“More and more consumers are resonating with gut health as a health benefit when it comes to beverages. And over the last few years, it has grown at about 26%, so that growth is definitely accelerating. And how consumers really define gut health is quite broad, ... so it is not only associated with health benefits like ... weight management or digestive health; it is also increasingly being connected to holistic health.”
The shift from sugary soda opens up the opportunity for gut-health sodas
Over the last decade, the carbonates (soda) market has gone through some ebbs and flows with growth being flat between 2016 and 2019, as consumers gained a great awareness of the health impacts of sugar, Naik said.
"Essentially more and more consumers were shying away from having carbonates and turning to lower sugar alternatives ... You have flavored sparkling waters, for instance, as well as beverages like tea and coffee, which consumers were choosing over carbonated beverages. And of course, in part, that was also fueled by the increasing association of carbonated soft drinks with sugar and the increasing awareness of the detrimental impact of sugar as an ingredient."
However, the soda market has rebounded some with the help of lower and no-sugar products, and the market registered a 29.34% CAGR in the last four years, according to February data from Ai Palette’s platform, Naik said. However, more recently, the growth has slowed to an 18.32% CAGR in the last two years, as consumers have begun to become more critical of artificial sweeteners like aspartame, she added.
When it comes to market drivers in the soda space, taste is still the number one driver, registering a 38% CAGR this year, based on Ai Palette’s data, Naik said. However, more consumers are also talking about soda in conjunction with health, with 11.8% of consumers citing it, up from 9.8% over the last two years, she added.
Olipop, Poppi burst onto the soda scene
When it comes to the health benefits consumers are associating with the soda category now, gut health is at 2.6% of consumer conversation, just behind weight management at 4%, according to May 2023 Ai Palette data. This increase in demand also coincides with the rise of brands like Olipop and Poppi, Naik said.
“An important brand, which is really leading the disruption is Olipop, which has a range of prebiotic sodas, and the sodas really make gut health a core part of their positioning. And of course, consumers are really lapping it up,” Naik said. “The brand is slated to do about $200 million in revenue, and in April of 2023, the revenue was almost twice as that of 2022.”
In addition to the gut-health aspect of its marketing, Olipop is calling out its low-sugar and high-fiber content and is tapping into "very nostalgic flavors and nostalgic imagery as well to essentially recreate the experience of having traditional sodas," Naik said.
And just behind Olipop with 34% of the gut-health soda market, Poppi is “also tapping into the nostalgic flavors and the nostalgic imagery,” she said. In addition to providing prebiotic benefits, Poppi has positioned its product to support weight loss, reduce cholesterol and improve skin health, she added.