Changes in customer preferences are stirring up the carbonated soft drink (CSD) category as shoppers increasingly seek health-conscious beverages, increased innovation and influencer-driven brands.
In convenience stores, carbonated beverage dollar sales grew 7.4% to $10.7 billion, with help from price per unit increases (up 6.4%), even as unit sales fell flat (up 0.9%) for the 52 weeks ending Dec. 31, 2023, per Circana.
At S&S Petroleum, which operates 90 convenience stores in Washington, Idaho, Oregon and California, 12-ounce slim cans are “making some noise,” noted Mike Jones, director of marketing for S&S Petroleum. “Smaller package sizes seem to be the latest trend,” he said, adding that he’s seeing the trend not only in CSDs but also across the energy and hydration segments.
Customers are demanding more flavors and innovation from the carbonated beverage category, Jones noted. “The new Coke Spice is one that has a lot of interest,” he added.
Evolving Tastes
Meanwhile, customers’ continued focus on health-forward choices is disrupting the CSD category. More shoppers are evaluating how to make better choices for their health and the environment when selecting beverage options, explained Lorraine Mackiewicz, manager at Clarkston Consulting.
“Product benefits that are top of mind include low or no sugar; no additives or artificial ingredients; health claims including mental clarity, digestive health and hydration; along with natural ingredients,” Mackiewicz said. “The health-conscious mindset is important in the soft drink category as consumers are less interested in traditional full-sugar formulas.”
Changing customer preferences have led to changes in the cooler case at S&S Petroleum.
“We have reduced CSD space in exchange for more energy as consumer preferences and margin dollar demands have shifted,” Jones said. “Energy also dictates more innovation, and these consumers want more trial.”
Given customer demand and preference shifts, Jones expects that CSD and sparkling segments will be down 2-5% in 2024.
“Brand loyalty is not what it once was, and we are seeing lots of trial and influencer-driven products and fads hitting the market,” Jones said. “The challenge is how do we manage space and still offer the amount of assortment that the customer expects.”
Mackiewicz pointed out that some notable brands that are making a splash on social channels and through influencer partnerships include Poppi, Olipop, Culture Pop and United Sodas of America, which all offer healthier alternatives with added nutritional value compared to traditional soft drinks.
“While c-stores should continue to be cautious about managing shelf space with canned soft drink options … it is worthwhile to watch whether these functional soft drink brands expand into featured fountain drink options,” Mackiewicz added.