There is a well-known saying in the beverages category – ‘if it is cold, it is sold’.
This has been the mantra for big beer and soft drinks brands for decades, as they promise consumers ‘ice cold refreshment,’ especially during the hot summer months, writes John Kelly, strategy director beverages, Kerry Europe
The brand promise and consumer demand for ‘ice cold refreshment’ is being redefined across both foodservice and retail channels.
Cold drink offerings sold year-round have been growing in popularity in recent years and are no longer the remit of just beer and carbonated soft drinks brands in the summertime.
Consumers today not only want beverages that give them ‘ice cold refreshment,’ but that have less (or zero) sugar, more functionality, and great taste, delivered in a sustainable way – and beverages that are as healthy and natural as possible.
Sugar has overtaken fat, salt and calories as the key health concern for consumers in Europe when eating out-of-home.
71% of European consumers say that sustainability is now important to them when choosing where to eat and drink out-of-home.
There is increasing ‘channel morphing,’ where the lines between channels and categories are blurred.
You only have to look at the ever-increasing range of Starbucks and Costa Coffee ready to drink (RTD) offerings across the retail channel to see how this trend is taking off.
Iced Drinks All Year Round
In the foodservice channel, traditional hot tea and coffee offerings are making way for year-round consumer demand for iced beverages.
In Kerry’s Art of Taste and Nutrition research, consumer demand for cold beverages is driving the innovation agenda, with a 15% increase year on year in iced beverage launches in Europe.
Starbucks in North America recently stated that iced drinks now make up about 70% of Starbucks' sales, and they are particularly popular with younger Gen Z and millennial consumers, driving company sales growth.
Europe is also starting to catch up on this trend, with nearly half (49%) of industry leaders agreeing in Allegra’s latest Project Café Europe 2023 report that cold coffee has significant growth potential.
Cold drinks are driving product innovation – the recently launched Starbucks Iced Shaken Espresso range is a great example of this.
Starbucks has stated that they are investing heavily in new machinery in outlet to meet the increased demand for year-round cold beverages.
Another leading food service chain in Europe, Pret A Manger, recently announced that it was introducing a bigger range of iced drinks to its menu offering to capitalise on the growing cold beverage trend and to deliver their iced range faster and more conveniently to consumers.
In the retail channel, the soft drinks category is expanding as consumers demand a greater range of beverages that meet their need for great taste and ever-increasing functional benefits.
As they proactively manage their health in areas such as gut health, immunity, and now cognitive health, these are the areas that are driving new product development in the broader beverages category.
Beverage fridges are seeing more space being given over to waters, iced teas, cold brew coffees, Kombuchas and functional and fortified beverages.
Limited time offers (LTOs) is another area where we are seeing innovation.
Our Kerry proprietary research tells us that LTOs both encourage visits and purchase in outlets, with 56% of European consumers in agreement.
Iced cold summer drinks add an element of fun, enjoyment, and great taste experiences.
Many brands are positioning themselves as a great choice for summer refreshment by launching limited edition flavour ranges in the summer months, across both the alcohol and non-alcohol category, with a focus on novel tropical and fruit flavours to create a true summer experience.
In Good Spirits
In the alcohol category, while lager beers and ciders traditionally see strong sales increases in the summer months, the spirits category is also adapting and innovating to consumer needs to win share of throat.
Alcohol spirits brands such as Pimms and Aperol – of the much-loved Aperol spritz – position themselves as key ingredients in light and refreshing summer drinks that are delicious to enjoy and great for summer social occasions.
The trend continues in the premium non-alcohol or 0.0% category, with brands such as Everleaf and Ceders 0.0% following a similar positioning.
The ever-increasing number of alcohol and non-alcohol brands launching in a RTD format has helped both their availability and popularity among consumers.
They are easy to chill and have a strong convenience offering for consumers looking for a balanced and great tasting drink experience.
The quest by consumers for accessible, flavoursome pre‐mixed beverages has accelerated in recent years, in regard to the wider RTD format within the global alcohol category.
By 2025 it is forecast that the RTD format will account for 8% of total alcohol globally, which would be double the sector’s 4% market share from 2021 (source IWRS).
Of course, many consumers are also aware of the importance summer drinks play in staying hydrated.
As the temperature rises, it is important to stay hydrated. Kerry Health & Nutrition Institute recently published an article on ‘The Importance of Hydration’ for overall health and physical and mental wellbeing (focus, mood and memory).
This opens up new opportunities for multiple beverages categories to play in this space, not just traditional water and soft drinks categories, as teas and coffees can also help with hydration.
Although previously thought to exacerbate dehydration because of the effect of caffeine, these alternative options have been shown to ultimately push us toward a more hydrated state.
Fortified milk can be useful as a hydrating beverage as it contains vitamins and minerals such as vitamin D and calcium.
For summer beverages, while consumers are looking for ice cold refreshment, they also want much more than this, with great taste experiences, less sugar (or zero sugar), more functionality in terms of proactive health benefits, and all of this delivered in a sustainable manner.
The key for any brand or retailer to win in summer drinks is to have a portfolio of offerings that meets one or more of these consumer needs, all served ice cold, of course!
© 2023 Checkout – your source for the latest Irish retail news. Article by John Kelly, Kerry Europe. Click subscribe to sign up for the Checkout print edition.