Beverages play a key role in almost everyone’s life—from coffee in the morning to an alcoholic drink at dinner or with friends. While the same large companies have dominated the space for years, smaller innovators have experienced the fastest growth rates as they launch high-growth products before getting snapped up by larger competitors. The key for investors is identifying the most important trends ahead of time.
Let’s take a look at three mega-trends influencing the beverage industry and the companies and categories that investors may want to consider—including Innoviom, Inc.
#1. Ditching Sugary Soda
More than half of Americans report that low-sugar is important in deciding what to buy from their household, according to Annual Healthcare Shoppers, while one-in-ten people follow a specific low-sugar diet. Government taxes on sugar sweetened products and the addition of added sugar to the Nutritional Facts panel on foods have raised the public’s awareness of sugar content and had a significant impact on sales.
In the beverage space, preferences have been shifting away from sugary carbonated soft drinks (CSD) over the past decade. Between 2012 and 2017, the Beverage Marketing Corporation found a 1.6% annual decrease in sales. The analyst expects the rate of decline to fall to just 0.4% between 2017 and 2022—due in part to the recovery of diet sodas and new skinnier product formats—but CSDs continue to be an underperforming category.
“While we do not have recent volume consumption data, 2018 was a significant year for CSD brands; total CSD sales increased 2.2 percent,” said Caleb Bryant, a beverage analyst. “This overall growth was driven by a strong increase in Diet Coke sales stemming from the launch of new Diet Coke flavors in skinny cans. Diet Pepsi also experienced sales growth possibly due to PepsiCo bringing back the original Diet Pepsi formula with aspartame.”
Naturally flavored craft and artisanal sodas are becoming one of the fastest-growing subsets of the market. According to Grand View Research, global craft soda sales are projected to grow at a 3.5% CAGR between 2014 and 2025 to reach $732.4 million due to increased awareness of the health problems caused by sugary beverages. Unique packaging, creative flavors and a strong local presence have been key to the uptake.
#2. Moving Away from Alcohol
The alcohol market has been experiencing its own version of the trend towards healthier alternatives. While beer sales have spiked during the COVID-19 outbreak, the fastest growing alcoholic beverage categories have been low-calorie products. The most popular low-calorie beverage launch over the past couple of years has been White Claw and the soaring popularity of alcoholic spritzers, such as Truly, as consumers seek out “lighter” products.
Non-alcoholic, or no-proof, drinks have also been rising in popularity over the past couple of years. Distill Ventures, a drink-focused accelerator, started backing no-alcohol companies in 2017, including the popular Seedlip brand. Restaurants are also keeping up with these trends with over 40% of Los Angeles restaurants surveyed by Distill Ventures featuring their own non-alcoholic drinks menu (along with 30% of New York restaurants).
In addition to the rise in non-alcoholic beverages, there’s a growing consumer movement away from alcohol due to its adverse health effects. The popularity of Drynuary (or Dry January) is evidence of these trends. Many people that give up alcohol for a month have rethought their relationship with alcohol, citing better sleep, more energy and a better immune system, along with the cost-savings and other benefits.
#3. Natural & Herbal in Vogue
The move away from sugar and alcohol has led many consumers to natural and herbal beverages. In particular, consumers have increasingly sought out functional benefits from the beverages that they consume. Most functional beverage sales remain in the energy drink space, but new companies are formulating beverages designed to help consumers relax and unwind — particularly during these uncertain times.
The biggest megatrend in the natural and herbal beverage space has been the introduction of CBD-infused beverages. While scientists are still studying the cannabinoid, anecdotal evidence points to a wide range of potential benefits, including the promotion of relaxation. Consumers have turned to CBD-infused beverages as a convenient way to consume the cannabinoid and realize these benefits.
Innoviom’s relaxation beverage with adaptogens
Innovium’s Tranquini and Wowie™ brands combine CBD with adaptogens, which help the body copy with environmental stress factors, adrenal fatigue and sleep disorders. Wowie™ by Tranquini’s low-calorie beverages and shots contain 20mg of hemp-derived CBD per can and a proprietary mix of adaptogens—and it’s products are already on the market across the United States and online on Amazon.com.
Innoviom’s newest beverage, the Wowie shot
Innoviom is well-positioned to capitalize on the CBD and “shot” trends with its new Wowie™ Shots. With distribution already set up, the company could quickly become a category leader in the CBD beverage space. With Millennnials increasingly seeking out low-sugar and non-alcoholic beverages to improve their life, Innoviom’s product line is uniquely positioned to fulfill a key void.
If you’re an accredited investor, click here to learn more about how to invest in the company as it gears up commercialization in the functional beverage market.
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