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Taking on 2024: Top Trends Shaping the Beverage Industry

From generative AI, to nutraceuticals, to taxes on sugar-sweetened beverages, these are the top trends shaping the beverage industry in 2024, and how industry leaders can respond in the year ahead.

In this article:

The sober curiosity spectrum: Demand for no-alcohol and low-alcohol beer, wine, seltzers and more will grow

The unsweetened truth: Consumers are moving away from sugar-sweetened beverages and embracing zero-sugar drinks

Less is more: Premiumization will take center stage

Functional drinks: Beverages with benefits will dominate the cold (and hot) drink market

Regulatory ripples: Single-use plastic legislation will prompt sustainability loyalty programs

The AI pour: Generative AI will personalize drink blends through a simple conversation

Capturing the freeze: Brands will capitalize on the expanding ready-to-drink cold beverage market

The loyalty loop: Brands will connect on-premise and off-premise beverage consumption

Twenty years ago, most consumers balked at the idea of drinking “nonalcoholic” beer. Premium bottled iced coffee drink options were few and far between. The idea of sodas infused with anything other than sugar was almost unheard of in the beverage industry.

2024 is seeing a surge in health-focused consumers, prompting beverage brands across the board, from sugary sodas to premium wines, to rethink their offerings and introduce innovative, wellness-oriented products.

Looking ahead, regulations like the potential tax increase on high-ABV beers in the U.K., the EU’s proposed sugar tax, the U.K.’s deposit return scheme for single-use containers and the increasingly saturated space for nonalcoholic alternatives promise to further shake up the landscape.

These are the top trends shaking up the beverage industry in 2024, and strategic advice for executives to raise a glass and prepare for the change through digital business transformation.

The top beverage industry trends in 2024

The sober curiosity spectrum: Demand for no-alcohol and low-alcohol beer, wine, seltzers and more will grow

The growing popularity of nonalcoholic beverages, “sober-curiosity” and even a “damp” lifestyle will have a significant impact on beverage brands that take advantage of this new market, especially with younger demographics. However, brands need to be careful in how they price and go to market with these new options.

Nonalcoholic (NA) beverages such as seltzers, beers, kombucha wine and even liquor offer the experience of an alcoholic beverage without the associated downsides, such as impaired driving ability or feeling unwell the next day, especially as fewer young adults in the U.S. drink alcohol today than two decades ago, according to Pew Research. This phenomenon is replicated in other markets as well.

Fewer young adults in the U.S. drink today than two decades ago

Chart showing that only 62 percent of young adults in the U.S. report that they drink alcoholic beverages in 2023, compared to 72 percent that said the same two decades ago.

In the U.K., half the population reports buying a low- or no-alcohol beverage, boosting overall NA volume consumption by 9 percent in 2022 as compared to 2021, according to IWSR Drinks Market Analysis. The no-/low-alcohol category now commands a volume share of nearly 3 percent of the U.K.’s total beverage alcohol market. The U.K.’s no-/low-alcohol market is expected to see volume growth at a CAGR of 7 percent from 2022 to 2026.

This trend is evident at major sporting events as well, where low-alcohol and nonalcoholic beverages are increasingly prominent. Many brands are using celebrities to promote low-alcohol or no-alcohol options, as evidenced by Bud Light’s commercial during the 2024 Super Bowl. In fact, the global market for nonalcoholic beer alone was valued at $22 billion last year with expected growth to $40 billion by 2032, according to Global Market Insights.

The economics of NA beverages: different drafts, different tax

Interestingly, the economics of nonalcoholic beverages are subtly different. In most countries, the majority of the price of an alcoholic beverage is tax, including value-added tax or sales tax. In the U.K. specifically, beverages are now taxed based on their strength (percent alcohol by volume), rather than by type, to incentivize decreased alcohol consumption. However, nonalcoholic beverages are not subject to these taxes, making them potentially more profitable for manufacturers, despite the higher production costs due to different supply chains and manufacturing processes.

But already, consumers are catching onto the difference—thinking, “Why is my mocktail the same price as a cocktail at the bar?” Brands need to get ahead of the consumer narrative that they are potentially getting ripped off, developing a story and a price point that makes a good value equation.
Another challenge for brands in this evolving low- or no-alcohol market is to link nonalcoholic consumption with alcoholic consumption, helping consumers navigate their choices and remain loyal to their brand regardless of where they are on the sober curious spectrum. For example, if a consumer is a fan of Diageo's gin brands, the company would want to ensure that they choose their nonalcoholic options over competitors' offerings when they’re opting out of alcohol.

The unsweetened truth: Consumers are moving away from sugar-sweetened beverages and embracing zero-sugar drinks

The rising tide of health consciousness is washing away the appeal of sugary beverages, prompting consumers to seek out healthier options. Beverages, particularly those high in sugar, are a significant contributor to obesity. This has led to various markets and geographies implementing taxes on carbonated soft drinks (CSDs). Beverage brands are meeting this shift by increasing investment in the production of zero-sugar or low-sugar beverage options, like Coke Zero instead of Coke classic.

This pressure places a greater responsibility on beverage manufacturers to help consumers enjoy carbonated soft drinks in a healthier and more sustainable way. As a result, we can expect to see more communication and marketing efforts pushing away from sugar-based drinks.

Evolving away from corn syrup

But it's not just about raw, granular sugar. One of the major sugar culprits for obesity is corn syrup. This sweetener is used extensively in beverages and is problematic because it's a type of sugar that's difficult for the body to break down. While corn syrup is largely banned in Europe, it remains prevalent in the U.S.—and is also much less expensive to use.

This pivot to zero- and low-sugar beverages will not only be driven by changes in manufacturing and messaging from brands but also by increasing consumer expectations for healthier beverage options.

“We know that consumers will shift away from sugar-sweetened soft drinks because of sugar taxes that affect purchase price and for health reasons. So, although the traditional sweeteners like corn syrup are cheaper, from a brand perspective, preempting the shift in consumer behavior away from sugar or at least toward cleaner sugars and reorienting the supply chain and manufacturing model to do so will benefit brands in the medium and long term.”
Darren Thomson, Senior Client Partner

Less is more: Premiumization will take center stage in 2024

It's clear that consumers are not only drinking alcohol less, but they’re drinking better, and it’s up to brands to figure out how to market their premium offerings to appeal to consumers. In the on-premise setting, consumers are willing to experiment with unique, premium offerings like craft beers or spirits. However, for casual consumption, established brands often hold the edge due to familiarity and perceived quality.

This presents a crucial challenge for major players: effectively communicating value to younger consumers who prioritize quality over quantity. This demographic, while not exclusive to premiumization, demonstrates it more pronouncedly. They also consume less alcohol overall, making value exchange even more critical.

Reaching Gen Z and beyond: influencer strategies and trend awareness for premium alcohol brands

Influencer marketing emerges as a powerful tool to reach this younger audience. Associating aspirational brands with aspirational figures can significantly boost appeal. However, caution is crucial. Choosing the right influencers and crafting consistent, brand-aligned messaging is paramount. Alcoholic beverages also come with baggage. While responsible consumption portrayed in positive settings can be impactful, associating a brand with irresponsible behavior can have disastrous consequences. Careful monitoring of influencer channels is essential.

Novelty is also key, especially in the spirits category. Partnering with mixologists and hosting recipe competitions can create engaging content and encourage experimentation with premium brands. Consider trending flavors and ingredients to position your product within relevant cultural contexts. For example, incorporating superfoods like acai berries into cocktails can leverage their health associations and generate excitement.

In 2024, alcohol brands need to monitor emerging trends and consumer preferences through relevant online platforms. Identify influencers who resonate with the target audience and leverage their reach to drive brand awareness and engagement.

Functional drinks: Beverages with benefits will dominate the cold (and hot) drink market

Driven by their pursuit of well-being, consumers are gravitating towards nutraceutical beverages, a category within the broader trend of functional drinks.

Nutraceuticals are foods or food supplements that are isolated or purified that have physiological benefits. Brands across categories, from coffee to carbonated beverages, are embracing this trend to infuse their product mix with new ingredients and functional beverages.

This growing category of drinks with benefits has three categories:

  • Naturally beneficial beverages: drinks that are beneficial on their own, such as green tea drinks, green juice or coffee

  • Enhanced beverages: drinks that have added ingredients or have been enhanced with special benefits, like bottled lattes infused with lion’s mane mushrooms for focus, or a seltzer with added CBD for calming properties

  • Functional drinks: drinks that have a specific outcome in mind, like protein smoothies designed to decrease appetite or magnesium mocktails designed to help consumers fall asleep

While beverages with benefits range across premium and non-premium drinks, the addition of nutraceuticals to drinks provides justification for a higher price point, and better value for consumers at the same time, as long as brands understand exactly what ingredients and benefits their consumers are looking for.

Marketing functional beverages, which contain added ingredients such as vitamins, collagen, protein, probiotics or turmeric, requires a careful balance. While it's important to highlight these ingredients, brands must avoid making bold claims about their benefits that are not backed by scientific research. This is to prevent potential backlash from consumers who may feel misled. Therefore, it's vital for brands to carefully strategize when introducing new health alternatives and consider how they will market these products to consumers.

As the popularity of various ingredients ebbs and flows, keeping a close pulse on even hyper-local consumer sentiment through social media and other engagement channels is crucial to staying ahead of these trends to make product mix, product development and assortment decisions in different regions.

How brands can predict consumer desires in functional ingredients

Despite being under the same corporate umbrella, many beverage brands do not exchange confidential consumer data amongst themselves. However, they can still collaborate by pooling their consumer data within a secure environment known as a data clean room. This allows them to gain insights into popular ingredients, enhance consumer targeting and develop more effective promotional offers for beverages with benefits. Importantly, this process does not involve the complete sharing of consumer data across brands, except for specific use cases.

Regulatory ripples: Single-use plastic legislation will prompt sustainability loyalty programs

Deposit return schemes (DRS) are being implemented in Europe and are likely to come into effect in the U.K. in 2025, and beverage brands have an opportunity to get ahead of this sustainability trend regardless of geography.

DRS involve consumers paying a deposit when buying a single-use container and getting refunded when returning the empty container to a reverse vending machine, in most cases hosted by retailers selling the beverages. Instead of putting money in a vending machine to get a can out, a consumer can put a can in and get a cash deposit. This will have a significant impact on the beverage industry, as it will require companies to collect and recycle used beverage containers.

There are two main ways for beverage companies to comply with DRS:

  • Preemptive action: Brands can take proactive steps to reduce their use of single-use plastics and implement DRS-compliant packaging solutions. This could involve using refillable bottles or containers made from recycled materials

  • Government intervention: If brands do not take preemptive action, they may be forced to comply with government-mandated DRS schemes. This could be more costly and disruptive for businesses

The beverage industry is already starting to see some of the impacts of the shift away from single-use plastics outside of DRS, and it’s important to take action now. For example, Coca-Cola has introduced a new single-action cap that stays connected to the bottle when unscrewed. This helps to reduce litter and makes it easier for consumers to recycle the bottle. By investing in DRS-compliant packaging solutions and reducing their use of single-use plastics, brands can avoid the costs and disruptions associated with government intervention.

Integrating sustainability into consumer loyalty programs

Brands can also build brand loyalty by demonstrating their commitment to environmental responsibility and integrating sustainability into their loyalty programs.

For example, building omnichannel experiences that incentivize recycling or reusing containers through DRS or other outposts outside of that government program with promotions and rewards can not only build the reputation of a sustainable beverage brand, but also deepen consumer relationships and engagement. Rather than just receiving a cash deposit from a DRS, consumers could also receive loyalty points on a beverage brand or retailer’s app or a promotion toward a specific new product, building a sustainable brand reputation and loyalty.

Can CPGs achieve profitable sustainability?

The AI pour: Generative AI will personalize drink blends through a simple conversation

Generative AI will provide new ways for recreational drinkers to personalize their experience with their coffee and alcoholic beverages in ways previously not imagined.

According to Publicis Sapient’s generative AI consumer research, 27 percent of consumers that have already used a generative AI tool are excited about its ability to improve customer service interactions and personalize product recommendations.

Imagine a virtual barista or mixologist, powered by AI, that can answer any question about a brand or drink, create customized blends based on personal preferences and even provide a detailed explanation of the drink-making process or the carbon emissions impact of a drink.

The ROI of these AI-powered experiences is multifaceted. Firstly, they offer a unique and engaging way for brands to interact with their consumers, fostering a deeper connection and loyalty. Secondly, the data gathered from these interactions provides invaluable insights into consumer preferences, enabling brands to continually refine their offerings and marketing strategies.

“Conversational AI provides a powerful testing ground for beverage brands to interact with consumers and also see what consumers are interested in and searching for.”
Darren Thomson, Senior Client Partner

Investing in this technology can significantly enhance a brand's competitive edge. However, it's important for brands to be aware of the challenges that come with implementing AI.

Fifty-three percent of global consumers are concerned that an increase in generative AI tools will lead to a lack of data privacy and an increase in misinformation.

Building strong data privacy standards, managing the complexity of AI technology and maintaining the authenticity of the brand voice in AI interactions is crucial.

Three opportunities for conversational AI in the consumer goods industry

Capturing the freeze: Brands will capitalize on the expanding ready-to-drink cold beverage market

From sugary sodas to chilled energy bombs, the retail beverage aisle has undergone a dramatic transformation in the past decade and will continue to expand in 2024. The interest in cold, ready-to-drink (RTD) coffee, tea and flavored water continues to increase, as it offers convenience, refreshment and an extra punch of energy.

Energy drinks fueled by caffeine and taurine are commonplace, and a new number one player has emerged: chilled coffee. Traditionally, tea existed in hot and iced versions, while coffee required brewing and waiting. The emergence of RTD cold coffee, which eliminates the brewing time, has been a game-changer. Its convenience and portability have attracted new consumers to the coffee world. According to the U.S. National Coffee Association (NCA), cold brew popularity has increased 300 percent since 2016, as of 2023.

The brand opportunities brewing in cold coffee

The rise of cold coffee beverages in cafes like Starbucks has served as a training ground, introducing consumers to these flavors and textures. This has fueled demand in the wider retail market, leading to an explosion of RTD coffee options.

For beverage brand executives, this trend presents both opportunities and challenges:

  • Expanding the chilled space: RTD coffee deserves dedicated space alongside existing categories like sodas and juices
  • Premium pricing: Consumers seem willing to pay a premium for high-quality RTD coffee, offering brands a potential profit driver
  • Beyond coffee: The success of RTD coffee opens doors for similar innovations in chilled tea and other functional beverages

The challenge for brands investing in chilled caffeine beverages, such as coffee and energy drinks, will be standing out in the retail beverage aisle, collecting first-party data to do so and connecting to the consumer experience outside of the cafe.

The loyalty loop: Brands will connect on-premise and off-premise beverage consumption

As beverage brands expand their ready-to-drink beverage options, in terms of products, quality and even purchase points, brand presence across the omnichannel consumer journey becomes much more difficult to connect. In 2024, brands will develop new ways to connect consumer data between on-premise consumption in cafes, bars or restaurants and retail touchpoints.

This journey is not just about the physical route a product takes from the cafe or bar to the consumer, but also about the digital footprints left by consumers across the various purchase channels.

For example, a consumer might buy a chilled Starbucks drink from a convenience store, but this transaction doesn't feed into Starbucks' customer data. The company is still blind to the consumer's behavior in this segment, missing out on valuable insights that could enhance their brand strategy.

These interaction points with the brand present a significant opportunity for beverage companies to better understand their customers and tailor their offerings accordingly. The same principle applies to the alcoholic beverages and premium spirits sector. Whether a consumer is savoring a premium spirit on-premise (in a bar) or off-premise (purchased to drink at home), it's challenging to attribute the consumer identity across both spaces.

The challenges and opportunities of in-store retail technology

Attempts to connect touchpoints and collect consumer data in retail have been rocky, and most in-store technology is still in the early stages. For example, digital cooler screens that display beverage ads on doors in convenience stores can often glitch or become overwhelming for consumers, creating a negative experience that’s difficult for brands to control or oversee. Instacart has also rolled out a pilot program of AI-powered smart carts to automatically track consumer purchases in real time and make recommendations. The carts use computer vision to sense which products are being added to the cart, keeping track via a digital checklist, and seeing real-time, personalized ads on a small screen based on the additions.

By leveraging technological capabilities to connect consumer identities and manage first-party data across experiences, beverage companies can gain valuable insights. This not only reduces costs but also provides a competitive edge in the market.

However, if the focus is primarily on the technology rather than the consumer experience, the return on investment from these opportunities may be compromised. This is because the added complexity may not justify the potential benefits. By placing the consumer at the heart of the process and adopting a holistic approach to designing the consumer journey, the integration of new technology can be made seamless.

Publicis Sapient’s customer journey transformation solution

The future of the beverage industry in 2024: how to get started

By adapting to these trends, embracing technology and prioritizing consumer needs, beverage brands can navigate the evolving landscape and secure success in 2024 and beyond.

“The key lies in understanding the why behind consumer preferences and translating it into meaningful, personalized experiences that resonate with your target audience.”
Darren Thomson, Senior Client Partner

Balancing the investment and testing of new digital capabilities like generative AI, in-store retail technology, data clean rooms and more, while also managing added costs, the consumer experience and the employee experience at the same time will be a challenge.

Connect with a beverage industry expert below to begin your digital transformation journey.

Darren Thomson
Darren Thomson
Senior Client Partner

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