Head of soft drinks at Euromonitor International Howard Telford shared the current state of the beverage market including categories on the rise and those he expected to see a strong uptick in sales for in the near and medium term. Download slides from last week’s presentation HERE.
Aside from bottled water seeing strong double digit growth over the past few weeks, Telford added that consumers are focusing on nutrient-dense drinks that deliver functionality.
“I would identify these nutrient-dense protein drinks as an area you might find some short term impact,” he said.
Telford added the “importance that consumers place on health for hydration is something to keep in mind as we think about evolving health priorities over the next couple of months and longer term as well.”
Price becomes priority #1
Many consumers are already feeling the economic impact of the public health crisis and will be making purchasing decisions based on price, most panelists agreed.
“Today, with the economic indicators that we’re seeing… I think we have to be very cognizant of price. It’s very early to draw
firm conclusions, but I would be a little less encouraged about some of those more premium products in the space because if we look back to 2008 and 2009 for lessons, I do think there’s going to be some trading down behavior on the part of consumers,” noted Telford.
Holly McHugh, marketing associate at beverage development company Imbibe, sees affordability as a top priority for many consumers struggling with their own financial and economic uncertainty.
“While all of these products are coming out, I think that there will be a focus on keeping the cost down. I do think brands will need to introduce products that are affordable and meet those taste and quality expectations,” said McHugh.
Living in an ‘anxiety economy’
As consumer stresses mount, there will likely be an increased interest in beverages touting functional ingredients related to anxiety relief and immunity, predicted panelists.
“I do think there’s going to be an increasing presence and emergence of this anxiety economy when it comes to food and beverage,” said Telford, who predicts CBD, adaptogen ingredients, and herbal infusions will move into the spotlight.
For hemp-derived CBD brand Ojai Energetics, responsible for the formulation of new beverage brand LIFEAID, sales have increased.
Ojai Energetics chief growth officer, Thomas Hicks, said: “I wouldn’t say we’re up significantly, but we’re up about 20% over our normal now, but we’re still very early into this crisis.”
However, Hicks noted that its marketing has remained consistent throughout the COVID-19 crisis.
“We’re definitely not marketing to this crisis. Our marketing message has not changed based on what’s happening in the world today,” said Hicks.
McHugh also added that Imbibe anticipates a ‘return to the familiar’ in times of uncertainty.
“We do see this trend of consumers going back to what’s familiar in times of stress or in times of panic. Nostalgic flavors, things like that,” she said.
What about new beverage brands?
Perhaps the hardest hit companies in the food and beverage community are the new brands that don’t yet have a robust supply chain and stockpiles of cash to give them some security over the next several months.
Manny Lubin, co-founder of shelf-stable chocolate milk brand Slate, shared how his brand, which launched in December 2019, has been navigating the crisis and doing everything in its power to maintain precious shelf space at about 400 retailers.
“As a young brand, we were fortunate to be on the shelves before this crisis hit, but it will definitely stunt our growth,” Lubin said.
“We’re doing everything we can to keep the shelves stocked. Because we are a retort product and we do have longer production runs, we are an inventory heavy business. Luckily, we do have plenty of inventory to fulfill all the orders both on the retail side and on ecommerce.”
Chris Fanucchi, who in addition to being one of the co-founders of almond milk protein brand Koia and clean energy brand LIMITLESS, works with a number of emerging brands in the food and beverage space through a cannabis-focused accelerator program.
“I see consumers trying to get more efficient with their dollar spend, especially with the turmoil we’re in right now,” he said. “Every time they spend $1 on that food or drink item they want that food or drink item to do more for them.”
However, he advised that now is not the best time to launch a beverage brand as he is working with a number of entrepreneurs who are having almost “zero luck” securing retailer meetings and raising money.
“It becomes all the more difficult when there’s really no light at the end of the tunnel, at least as it sits today. I’m hoping that sooner rather than later, that we can get this thing under control so that some of these brands that are going to lose a bunch of cash over the next several months don’t go completely belly up on us.”
Fanucchi remarked that while many new beverage brands will struggle to stay in business, the functional beverage sector will ultimately see strong consumer pull over the long term.
Listen to full panel discussion HERE.