Soft drinks innovation strategy in 2024 is being developed in the context of a more challenging economic and financial environment. Sharp rises in the cost of living have made premium-priced products (generally the focus of beverage innovation investment) more difficult for consumers to afford and adopt.
Euromonitor’s Passport Innovation tool , an AI-powered platform covering new product launches, measures the incidence of new brand and sub-brand launches at online retailers across 54 FMCG categories and 32 countries, starting from January 2021. The platform tracks approximately 300 new brand launches, 3,000 new sub-brand launches and 4,700 expansion events each month.
Within the global soft drinks industry, we see a 15% decline in overall new brands and new sub-brand launches observed in 2023, relative to the previous year
Source: Euromonitor International
The non-alcohol industry is unlikely to see any immediate acceleration in the overall number of new products introduced in the near term, as producers instead streamline portfolios and operations to control costs. With more limited marketing investment available, established beverage brands will primarily focus on safer bets: particularly bolder, flavour sub-brand launches, partnerships and creative flavour-based limited-time offers (such as the Mondelez/Coca-Cola Oreo "Fizzy Cookie Flavoured" cola launch announced in August 2024) – all supported by targeted digital/social marketing campaigns.
Diversifying energy-boosting drinks: New flavours and cleaner labels
Meanwhile, energy-boosting caffeinated beverages remain a thriving area of both new product development and sales growth globally. For the last five years, the “performance” energy segment has remained one of the strongest areas of innovation, a subcategory characterised by highly caffeinated formulations combined with sports nutrition ingredients (such as branched-chain amino acidsand creatine) and led by new beverage launches from vitamin/supplement producers.
There has also been a sharp increase in brain health/cognitive health/memory claims, which doubled in US energy drinks over 2019-2023
Source: Euromonitor International
The intersection of athletic performance and energy has also coincided with more exclusively zero sugar, zero calorie innovations within energy drinks (such as Celsius).
Further segmentation of energy drinks (or, more broadly, energy-boosting functional propositions across categories) is being achieved through new, bold and innovative flavour combinations, in some cases replicating or even licensing the flavours of confectionery brands (such as Ghost Energy or C4). Plant-based sources of caffeine, like yerba mate, coffee or guayusa, and cleaner labels can also attract a different consumer profile to the category, expanding opportunity.
New need states: Botanicals and plant-based ingredients
Alcohol reduction, particularly among younger consumers, is creating opportunity for mindful, social (but nevertheless, premium) beverage options for Gen Z. Adult non-alcohol also presents functional opportunity, with brands seeking to achieverelaxation or mood elevation without harmful ingredients or intoxicants.
A push by beverages into need states occupied by vitamins and dietary supplements must still maintain natural ingredient profiles. Clean labels remain key, with more consumers avoiding artificial sweeteners, in particular. Functional beverages continue to explore new consumer need states, aligning closely with new or under-addressed health challenges. For instance, in Asia Pacific, there has been a notable increase in the proportion of consumers adjusting their diets to relieve stress and anxiety, or to promote sleep. This has led to an increase in drinks (in particular, hot tea) positioned for emotional/mental wellbeing, containing herbal ingredients like chamomile, ashwagandha and ginger.
Accessibility – in terms of packaging type and in terms of price point – forms an integral part of soft drinks innovation. A growing number of launches within soft drinks are emerging from small format powder mixes and dissolvable tablets. The format is highly convenient – for suppliers, allowing for lighter, easier distribution, and for consumers, providing portability along with dosage control. This holds particularly true for the added-value hydration space, led by electrolyte powders. On the heels of the success of Liquid IV (Unilever) and Nuun (Nestlé), both BodyArmor (Coca-Cola) and Liquid Death (Supplying Demand Inc) launched new powder formats in the last 12 months.
Concentrated formats generate less packaging waste, eliminating the plastic PET bottles and aluminium cans associated with ready-to-drink products. Brands like Waterdrop, a soluble water enhancer cube founded in Austria, actively promote the reduction of plastics as a core USP of their brand.
Low investment, but high impact
For brand extensions, the focus should remain on unique, creative flavours and flavour co-branded partnerships that stimulate interest. Confectionery-style flavours continue to propel growth in energy drinks and sports drinks. Leveraging social media channels and smaller-scale trials or product “drop”-style marketing can help to amplify unique and buzz-worthy flavour profiles in a way that is cost-effective. For suppliers, identifying emerging flavour trends and consumer-sourced insight at the local level is vital, maximising reach and engagement for flavour extensions.
Stream our Passport Innovation Product Demo from May, to discover how Euromonitor’s Passport Innovation database will help you to navigate new product journeys for strategic innovation.