We often ask event speakers to consult their crystal balls for the future of the beverage business. This time, we reached out to friends so that you wouldn’t have to travel. So here’s what they’re thinking about as they look down the road, and also, what we think some of our biggest questions are for the industry in 2016:
Operational Uncertainty: Brands are being built on trends that are still being proven out while they’re on the market, and the FDA is taking a harder look than it has in the past. Consider the agency’s low level of response to inquiries about energy drinks – where there has been a much higher level of public concern – to its ongoing look at high pressure processing, a much smaller category. Roll in the TTB’s uncertainty about the treatment of kombucha and you’ve got two fast-growth categories that are still on shaky regulatory ground. So the big question is, will the agencies finally draw up and enforce boundaries about process and labeling?
Retail Retrenchment: With so many new products fighting for space in produce, dairy, and cold vaults, and retailers knowing that delivery systems are going to eat into share long-term, how will stores re-focus their space allotments? Meanwhile, convenience stores continue to welcome innovative products: how edgy will they get?
The Bubble Bubble: How much longer will Sparkling Ice and LaCroix have the field to themselves? The two companies have been the big winners when it comes to zero-calorie carbonated refreshment – Can these wildly successful products grow into brand platforms capable of maintaining independence, or will they become someone else’s tuck-in?
Snackification: changes came to HPP juices last year as they shifted from a cleanse-based need state to a simple good-for-you, nutritional enhancement. Now, with more body from added protein and grains, as well as introductions like gazpachos and bone broth, the technology is well-positioned to fulfill the 150-300 calorie snack-to-meal space that PepsiCo CEO Indra Nooyi has long anticipated. But will Pepsi be able to take advantage of that promise, or has it already gone to the independents?
QUESTIONS FOR THE CROWD
What beverage trend, possible regulation, new ingredient, labeling trend, etc. will you be tracking or expect to have an impact on the business in 2016?
Laura McCord, Senior Director of Retail Growth Solutions, KeHE Distributors:
We believe coconut still has a lot of penetration runway as an alternative to mainstream isotonic. And maple water as a domestically sourced isotonic is a growth story to watch in 2016. Turmeric as a functional ingredient will continue to gain noteworthy momentum in beverages. We’re seeing beet in juices explode and expect that to continue into 2016.
Cyrus Schwartz, CEO, Dora’s Naturals:
I expect craft sodas, cold brew teas and coffee and natural hydration (i.e. coconut water, maple water, watermelon water, etc.) to be the meaningful growth categories in 2016
Todd Berardi, Founder, Hiball Beverages:
We are bullish on organic/fair trade certification, so we track and highlight this constantly. We just returned from filming a mini-documentary in India on our organic caffeine supply chain.
Duane Primozich, Managing Director, Boulder Investment Group:
I think 2016 will be the year we see some interesting bone broth products emerge. It is still unclear what format will gain the most traction for this new product category, but it is clear that there is high demand for the benefits.
Neil Kimberley, VP Strategy and Brand Development, Essentia Water:
Big beverage companies will start to proactively reduce the size of soft drink aisles, leaving space for other beverages. If they don’t, retailers will. Meanwhile, new delivery alternatives will arise as a route to market.
What (Ex: beverage trend, possible regulation, legal theme, ingredient, consumer demand, etc) would you be happy to find in the rear-view mirror as we leave 2015?
Kvass inspired beverages are likely to be in the rear-view mirror as we leave 2015. We won’t be disappointed!
Bob Burke, Founder, Natural Products Consulting group:
Frivolous, disingenuous, money grabbing, unprincipled, extortive, class action lawsuits especially when most of the time no one was really actually “harmed”. These are not to be confused when companies do cross lines.
I would like to see more clarity on the definition of “raw.”
Even though we are not playing in HPP or the Kombucha space, I am ready to stop hearing the noise and see real regulation and transparency to insure these products are truly safe for consumers from a production standpoint and alcohol level….we all know supply chains are not perfect, and I feel like it’s a ticking time bomb with products that require refrigeration.
What are you most excited for (in your own company or the industry) in 2016?
John Warburg, Managing Director, Warbros Venture Fund:
I’m curious to see how the sparkling water/flavored seltzer category plays out. It seems like a logical recipient of the dollars draining out of big CSD. I also have a vested interest! I’m also curious to see what, if anything, develops in the energy and iced coffee categories (another vested interest). They continue to be dominated by huge companies – and, in my opinion, low quality products. When, if ever, will a natural/higher quality/better-for-you brand finally start to make some significant headway?
At a macro-level, we’re excited about the growing awareness around health and social responsibility issues among mainstream Americans that are driving change in food and agriculture. We’re thrilled and honored to be a part of this revolution! With the optimism and idealism that the millennials bring to the marketplace, combined with their financial resources, we hope to see a greater emphasis on Fair Trade items as well as Certified B Corporations.
Jim Tonkin, Healthy Brand Builders:
I’m looking forward to more validation studies to determine how well HPP withstands bacteria, advances in the plant protein space, and the way the industry continues to find new and exciting ways to expand around flavor.
Who or what company, entity, or trend will you be keeping an eye on in 2016?
Michael Schaefer, Head of Beverages and Foodservice Analysis, Euromonitor International:
There’s a growing influence of restaurants, cafes, coffee shops and other away-from-home channels in the new product development process. In the same way that bars drive the development of new product trends in alcoholic beverages, coffee shops and other quick-service channels can be expected to play a growing role in the development of non- alcoholic drinks trends.
Mark Rampolla, Co-Founder, Powerplant Ventures:
I’m interested in Lance Collins and Core; I wasn’t sure before but I think he’s going to repeat again. I’m very impressed with traction he’s getting on baseline and it sounds like cool innovation is coming. Also, the launch of Juicero. I’m not sure what will happen but it will be big splash or big thud. Either way interesting!
I’ll be watching Bai. I’m fascinated by what Ben Weiss has done there and very curious to see how it turns out for him and his investors.
Bill Sipper, Managing Partner, Cascadia Managing Brands:
Watch Whole Foods. Same store sales are down. There have been several shakeups at the regional and national level. With all the competition out there today it will be interesting to see if Whole Foods will balance themselves out. It is a big year, one way or the other, for Whole Foods. Besides Kroger, Walmart, and Target, mainstays like Sprouts and The Fresh Market have upped their game.