Insights

Tops of 2018: Non-Alcoholic Beverage Innovation
Article

Tops of 2018: Non-Alcoholic Beverage Innovation

When it comes to non-alcoholic beverages, U.S. consumers have a great thirst for trying new and exciting products. And as a result, beverage manufacturers lean on innovation practices to bring new and interesting offerings to the marketplace. In 2018, innovation filled the U.S. non-alcoholic beverage market. Across Nielsen tracked retail channels, $5.8 billion in sales from the $56 billion beverage category came from new products (new product launches, brand extensions and new flavor offerings), accounting for 10% of this year’s total category.   

When looking across the calendar year, according to Nielsen Innovation Measurement Activity data, July was the heaviest month for product innovation (621 new innovations), and November was the lightest (169 new products).

While innovation was widespread across the non-alcoholic beverage category, a lot of buzz surrounded the invigoration of beverage staple categories such water, milk and tea. For example, dollar sales in the $2.1 billion sparkling water category increased 17% from last year, mostly due to new players and new flavor offerings. A growing menu of milk alternatives ($1.7 billion) entered the category, with consumers opting for things like almond milk (+12% in dollar sales growth vs. last year) and oat milk (+69% vs. last year). On a neighboring shelf, compelling new offerings of kombucha, a $433 million category, invigorated the tea market.

In the ongoing quest for improved health, water remained a top choice for consumers in 2018. In fact, according to a recent study, 77% of surveyed Americans indicated that trying to drink more water is among the primary ways they actively manage their health and lifestyle* Americans aren’t just voicing this as a desire, however. They’re also following through at the checkout counter, as their health-focused mindset contributed to an impressive 6% increase in water sales over the past year, pushing total sales to more than $16.1 billion. This hits well above the 2.4% growth that the overall beverage category experienced and was led by strong demand for both sparkling and value-added waters.

Bubbles were a top innovation characteristic in 2018, as 71% of new items to the category were sparkling waters, followed by water items with “calorie free” claims. In both cases, we see alignment with what eventually manifested in the category’s overall performance—fizzy and calorie-conscious enhanced waters ultimately driving category sales.

Innovation will continue to be a play an important role in the non-alcoholic beverage category in 2019. But to be successful, U.S. beverage manufacturers will need to continue to work hard to maintain consumer interest and introduce meaningful innovation to stay competitive and relevant in today’s increasingly crowded product marketplace.

*Nielsen survey of 1,163 respondents, surveyed in April 2017