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Carbonated Soft Drinks: Spotlight on Natural/Craft - US - June 2015

"The CSD category has faced several years of sales declines, the result of artificial ingredients, sweeteners, sugar concerns, links to obesity and diabetes, and other health issues. Total retail sales of carbonated soft drinks (CSDs) is expected to decline as negative diet soda sales continue to overtake regular sales gains. The category struggles as the diet CSD segment sours and leading companies increase prices to make up for lost sales volume. Opportunities exist in the category to strengthen brand trust, authenticity, and experience, particularly through trending natural and craft CSDs segments."
- Elizabeth Sisel, Beverage Analyst

This report discusses the following key topics:

  • Category sales are declining
  • Unfamiliarity, high prices hinder success in craft segment
  • Health concerns continue to plague category

This report spotlights natural/craft CSDs because of their growing popularity and better-for-you and natural trends. Mintel defines these as CSDs labeled as natural, feature real sugar and/or plant-based sweeteners, and/or contain 100% natural ingredients. Craft CSDs are defined as being manufactured in small batches, includes more natural ingredients, and/or is labeled as “craft” or “hand-crafted.”

Artificial ingredients, sweeteners, sugar content, and links to obesity and diabetes, among other health issues continue to put pressure on the carbonated soft drink category. CSDs need to move past a beverage category that offers consumers basic refreshment and taste with a host of additional health baggage.

Craft and natural provides a new flavor experience, while hitting on natural and premium ingredient trends. The segments are still too young to predict success and too small to save the category’s souring sales, however, interest in craft and increasing numbers of consumers drinking natural, naturally sweetened, and craft products are promising. Health perceptions are on craft’s side, but manufacturers need to justify high prices and build awareness to grow sales.

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Category sales are declining
            • Figure 1: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2010-20
          • Unfamiliarity, high prices hinder success in craft segment
            • Figure 2: Negative craft CSD attributes, March 2015
          • Health concerns continue to plague category
            • Figure 3: Attitudes and behaviors toward craft and natural CSD, March 2015
          • The opportunities
            • Interest in craft and natural
              • Figure 4: Craft CSD interest, March 2015
            • Opportunities to highlight natural/premium ingredients
              • Figure 5: Positive craft CSD attributes, March 2015
            • Evolution of expectations
              • Figure 6: Attitudes and behaviors toward craft and natural CSD, March 2015
            • What it means
            • The Market - What You Need to Know

              • Category sales declines forecast to continue
                • Regular segment sees positive gains, diet decline continues
                  • Race, presence of children drive CSD consumption
                  • Market Size and Forecast

                    • Category decline to continue
                      • Figure 7: Total US sales and fan chart forecast of carbonated soft drinks, at current prices, 2010-20
                      • Figure 8: Total US retail sales and forecast of carbonated soft drinks, at current prices, 2010-20
                      • Figure 9: Total US retail sales and forecast of carbonated soft drinks, at inflation-adjusted prices, 2010-20
                  • Market Breakdown

                    • Regular CSDs recover slightly; diet continues to suffer
                      • Figure 10: Total US retail sales and forecast of carbonated soft drinks, by segment, at current prices, 2010-20
                    • Segments struggle through 2020
                      • Figure 11: Total US retail sales and forecast of carbonated soft drinks, by segment, at current prices, 2010-20
                    • Retail sales stagnant from 2013-15
                      • Figure 12: Total US retail sales of carbonated soft drinks, by channel, at current prices, 2013 and 2015
                    • Natural channel sales grow 14.3% from 2013-15
                      • Figure 13: Natural supermarket sales of carbonated beverages, at current prices, rolling 52 weeks February 2013-February 2015
                    • Natural sugar, sweetened CSDs experience growth
                      • Figure 14: Natural supermarket sales of carbonated beverages, by type of sweetener, at current prices, rolling 52 weeks ending 2/24/13 and 2/22/15
                  • Market Factors

                    • Hispanic and Asian populations growing
                      • Figure 15: Population by race and Hispanic origin, 2010-20
                    • Presence of children influences consumption
                      • Older Millennials
                        • Figure 16: Households with own children, by age of householder, 2013
                      • Hispanics and Asians
                        • Figure 17: Households with own children, by race and Hispanic origin of householder, 2013
                    • Key Players – What You Need to Know

                      • Leading company MULO sales stall
                        • Regular CSDs post slight gains
                          • Diet CSDs MULO sales continue to decline
                          • Manufacturer Sales of CSDs

                            • Leading company sales remain flat
                              • Manufacturer sales of carbonated soft drinks
                                • Figure 18: MULO sales of carbonated soft drinks, by leading companies, rolling 52 weeks 2014 and 2015
                            • What’s Working?

                              • Regular Coca-Cola brands’ dollar sales recover slightly
                                • Figure 19: Coca-Cola brand consumption, trended 2010-14
                              • Fanta continues growth
                                • Dr Pepper flagship a priority
                                  • Figure 20: Dr Pepper brand consumption, trended 2010-14
                                • Squirt, ginger ale brands help fuel growth
                                  • Figure 21: Ginger Ale brand consumption, by brand, trended 2010-14
                                • PepsiCo commits to Mountain Dew
                                  • Figure 22: Mountain Dew brand consumption, trended 2010-14
                                  • Figure 23: MULO sales of regular soft drinks, by leading companies and brands, rolling 52 weeks 2014 and 2015
                              • Who’s Struggling?

                                • The fall of artificial sweeteners in CSDs
                                  • Diet consumption decreasing
                                    • Figure 24: Diet CSD consumption, by brand, trended 2010-14
                                    • Figure 25: Diet CSD consumption-average # of drinks in last 7 days, by brand trended 2010-14
                                  • New campaigns to win back drinkers
                                    • Private label
                                      • Figure 26: Store brand CSD consumption, by type, trended 2010-14
                                      • Figure 27: MULO sales of regular soft drinks, by leading companies and brands, rolling 52 weeks 2014 and 2015
                                      • Figure 28: MULO sales of diet soft drinks, by leading companies and brands, rolling 52 weeks 2014 and 2015
                                  • What’s Next? – Natural and Premium

                                    • Natural CSDs
                                      • Real ingredients
                                        • Unique flavor experiences
                                          • Naturally sweetened
                                            • Natural CSDs with plant-based sweeteners dominate diet sales growth
                                              • Leading companies get sweet, naturally
                                                • Craft CSD pick up
                                                  • National craft brewers
                                                  • What’s Coming? – Evolution to Carbonated Beverages

                                                    • Healthy sodas
                                                      • Kombucha soda
                                                        • Soda by another name
                                                          • Non-alcoholic sparkling/carbonated beverages
                                                            • CSD alternative and a mixer
                                                            • The Consumer – What You Need to Know

                                                              • Consumers interested in craft
                                                                • Millennials, parents, Asian and Hispanics core craft/natural consumers
                                                                  • Natural perceived as healthier
                                                                  • Craft Interest

                                                                    • 44% of non-drinkers interested in trying craft CSDs
                                                                      • Figure 29: Craft CSD interest, March 2015
                                                                    • Real, premium ingredients strongest draw
                                                                      • Figure 30: Positive craft CSD attributes, March 2015
                                                                    • Unfamiliarity, high price reasons for disinterest
                                                                      • Figure 31: Negative craft CSD attributes, March 2015
                                                                  • Millennials Core Craft Consumers

                                                                    • Opportunity with older Millennials
                                                                        • Figure 32: Craft CSD consumption – Any consumption, by generations, March 2015
                                                                      • Young Millennials open to trial
                                                                        • Figure 33: Craft CSD interest, by generation, March 2015
                                                                      • Natural ingredients drive interest
                                                                          • Figure 34: Positive craft CSD attributes, March 2015
                                                                        • Young Millennials unfamiliar, older Millennials price sensitive
                                                                            • Figure 35: Negative craft CSD attributes, by generation, March 2015
                                                                        • Non-Millennial Craft Potential

                                                                          • Some craft interest, opportunities with Gen Xers
                                                                            • Figure 36: Craft CSD interest, by generations, March 2015
                                                                        • Fathers and Mothers Heavy Craft Users

                                                                          • Fathers are core consumers, opportunities with mothers
                                                                            • Figure 37: Craft CSD consumption – Any consumption, by parental status, March 2015
                                                                          • Parents interested in craft trial
                                                                            • Figure 38: Craft CSD interest, by parental status, March 2015
                                                                          • Ingredients most important
                                                                            • Figure 39: Positive craft CSD attributes, by parental status, March 2015
                                                                          • Health, high prices fuel disinterest
                                                                            • Figure 40: Negative craft CSD attributes, by parental status, March 2015
                                                                        • Asian and Hispanic Craft Users

                                                                          • Asians and Hispanics are heavy craft users
                                                                            • Figure 41: Craft CSD consumption – Any consumption, by race and Hispanic origin, March 2015
                                                                          • Interest/disinterest similar across race groups
                                                                            • Figure 42: Craft CSD interest, by race and Hispanic origin, March 2015
                                                                        • Craft Purchase Locations

                                                                          • Stronger craft presence at supermarkets, mass merchandisers
                                                                              • Figure 43: Craft CSD purchasing locations, March 2015
                                                                          • The Natural CSD Consumer

                                                                            • Millennials
                                                                              • Figure 44: Natural and Stevia-sweetened CSD consumption – Any consumption, by generations, March 2015
                                                                            • Parents
                                                                              • Figure 45: Natural and Stevia-sweetened CSD consumption – Any consumption, by parental status, March 2015
                                                                            • Hispanics and Asians
                                                                              • Figure 46: Natural and Stevia-sweetened CSD consumption – Any consumption, by race and Hispanic origin, March 2015
                                                                          • Natural CSD Association with Health

                                                                            • Natural/organic CSDs perceived as healthier/more nutritious
                                                                              • Aversions to artificial sweeteners
                                                                                • Figure 47: Attitudes and behaviors toward natural CSDs, March 2015
                                                                            • Natural CSD Purchase Locations

                                                                              • More options at supermarket, mass merchandiser
                                                                                • Figure 48: Natural CSD purchasing locations, March 2015
                                                                            • Providing a Flavor Experience

                                                                                • Figure 49: Attitudes toward craft/natural CSDs
                                                                            • Appendix – Data Sources and Abbreviations

                                                                              • Data sources
                                                                                • Sales data
                                                                                  • Fan chart forecast
                                                                                    • Consumer survey data
                                                                                      • Abbreviations and terms
                                                                                        • Abbreviations
                                                                                        • Appendix – Market

                                                                                          • Regular soft drinks
                                                                                            • Figure 50: Total US retail sales and forecast of regular soft drinks, at current prices, 2010-20
                                                                                            • Figure 51: Total US retail sales and forecast of regular soft drinks, at inflation-adjusted prices, 2010-20
                                                                                          • Diet soft drinks
                                                                                            • Figure 52: Total US retail sales and forecast of diet soft drinks, at current prices, 2010-20
                                                                                            • Figure 53: Total US retail sales and forecast of diet soft drinks, at inflation-adjusted prices, 2010-20
                                                                                          • Total market by retail outlet
                                                                                            • Figure 54: Total US retail sales of carbonated soft drinks, by channel, at current prices, 2010-15
                                                                                        • Appendix – Key Players

                                                                                            • Figure 55: MULO sales of regular soft drinks, by leading companies and brands, rolling 52 weeks 2014 and 2015
                                                                                            • Figure 56: MULO sales of diet soft drinks, by leading companies and brands, rolling 52 weeks 2014 and 2015

                                                                                        Companies Covered

                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                        Carbonated Soft Drinks: Spotlight on Natural/Craft - US - June 2015

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