Premium carbonated drinks pour into market

Carbonated beverage dollar sales in the drug store channel Sparkling Essence infused sparkling water

Undaunted by flat carbonated beverage sales, premium soda manufacturers are bringing a steady stream of new products to market.

*In billions**52 weeks ended Aug. 8 Source: Infoscan Reviews, SymphonyIRI Group

“There’s definitely movement in this segment. There’s been a deluge of products, and we’ve been watching it closely,” said Melissa Abbott, trends and culinary insights manager at the Hartman Group. Abbott believed the spike in interest in niche carbonated beverages is fueled by consumers’ desire for higher-quality foods that are “premium, but attainable.” She also believed consumers are willing to spend a bit more for those products. “Consumers don’t view these beverages as a commodity. They are a treat, like a substitution for a candy bar,” she said.

Such premium soda brands as Boylan’s and Jones Soda have occupied this small niche for years, but have seen a surge in popularity. More brands—Fruit 66, Hot Lips and Kristall, to name a few—are more recent entries. “We’re seeing wider distribution from small labels,” Abbott said. “It’s exciting to see what’s going to happen here.”

Private-label brands also have moved into the segment. Walgreens has introduced Deerfield Trading’s Old Fashioned Soda with real cane sugar in such flavors as root beer and strawberry cream, and the company’s Duane Reade stores stock DR Delish sparkling beverages in pomegranate and blood orange, among other flavors.

Nontraditional flavors are a driver in the category. “We get excited about developing the next flavor,” said David Yudkin, co-owner of Hot Lips Soda. He believed pulp in the bottle is “new and will drive the category” going forward.

This spring, R.W. Knudsen introduced Sparkling Essence, a zero-calorie beverage made with sparkling water infused with organic ingredients in four light, natural flavors: lemon, cucumber, mint and blueberry. Knudsen also recently reformulated and repackaged its Spritzers, made from fruit juice and sparkling water in such flavors as Jamaican lemonade, peach and boysenberry. In an effort to shave calories from each serving, the company reduced juice content from 100% to 70%-to-80% juice and changed packaging from a 12-oz. can to a sleek 10.5-oz. can. The Spritzers are sold for about $3.79 for a four pack.

Jones has done well with its quirky, limited-edition flavors—its newest addition is a bacon-flavored soda. The company’s limited-edition six packs have been featured at Target for Halloween.

While more premium soda brands continue to enter the market, industry experts were quick to note that the segment remains small. “The industry is dominated by Coke, Pepsi and Dr Pepper Snapple Group,” said John Sicher, editor of Beverage Digest. “There’s always room for niche players, and they will always be niche players.”

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