepticism toward artificial ingredients
                                                                      • Consumers increasingly wary about high fructose corn syrup
                                                                        • Artificial sweeteners on the health-risk watch
                                                                          • Antioxidant concept takes root in American consumer psyche
                                                                              • Figure 16: Welch’s grape juice, Television Ad, 2007
                                                                              • Figure 17: Welch’s Concord Grape Juice, Television Ad, 2008
                                                                          • Health and Wellness: Innovation and Innovators

                                                                              • New product launches with antioxidant claims have exploded to keep up with consumer demand
                                                                                • Figure 18: Trends in number of new products in non-alcoholic beverages with antioxidant claim, by segment, 2003, 2005, and 2008
                                                                                • Figure 19: Trends in number of new products in non-alcoholic beverages by the type of superfruit, 2003, 2005, and 2008
                                                                              • No additive and preservative claim in new beverages has more than tripled during 2003-08
                                                                                • Figure 20: Trends in number of new products in non-alcoholic beverages with no additive/preservative claim, by segment, 2003, 2005, and 2008
                                                                              • Rising numbers of low/no-sugar claims aim to target the biggest consumer trend: obesity
                                                                                • Figure 21: Trends in number of new products in non-alcoholic beverages with low/no sugar claim, by segment, 2003, 2005, and 2008
                                                                              • Vitamin and mineral fortified—aim to fulfil shortfalls in consumer diet
                                                                                  • Figure 22: Trends in number of new products in non-alcoholic beverages with vitamin and mineral fortified claim, by segment, 2003, 2005, and 2008
                                                                                  • Figure 23: Trends in number of new products in non-alcoholic beverages with organic claim, by segment, 2003, 2005, and 2008
                                                                              • Health and Wellness: The Consumer

                                                                                • Low-calorie beverages or ones providing low/no-calorie nutrition will garner consumer attention
                                                                                  • Consumers are drinking more antioxidant-rich and vitamin/mineral fortified beverages
                                                                                    • Non-alcoholic beverage users shun high-fructose corn syrup and artificial sweeteners
                                                                                      • Use of packaging as a marketing tool
                                                                                        • Non-alcoholic beverages have growth potential at the expense of alcoholic beverages
                                                                                          • Adults aged 18-24 perceive energy drinks as dangerous
                                                                                              • Figure 24: Health attributes influencing change in drinking non-alcoholic beverage habits, November 2008
                                                                                            • Blacks and Hispanics more proactive in moving to low-calorie alternative to reduce or manage weight
                                                                                              • More blacks and Hispanics perceive energy drinks as dangerous
                                                                                                • Figure 25: Health attributes influencing change in drinking non-alcoholic beverages, by race/Hispanic origin November 2008
                                                                                              • Households with children are buying fewer beverages with “bad-for-you” perception
                                                                                                  • Figure 26: Buying more RTD and premium beverages, by gender, November 2008
                                                                                              • Price Sensitivity and Affordability: Market Factors

                                                                                                • Consumers are price sensitive in purchasing beverages
                                                                                                  • Key consumer households and nearly 50% of U.S. households fall below median income
                                                                                                    • Figure 27: Household income, by number of households and income group, 2007
                                                                                                    • Figure 28: Household income, by age and ethnicity/Hispanic origin of householder, 2006 and 2007
                                                                                                  • More discretionary income in the hands of the affluent
                                                                                                    • Current economic climate influences change in consumer drinking habits
                                                                                                      • Figure 29: Trends in consumer expenditure on food and beverages, 2003-07
                                                                                                    • Consumer demand declines as a result of economic downturn
                                                                                                        • Figure 30: change in volume sales for non-alcoholic beverages, 2006-07 and 2007-08
                                                                                                      • Economic downturn prompts consumers to move to private labels
                                                                                                        • Figure 31: Trends in non-alcoholic beverage sales, by private label and branded products marekt share, 2003-08
                                                                                                    • Price Sensitivity and Affordability: The Consumer

                                                                                                      • Consumer move toward buying more beverages on promotion, in family-size and single-serve multipacks packaging
                                                                                                        • Consumers are purchasing more private label beverages to save money
                                                                                                          • Opportunities for non-alcoholic beverages to take away sales from alcoholic beverages
                                                                                                            • Consumers are saving money by brewing tea and coffee at home
                                                                                                                • Figure 32: Attitudes toward promotion and economic choices in beverages, by age, November 2008
                                                                                                              • Blacks and Hispanics are buying more beverages in family-size packaging to save money
                                                                                                                • Hispanics are likely to show decline in drinking energy drinks
                                                                                                                  • Figure 33: Attitudes toward promotion and economic choices in beverages, by race/Hispanic origin, November 2008
                                                                                                              • Convenience: Market Factors

                                                                                                                • American consumers are busy, but striving to make life easier
                                                                                                                  • Figure 34: Trends in average time use for personal care activities and work-related activities for Americans aged 15 and over, 2003 and 2007
                                                                                                                • Working moms experience too much demand on time and energy
                                                                                                                  • Figure 35: Weekday time use of married women aged 25-54, by presence of child aged 6 and under in household and status of employment, 2007
                                                                                                                  • Figure 36: Trends in personal consumption of RTD beverages, by moms and all women, April 2007-June 2008
                                                                                                                • Americans’ increasing need for energy
                                                                                                                  • Figure 37: Reasons for drinking energy drinks, by age, May 2008
                                                                                                                  • Figure 38: Trends in the number of new products with energy claims in various non-alcoholic beverages, 2003 and 2008
                                                                                                                • Portability and the need for immediate consumption
                                                                                                                • Convenience: The Consumer

                                                                                                                    • Consumer shift in drinking RTD coffee, energy drinks, sports drinks, and smoothies for immediate consumption
                                                                                                                        • Figure 39: Change in the incidence of purchasing beverages in the last two years for immediate consumption and at-home consumption and purchasing beverages in single-serve packaging, November 2008
                                                                                                                    • Convenience: Innovation and Innovators

                                                                                                                      • Trends in the number of new beverage products with convenient packaging claim
                                                                                                                        • Figure 40: Trends in the number of new products with convenience packaging claims, 2003-08
                                                                                                                    • Brand Loyalty: Market Factors

                                                                                                                      • Growing numbers of line extensions: an effort to hold on to loyal consumers and bring in new consumers
                                                                                                                        • A line extension with independent positioning may drive sustainable long-term growth
                                                                                                                          • Innovation in private label, at par with branded products, has challenged brand loyalty
                                                                                                                            • Figure 41: Growing number of new private label beverages, 2003-08
                                                                                                                            • Figure 42: Private label sales as a percent of total FDMx sales of certain non-alcoholic beverages, 2003-08
                                                                                                                        • Brand Loyalty: The Consumer

                                                                                                                          • More than a third of all adults exhibit brand loyalty toward their favorite brand; young adults are least likely to be brand loyal
                                                                                                                            • Coupons and promotions are an integral part of purchase behavior among brand loyal consumers
                                                                                                                              • Consumer switch to private labels because private labels offer comparable quality to and cheaper prices than branded beverages
                                                                                                                                  • Figure 43: Factors influencing change in brand loyalty, by age, November 2008
                                                                                                                              • Sustainability: Market Factors

                                                                                                                                • Growing backlash against plastic in bottled water
                                                                                                                                  • Low recycling rates in plastic may extend consumer backlash to other non-alcoholic beverage categories
                                                                                                                                    • Figure 44: Recycling rates, by material and packaging type, 2006
                                                                                                                                    • Figure 45: Nestlé environmental-friendly packaging, Television Ad, 2008
                                                                                                                                • Sustainability: The Consumer

                                                                                                                                  • A majority of non-alcoholic beverage buyers do not relate to environmental issues in beverages…
                                                                                                                                    • … but growing awareness about harmful influence of plastic on the environment and health is likely to negatively influence the non-alcoholic beverage industry
                                                                                                                                      • Young adults and Hispanics, the key beverage consumers, are more aware of negative environmental consequences of plastic waste
                                                                                                                                          • Figure 46: Concern for environment and beverage purchase behavior in the past two years, by age, November 2008
                                                                                                                                          • Figure 47: Concern for environment and beverage purchase behavior in the past two years, by race/Hispanic origin, November 2008
                                                                                                                                      • Sustainability: Innovation and Innovators

                                                                                                                                        • Number of new beverages with environmental-friendly packaging claims is on the rise
                                                                                                                                          • Figure 48: Trends in the number of new products with environmental-friendly packaging claims, 2003-08
                                                                                                                                        • Packaging made from 100% recycled material
                                                                                                                                          • Packaging made from using less plastic
                                                                                                                                            • Water bottles made from plant-based plastic
                                                                                                                                            • Changes in Drinking Habit: Demographic Influences

                                                                                                                                              • Women have given impetus to pro-health and low-calorie beverages
                                                                                                                                                • Figure 49: Attitudes towards health, by gender, February 2007-March 2008
                                                                                                                                                • Figure 50: Reasons for watching/controlling diet, by gender and custom women demographic, April 2007-June 2008
                                                                                                                                                • Figure 51: Perception of health attributes influencing change in drinking non-alcoholic beverages, by gender, November 2008
                                                                                                                                              • Women tend to be budget-conscious
                                                                                                                                                • Figure 52: Attitudes towards health, by gender, July 2007-September 2008
                                                                                                                                                • Figure 53: Attitudes towards buying beverages on promotion, by gender, November 2008
                                                                                                                                              • Young adults aged 18-24 have stimulated growth through energy drinks
                                                                                                                                                • Figure 54: Trends in the personal consumption of energy drinks, sports drinks, bottled water, and soda, by age 2003 and 2008
                                                                                                                                                • Figure 55: Change in the number of consumers in certain non-alcoholic beverage segments, by age group, during 2003-08
                                                                                                                                              • Beverages targeting geriatric population are likely to thrive and may fuel growth in the market overall
                                                                                                                                                • Figure 56: U.S. population of adults aged 18 and over, by age group, 2003-13
                                                                                                                                              • Ethnic population also exhibits changes in drinking habits
                                                                                                                                                • Figure 57: Trends in the personal consumption of energy drinks, sports drinks, bottled water, and soda, by race/Hispanic origin 2003 and 2008
                                                                                                                                            • Cluster Analysis

                                                                                                                                                • Maintainers
                                                                                                                                                  • Who they are
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Changers
                                                                                                                                                        • Who they are
                                                                                                                                                          • Opportunity
                                                                                                                                                            • Rearrangers
                                                                                                                                                              • Who they are
                                                                                                                                                                • Opportunity
                                                                                                                                                                  • Cluster characteristics
                                                                                                                                                                    • Figure 58: Drinking clusters, November 2008
                                                                                                                                                                    • Figure 59: Incidence of drinking various non-alcoholic beverages, by drinking clusters, November 2008
                                                                                                                                                                    • Figure 60: Health attributes influencing change in drinking non-alcoholic beverage habits, by drinking clusters, November 2008
                                                                                                                                                                    • Figure 61: Attitudes toward promotion and economic choices in beverages, by drinking clusters, November 2008
                                                                                                                                                                    • Figure 62: Incidence of purchasing beverages for convenience and status, by drinking clusters, November 2008
                                                                                                                                                                    • Figure 63: Concern for environment and beverage purchase behavior in the past two years, by drinking clusters, November 2008
                                                                                                                                                                    • Figure 64: Health attributes influencing change in drinking non-alcoholic beverage habits, by drinking clusters, November 2008
                                                                                                                                                                    • Figure 65: Factors influencing change in brand loyalty, by drinking clusters, November 2008
                                                                                                                                                                  • Cluster demographics
                                                                                                                                                                    • Figure 66: Drinking clusters, by gender, November 2008
                                                                                                                                                                    • Figure 67: Drinking clusters, by age group, November 2008
                                                                                                                                                                    • Figure 68: Drinking clusters, by income group, November 2008
                                                                                                                                                                    • Figure 69: Drinking clusters, by race, November 2008
                                                                                                                                                                    • Figure 70: Drinking clusters, by Hispanic origin, November 2008
                                                                                                                                                                  • Cluster methodology
                                                                                                                                                                  • Appendix: Other Useful Tables

                                                                                                                                                                    • Health and wellness attributes contributing to change in non-alcoholic beverage consumption
                                                                                                                                                                      • Figure 71: Health attributes influencing change in drinking non-alcoholic beverages, by gender, November 2008
                                                                                                                                                                      • Figure 72: Health attributes influencing change in drinking non-alcoholic beverages, by income, November 2008
                                                                                                                                                                      • Figure 73: Health attributes influencing change in drinking non-alcoholic beverages, by presence of children, November 2008
                                                                                                                                                                    • Price sensitivity and affordability
                                                                                                                                                                      • Figure 74: Attitudes toward promotion and economic choices in beverages, by gender, November 2008
                                                                                                                                                                      • Figure 75: Attitudes toward promotion and economic choices in beverages, by income, November 2008
                                                                                                                                                                      • Figure 76: Attitudes toward promotion and economic choices in beverages, by presence of children, November 2008
                                                                                                                                                                    • Sustainability
                                                                                                                                                                      • Figure 77: Concern for environment and beverage purchase behavior in the past two years, by gender, November 2008
                                                                                                                                                                      • Figure 78: Concern for environment and beverage purchase behavior in the past two years, by income, November 2008
                                                                                                                                                                      • Figure 79: Concern for environment and beverage purchase behavior in the past two years, by presence of children, November 2008
                                                                                                                                                                  • Appendix: Trade Associations

                                                                                                                                                                    Companies Covered

                                                                                                                                                                    • Bill Communications, Inc.
                                                                                                                                                                    • Bureau of Economic Analysis
                                                                                                                                                                    • Coca-Cola Company (The) (USA)
                                                                                                                                                                    • DS Waters of America LP
                                                                                                                                                                    • Food and Drug Administration
                                                                                                                                                                    • Gatorade
                                                                                                                                                                    • Greenfield Online
                                                                                                                                                                    • Hansen Natural Corporation
                                                                                                                                                                    • International Bottled Water Association
                                                                                                                                                                    • Jamba Juice Company
                                                                                                                                                                    • National Beverage & Products Association
                                                                                                                                                                    • National Cancer Institute (NCI)
                                                                                                                                                                    • National Soft Drink Association
                                                                                                                                                                    • Nestlé USA
                                                                                                                                                                    • NutraSweet Company, The
                                                                                                                                                                    • Ocean Spray Cranberries, Inc
                                                                                                                                                                    • PepsiCo Inc
                                                                                                                                                                    • Red Bull North America, Inc.
                                                                                                                                                                    • Starbucks Corporation
                                                                                                                                                                    • The Conference Board
                                                                                                                                                                    • The Kroger Co.
                                                                                                                                                                    • U.S. Bureau of Labor Statistics
                                                                                                                                                                    • U.S. Department of Agriculture
                                                                                                                                                                    • Walmart Stores (USA)
                                                                                                                                                                    • World Health Organization

                                                                                                                                                                    America's Changing Drinking Habits - US - February 2009

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