Although consumers have different preferences, the taste of a beverage is what drives their decision-making.

The April 2024 issue of Beverage Industry examined insights from Chicago-based Mintel’s “Carbonated Soft Drinks – US, 2023” report. The report pointed to taste as the most important factor for consumers when it came to choosing which carbonated soft drinks (CSDs) to enjoy.

“Taste is the most important factor for consumers when choosing CSDs, yet flavor innovation, especially when it retains familiar elements, is welcome,” the report said. “Considerations like sustainability factors and health benefits will not outweigh taste, yet consumers consider a longer list of factors before making their CSD choices, putting brands on the spot to check more boxes and meet expanded needs.”

For the report, Mintel surveyed Internet users aged 18 and older who drank CSDs and then divided them across three demographics: Generation Z, millennials and Generation X. All three generations said that “taste great” was the top priority for CSDs, with Gen X being indicated as the highest at 75%. Sixty percent of millennial respondents considered great taste as important, compared with 58% of Gen Z.

CSD manufacturers are eager to release flavor innovations, whether those innovations be permanent or limited-edition. However, such varieties are not always a guarantee for growth, experts note.

“Flavor innovation continues to be a category mainstay as a means to bolster growth,” said Gary Hemphill, managing director of research at Beverage Marketing Corporation (BMC), in Beverage Industry’s April 2024 issue. “Unfortunately, all too often, new flavors have fleeting success that has not been sustainable. Still, flavor innovation remains an important way to bring news and excitement to the category.”

% Volume Share

Source: Beverage Marketing Corporation

Major CSD manufacturers like The Coca-Cola Co., Keurig Dr Pepper and PepsiCo have been active on creative, flavorful releases recently, with releases like Coca-Cola Spiced and Dr Pepper Hot Take. While Hot Take was a limited-edition offering in 2023, Coca-Cola Spiced joins the company’s lineup of permanent offerings.

In a September 2023 report titled “Carbonated Soft Drinks & Sparkling Functional Beverages in the US through 2027: Market Essentials,” Wintersville, Ohio-based BMC noted the most popular CSD volume flavor segments from 2022. The cola flavor has remained supreme, at 50.3%. Pepper and heavy citrus flavors were second and third, at 11.3% and 11.2%, respectively.

The pepper flavor segment was up from 10.6% in 2017, while the orange/flavors was down to 4.7% in 2022 compared with 5.1% in 2017. The others segment also was up to 8.5% in 2022, up from 7.8% in 2017.

Along with taste, consumers want to see more benefits from the beverage than just a treat.

“Consumers want to see healthier formulations and functional benefits if flavor remains intact, but aren’t looking for CSDs to become healthy beverages overall,” Mintel’s report said. “For most, CSDs are treats best enjoyed in moderation. Growth will come from new launches that are centered on meeting core needs of taste and indulgence.”

BMC’s Hemphill shared that consumers are looking for CSDs with functional and better-for-you (BFY) benefits.

“Overall, the impact of health and wellness trends on carbonated soft drinks has been modest,” Hemphill said in Beverage Industry’s April 2024 issue. “The biggest factor has been solid performance of diet soft drinks. Beyond this, we’ve seen the emergence of healthier, more functional prebiotic sodas, but their overall market impact has been minimal because volume remains small. Still, several brands have shown success, which may bode well for the future of a healthier carbonated soft drink category.”

Global bev-tech company Beliv, founded by Carlos Sluman, formulated Mighty Pop, a CSD that contains prebiotics, probiotics and postbiotics, to support both digestive and immune health. Delivering 1 billion live probiotic cultures, a can of Mighty Pop contains 3 grams of fiber from acacia plants, as well as postbiotics, the company notes.

Functional soda brand OLIPOP, Oakland Calif., has continued to expand its portfolio. Each soda offers digestive health support, minimal natural sugars and prebiotic plant fiber, making it a BFY option without compromising on taste, the company said in a statement.

Analysts anticipate that the proliferation and benefits that come with BFY could be the lift that the CSD market needs.

Coke Spiced & Coke Spiced Zero Sugar
Coca-Cola Spiced and Coca-Cola Spiced Zero Sugar joined the portfolio of Coke products. Image courtesy of The Coca-Cola Co.

“Perhaps CSD’s best opportunity for future growth is the continued development of better-for-you products,” Hemphill said in Beverage Industry’s April 2024 issue.  Yet, the CSD market has continued to struggle from a volume standpoint despite an increase in dollar sales and despite flavor and functional innovations aiming to boost the category, he noted.

“Carbonated soft drink volume performance was soft in 2023, but sales were robust due to higher prices,” Hemphill explained. “This is a trend we’ve seen repeatedly over the last three years as prices have increased due to inflation. We expect pricing growth to be much slower this year.”

Hemphill shared that BMC suspects continued soft volume performance with dollar sales faring better thanks to modestly higher prices.

“Consumers already enjoy CSDs with meals, but brands can further secure CSDs’ position as an essential part of meal and snacking routines,” Mintel’s report said. “New products can supplement cravings motivated snacking with indulgence, familiarity or BFY elements as the need calls. Consumers don’t currently view CSDs as the ideal choice for alcohol alternatives or alcohol mixers, another area where product versatility will be welcome.”