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Beverage Blurring - US - February 2016

"Beverage blurring is the concept of cross-category beverages, also known as hybrid or fusion drinks, and the impact they have on the consumer impression and behavior. Cross-category drinks combine two or more drink categories, blending flavors and functionality to create a new beverage that could fall under multiple categories."

- Elizabeth Sisel, Beverage Analyst

This report looks at the following issues:

  • Top categories struggle to grab consumer attention
  • Beverage health, function second to taste/flavor
  • Expanding beverage selection can overwhelm, decrease product loyalty

Cross-category beverages have become increasingly popular as manufacturers look to cater to consumer’s health and wellness demands, as well as their desire for flavor experience. Those demands have led to the creation of numerous beverages with multiple identities. While it offers great potential for attracting consumer interest, it also challenges manufacturers and retailers for proper positioning on store shelves and risks complicating consumer purchases.

This report covers the US market for the following non-alcoholic beverage categories:

  • Carbonated soft drinks
  • Juice
  • Dairy milk
  • Non-dairy milk
  • Bottled water
  • Coffee
  • Tea
  • Performance and nutritional drinks
  • Energy drinks

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Top categories struggle to grab consumer attention
            • Figure 1: Non-alcoholic beverage consumption, November 2015
          • Beverage health, function second to taste/flavor
            • Figure 2: Preferred beverages attitudes and behaviors – Reasons for drinking preferred beverages, November 2015
          • Expanding beverage selection can overwhelm, decrease product loyalty
            • Figure 3: Drinking attitudes and behaviors – Attitudes toward beverage availability, November 2015
          • The opportunities
            • Free offerings, taste, price influences new beverage trial
              • Figure 4: Drinking attitudes and behaviors – Preferred beverages, November 2015
              • Figure 5: Attributes that encourage new beverage trial, November 2015
            • Leverage consumer loyalty to inspire trial
              • Figure 6: Attributes that encourage new beverage trial, November 2015
            • What it means
            • The Market – What You Need to Know

              • Top non-alcoholic categories struggles, remaining sees growth
                • Juice, CSDs, dairy milk has highest market penetration
                  • Preference for bulk, single-serve shifts with age
                    • Preferences for chilled, room temperature changes with age
                      • Supermarkets, mass merchandisers top purchase locations
                      • Market Breakdown

                        • Leading categories see stagnant growth and declines
                          • Figure 7: Percent change in sales non-alcoholic drinks, by segment, at current prices, 2014-15
                        • Carbonated Soft Drinks: Spotlight on Natural/Craft – US, June 2015
                          • Juice, Juice Drinks, and Smoothies – US, November 2015
                            • Mintel’s upcoming Dairy Milk – US, March 2016
                              • Bottled Water – US, January 2015
                                • Coffee – US, September 2015
                                  • Nutritional and Performance Drinks – US, January 2015
                                    • Energy Drinks – US, May 2015
                                      • Tea & RTD Tea – US, July 2015
                                        • Mintel’s upcoming Non-dairy Milk – US, April 2016
                                        • Market Perspective – Beverage Consumption

                                          • Juice, CSDs, dairy milk have highest market penetration
                                            • Figure 8: Non-alcoholic beverage consumption, November 2015
                                            • Figure 9: Individual carbonated soft drinks and bottled water mean consumption in a seven- day period, July 2014 to September 2015
                                            • Figure 10: Household mean consumption of juice, coffee, tea, or milk on an average day, July 2014 to September 2015
                                            • Figure 11: Individual energy drink/shot and thirst quenching/sports drinks mean consumption in a 30 day period, July 2014 to September 2015
                                        • Market Perspective – Bulk Versus Single-serve

                                          • Preference for bulk, single-serve shifts with age
                                            • Figure 12: Size and refrigeration preferences – Size, by age, November 2015
                                          • Single-serve can encourage beverage trial
                                            • Figure 13: Size and refrigeration preferences – Attitudes toward single-serve, November 2015
                                            • Figure 14: Size and refrigeration preferences – Attitudes toward single-serve, by age, November 2015
                                        • Market Perspective – Chilled Versus Store Shelves

                                          • Preferences for chilled, room temperature changes with age
                                            • Figure 15: Size and refrigeration preferences – Refrigeration preferences, by age, November 2015
                                          • Consumers expect beverages to be on store shelves
                                            • Figure 16: IFT beverage blurring – Beverage placement, June 2015
                                        • Market Perspective – Purchase Locations

                                          • Supermarkets, mass merchandisers top purchase locations
                                            • Figure 17: Preferred beverages attitudes and behaviors – Top purchasing locations, November 2015
                                            • Figure 18: Preferred beverages attitudes and behaviors – Top purchasing locations, by age, November 2015
                                        • Market Factors

                                          • Health concerns remain top-of-mind with consumers
                                            • Figure 19: Important to achieve good health – Any top three rank, May 2015
                                          • Consumers aged 25-34, older groups on the rise
                                            • Figure 20: Growth rates of population (% change), by age, 2010-20
                                          • Declining household income challenges some beverage categories
                                            • Figure 21: Median household income, in inflation-adjusted dollars, 2004-14
                                          • Households with children decline
                                            • Figure 22: Households, by presence of own children, 2003-13
                                          • Hispanic population experiencing growth
                                            • Figure 23: Growth rates of population (% change), by race and Hispanic origin, 2010-20
                                          • Overlap between Millennials, acculturated Hispanics, and parents
                                            • Millennials as parents
                                              • Figure 24: Households with own children, by age of householder, 2013
                                            • Hispanics as parents
                                              • Figure 25: Households with own children, by Hispanic origin of householder, 2013
                                            • Hispanics as Millennials
                                              • Figure 26: Generations, by Hispanic origin, 2015
                                          • Key Players – What You Need to Know

                                            • Cross-category beverages see growth
                                              • Beverage category crossover creates new flavors, functions
                                                • Grassroots promotional efforts move the needle
                                                • Product Impact

                                                  • Iconic packaging can cause confusion
                                                    • Brand name can interfere with consumer perception
                                                      • Packaging/looks can be deceiving
                                                        • Hybrid beverages may nudge consumers to new territory
                                                        • What’s Working?

                                                          • Cross-category drinks hit on trends, see success at MULO channels
                                                            • Characteristics of success
                                                              • Branded by heritage and ingredients
                                                                • Categories with healthier association
                                                                • What’s Struggling?

                                                                  • Some drinks facing stronger competition at MULO outlets
                                                                  • What’s Next?

                                                                      • Waters increase functionality and flavor offerings
                                                                        • Around the US
                                                                          • Around the globe
                                                                            • Teas cross with variety of categories
                                                                              • Around the US
                                                                                • Around the globe
                                                                                  • Coffee flavor, function tapped for multiple drink types
                                                                                    • Around the US
                                                                                      • Around the globe
                                                                                        • Juice fusions move to new categories
                                                                                          • Around the US
                                                                                            • Around the globe
                                                                                              • Milk meets water
                                                                                              • The Consumer – What You Need to Know

                                                                                                • Confusion over cross-category beverage placement
                                                                                                  • Hybrid drinks struggle with positive perceptions
                                                                                                    • Majority only sometimes purchase new drinks
                                                                                                      • Consumers open to new beverage trial
                                                                                                        • Free trial, taste most important to encourage new beverage trial
                                                                                                          • Consumers enjoy wide beverage selection
                                                                                                          • Beverage Confusion

                                                                                                            • Confusion over cross-category beverage placement
                                                                                                              • Vital Juice Co. Almond Cold Pressed Juice
                                                                                                                • Figure 27: Beverage placement – Vital Juice Co. Almond Cold Pressed Juice, November 2015
                                                                                                              • POM Supertea
                                                                                                                • Figure 28: Beverage placement – POM Supertea, November 2015
                                                                                                              • Mtn Dew Kickstart Energizing Sparkling Juice Beverage
                                                                                                                • Figure 29: Beverage placement – Mtn Dew Kickstart Energizing Sparkling Juice Beverage, November 2015
                                                                                                              • V8 V Fusion + Energy
                                                                                                                • Figure 30: Beverage placement – V8 V Fusion + Energy, November 2015
                                                                                                              • Starbucks Refreshers Sparkling Green Coffee Energy Beverage
                                                                                                                • Figure 31: Beverage placement – Starbucks Refreshers Sparkling Green Coffee Energy Beverage, November 2015
                                                                                                              • Hi Ball Sparkling Energy Water
                                                                                                                • Figure 32: Beverage placement – Hi Ball Sparkling Energy Water, November 2015
                                                                                                              • Jones Strawberry Lime Sparkling Water
                                                                                                                • Figure 33: Beverage placement – Jones Strawberry Lime Sparkling Water, November 2015
                                                                                                              • Rockstar Roasted Caffe Latte Flavored Energy & Coffee Drink
                                                                                                                • Figure 34: Beverage placement – Rockstar Roasted Caffe Latte Flavored Energy & Coffee Drink, November 2015
                                                                                                              • Harmless Harvest 100% Raw Coconut Water with Fair Trade Coffee
                                                                                                                • Figure 35: Beverage placement – Harmless Harvest 100% Raw Coconut Water with Fair Trade Coffee, November 2015
                                                                                                            • Views toward Hybrid (Fusion/Cross-category) Drinks

                                                                                                              • Hybrid drinks has opportunity to leverage uniqueness
                                                                                                                • Figure 36: Beverage blurring – Positive attitudes toward hybrid drinks, June 2015
                                                                                                                • Figure 37: Beverage blurring – Positive attitudes toward hybrid drinks, by age, June 2015
                                                                                                                • Figure 38: Beverage blurring – Positive attitudes toward hybrid drinks, by demographics, June 2015
                                                                                                              • Hybrid/fusions drinks are challenged by consumer perceptions
                                                                                                                • Figure 39: Beverage blurring – Negative attitudes toward hybrid drinks, June 2015
                                                                                                            • New Beverage Purchasing Behaviors

                                                                                                              • Majority only sometimes purchase new drinks
                                                                                                                • Figure 40: Drinking attitudes and behaviors – New drink purchasing behaviors, November 2015
                                                                                                              • Frequently purchase new or different beverages
                                                                                                                • Sometimes purchased new or different beverages
                                                                                                                  • Rarely purchases new or different beverages
                                                                                                                    • Frequent new drink shoppers visit a variety of retail channels
                                                                                                                      • Figure 41: Preferred beverages attitudes and behaviors – Top purchasing locations, by drinking attitudes and behaviors, November 2015
                                                                                                                    • Hybrid beverage drinkers
                                                                                                                      • Occasional hybrid drinkers
                                                                                                                        • No interest in hybrid drinks
                                                                                                                        • Attitudes toward New and Preferred Beverages

                                                                                                                          • Consumers open to new beverage trial
                                                                                                                            • Figure 42: Drinking attitudes and behaviors – Preferred beverages, November 2015
                                                                                                                          • Open to new beverage trial
                                                                                                                            • Sticks to preferred beverages
                                                                                                                              • Prefers variety
                                                                                                                                • Reasons for drinking preferred beverages
                                                                                                                                  • Figure 43: Preferred beverages attitudes and behaviors – Reasons for drinking preferred beverages, November 2015
                                                                                                                                  • Figure 44: Preferred beverages attitudes and behaviors – Reasons for drinking preferred beverages, by age, November 2015
                                                                                                                              • Encourage New Beverage Trial

                                                                                                                                • Free trial, taste most important to encourage new beverage trial
                                                                                                                                    • Figure 45: Attributes that encourage new beverage trial, November 2015
                                                                                                                                    • Figure 46: Attributes that encourage new beverage trial, by age, November 2015
                                                                                                                                  • Opportunities to reach women with new drink trial
                                                                                                                                    • Opportunities to reach parents with new drink trial
                                                                                                                                    • Attitudes toward Available Drink Selection

                                                                                                                                      • Consumers enjoy wide beverage selection
                                                                                                                                        • Figure 47: Drinking attitudes and behaviors – Attitudes toward beverage availability, November 2015
                                                                                                                                      • Enjoys the selection
                                                                                                                                        • Indifferent
                                                                                                                                          • Overwhelmed
                                                                                                                                            • Figure 48: Drinking attitudes and behaviors – Attitudes toward beverage availability, by age, November 2015
                                                                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                                                                          • Data sources
                                                                                                                                            • Sales data
                                                                                                                                              • Consumer survey data
                                                                                                                                                • Consumer qualitative research
                                                                                                                                                  • Abbreviations and terms
                                                                                                                                                    • Abbreviations
                                                                                                                                                      • Terms
                                                                                                                                                      • Appendix – Market Breakdown

                                                                                                                                                          • Figure 49: Sales non-alcoholic drinks, by segment, at current prices 2010-15

                                                                                                                                                      Companies Covered

                                                                                                                                                      • Walmart Stores (USA)

                                                                                                                                                      Beverage Blurring - US - February 2016

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