2019 Year-End Report: Top 5 Beverage Trends

CHICAGO — Bubbles and performance won the day in the packaged beverage category in 2019. The former—bubbles—kept innovation flowing in the bottled water and alcohol segments, while the latter—performance—gave energy drinks the boost they’ve been lacking the past couple of years. Meanwhile, innovation in beer continues to drive sales in that category, and some retailers are making hay by working with brewers on exclusive brands of their own.

Here’s a look at the top five trends in packaged beverages from 2019 …

Energy drinks lived up to their name in 2019 by bringing some lively drama to the packaged beverage category. VPX Sports’ Bang brought new excitement to the segment by redefining what an energy drink could be, effectively establishing the performance energy segment with year-over-year unit and dollar sales growth of more than 200%. This came after growth in the energy-drink segment had languished in single digits over the previous 18 months or so, according to Nielsen data.

Monster battled back on store shelves and in the courtroom with its launch of Reign Total Body Fuel and a lawsuit challenging Bang’s nutrition claims.

Bang shot back with a lawsuit of its own, claiming Reign was a knockoff of Bang’s product and packaging. As of now, both products remain perfectly viable to consumers as dozens of similar products have jumped on the performance energy bandwagon. Neither lawsuit has been settled, but retailers were the winners with a vital injection of new products and brands.

2019 was a bit of a comeback year for beer sales, which have suffered at the hands of growing interest in wine and spirits by millennials. Unexpectedly, however, much of the resurgence for beer, driven by the advent of hard seltzers, came outside the convenience-store channel.

Year-over-year dollar sales of beer in all channels of retail ended 2018 up just about 1.0% and unit sales down 1.0%. By October 2019, however, dollar sales were growing nearly 3.0% and unit sales were a welcome flat, according to Nielsen data. In c-stores, however, year-over-year dollar sales were flat at the end of 2018 and up only 0.8% in October 2019, while the rate of unit sales decline actually increased from 1.8% in 2018 to a 2.5% decline for the 52 weeks ending Oct. 6, 2019.

While we’re on the subject of seltzer, could it be more ubiquitous? Sparkling waters have been around forever, but the LaCroix effect—a long-suffering brand dating back to the 1980s that rose from its own ashes over the past five years—has made seltzer the drink of the decade. Increasingly seen as a healthier replacement for carbonated soft drinks, the combined segment of sparkling waters (which have naturally derived bubbles) and seltzer (with fizz added) grew volume by 18.2% in all channels during the first half of 2019 vs. the previous year, according to Beverage Marketing Corp.

Major beverage companies have responded. Nestle Waters modernized the packaging for the sparkling versions of its regional brands in early 2018, PepsiCo jumped into the fray in February 2018 with the launch of Bubly, and Coca-Cola Co. rolled out smartwater sparkling in April 2019. Coca-Cola will add another layer to its water portfolio with the rollout of its new Aha Sparkling Water in March 2020, offering what it calls “interesting and approachable flavors” to set itself apart.

Meanwhile, hard seltzer became the darling of beer drinkers in 2019, as Mark Anthony Brands’ White Claw became the fastest-growing entry into the category, followed by the Boston Beer Co.’s Truly Spiked and Sparkling. Anheuser-Busch followed aggressively this year with the launch of Natural Light Hard Seltzer and Bud Light Hard Seltzer. While we expect more to come in this segment, the question remains: Does this trend have staying power, or will it go the way of hard ciders and hard sodas, which skyrocketed briefly and fell to earth quickly?

Elsewhere in beer, 2019 was the year, if you had a respected coffee brand, you might have wanted to partner with a brewer to turn it into a beer. Retailers who got in on the action included:

Wawa, Wawa, Pa., which got there first with its Winter Reserve Coffee Stout, brewed by 2SP Brewing Co., Aston, Pa.

Sheetz, Altoona, Pa., with Project Coffee Hopz IPA, brewed by Rusty Rail Brewing Co., Mifflinburg, Pa.

Kwik Trip, La Crosse, Wis., with its Glazer Bean, a chocolate coffee stout made by Karben4 Brewing.

Even quick-service-restaurant chain Dunkin’ got in on the trend, working with Harpoon Brewery to create Harpoon Dunkin’ Coffee Porter.

For Sheetz, selling its own co-branded beer was something of a celebration after the chain fought for years to change Pennsylvania state law to make the sale of cold beer in c-stores legal.

“We have worked for years to make beer available in our store locations across Pennsylvania and now, with beer in more than 140 stores across the state, we are excited to take the next step in this journey,” said Ryan Sheetz, associate vice president of brand.

As with many other product categories, the 2018 Farm Bill, which legalized the growing of industrial hemp in many states, brought many hemp- or CBD-infused offerings out of the beverage woodwork. CBD, or cannabidiol, is a chemical in cannabis and hemp that many believe can work as a sleep aid or stress reliever, or for other medicinal purposes.

Beverages—waters, teas, juices and even beers—enhanced with CBD sell for a premium of $5 or more per 12-ounce drink. A primary challenge, however, is the concern that the U.S. Food and Drug Administration (FDA) has not approved the use of CBD in consumable products.

This led the FDA in November to issue warnings to 15 CBD companies for violating the Federal Food, Drug and Cosmetic Act for marketing consumable products, including drinks, with CBD or making unsubstantiated claims about the products.

“As we work quickly to further clarify our regulatory approach for products containing cannabis and cannabis-derived compounds like CBD, we’ll continue to monitor the marketplace and take action as needed against companies that violate the law in ways that raise a variety of public health concerns,” said Amy Abernethy, principal deputy commissioner of the FDA, in a statement at the time.