Four Beverage Trends to Watch in 2019
Wells Fargo analyst Bonnie Herzog recently recapped major takeaways from Beverage Digest’s “Future Smarts” conference. The event took place in New York City and featured leadership from many of the major beverage manufacturers in the United States.
“While we acknowledge there are plenty of challenges too,” Herzog wrote in a research note. “We generally believe the outlook remains broadly encouraging and see many opportunities for beverage manufacturers to drive solid growth.”
Here are four major trends Herzog spotted at the conference:
- CBD-Infused Beverages: Herzog noted plenty of optimism about opportunities within the space of cannabis-infused beverage. In fact, a real-time poll of conference participants showed more than 40% predict that by 2023, cannabis-infused beverages to generate more incremental dollars in the United States than any other category.“A few panelists were upbeat about the Farm Bill passing very soon and believe that this will make manufacturing and distributing CBD-based products significantly easier (driving new entrants into the category and increasing innovation),” Herzog said. “What’s more, we sensed that many beverage industry thought leaders believe that it’s only a matter of time before many of the key beverage manufacturers enter the space with their own CBD-based products.”
- Natural Ingredients: “To us, it appears that many companies are increasingly open to more experimentation,” Herzog said. “We think this will open the door to more healthy beverage alternatives for consumers, further reducing the industry’s exposure to ingredients such as sugar and unnatural sweeteners.” As such, Herzog predicts this trend will have the most impact on segments like sparkling water and ready-to-drink coffee. For example, Pepsi and Starbucks revealed plans to launch an almond milk Frappuccino with 40% fewer calories than base/regular Frappuccinos.
- Sustainable Packaging: Numerous companies talked about proactive measures to invest in sustainable packaging due to potential regulations and shifting consumer preferences. “Broadly speaking, conference participants generally believe that encouraging better collection techniques is the most critical step that U.S. regulators and beverage manufacturers can take in terms of driving better environmental sustainability,” Herzog said. “That said, conference participants also indicated that cutting single-use plastic and increasing the use of plant-based plastic (among other things) are also critical things that beverage manufacturers / regulators can do to support environmental sustainability.” Nestle, for example, has a goal of reducing its packaging mix in North America to 25% recycled polyethylene terephthalate by 2021 and 50% by 2025.
- C-Commerce: Another repeat topic was how technology could change the retail landscape for beverage manufacturers. “We’re admittedly intrigued by new(er) ‘conversational’ commerce (c-commerce) technology – which enables customers to place orders for products (including beverage products) via text message,” Herzog said. “While still in its infancy, we wonder what the long-term opportunity is for yet another direct-to-consumer purchasing mechanism.”