Comfort and familiarity drove carbonated soft drinks to growth in 2020, but evolution in both options and ingredients could drive sales in 2021.
“One positive business impact of the COVID-19 pandemic was the changing of shopper habits that led to customers using us more as a one-stop shop than in the past,” said Jared Scheeler, CEO of The Hub, which operates six locations across North Dakota. “Carbonated soft drinks comprised 24.1% of our company’s packaged beverage sales in 2019 and 26.4% of the category in 2020. I attribute that to increased sales of take-home packages. I fully expect our increase in take-home packages to continue in 2021.”
In addition to portability, existing brands and new tastes helped drive the category, which market research firm Mintel forecasted to rise 3.5% to $37 billion, according to its report “Carbonated Soft Drinks: Incl Impact of COVID-19 US, May 2020.”
“The top-heavy carbonated soft drink category has a unique advantage in this equally unique time: deeply rooted connections with not only their most engaged fans, but also with less frequent users,” Mintel Food and Drink Analyst Kaitlin Kamp wrote in the report. “Decades of legacy brand building centered not only on refreshment and enjoyment, but also community and family, are likely paying off.”
Scheeler echoed that, noting 20-ounce bottles and subtle package redesigns helped drive sales. But new products and sizes also helped.
“Dr Pepper & Cream Soda performed much better than I could have imagined and finished as a top 20 SKU in the subcategory,” Scheeler said. “But the item that provided the biggest surprise in 2020 was a 16-ounce can of 1919 Root Beer, manufactured by Schell Brewing Co. in New Ulm, Minn. It’s a popular malt shop and state fair brand in the Upper Midwest that previously only came in keg format.”
Nielsen data showed U.S. convenience store soft drink sales increased 3.8% for the 52 weeks ending Dec. 26, 2020.
Meanwhile, IRI data found carbonated beverages at convenience stores flat, up just 0.5% for the calendar year ending Dec. 27, 2020.
Mintel’s study showed that 35% of consumers are reducing the amount of soft drinks they consume and are focusing more on health benefits.
To capture customers, companies will need to introduce hybrids such as energy, digestive aids, immunity or detoxification, as well as low- or no-calorie options.
“When looking at the innovation calendars from the major manufacturers, the word “zero” seems to dominate the entire year,” Scheeler said. “As our society evolves, even those who don’t consider themselves “health nuts” are starting to understand the dangers of too much sugar in a diet, and these healthier offerings are starting to get traction in the category.”