Five Opportunities to Grow Nonalcoholic Beverages

CHICAGO — Nonalcoholic beverages run the gamut from coffee and tea to soda, energy drinks, smoothies and milkshakes, all of which serve as profit centers for most operators. At the end of the day, taste is the top factor both consumers and operators cite when selecting a nonalcoholic beverage, regardless of what type of beverage it is, according to a report by Datassential.

Indulgence is another top reason that consumers increased their beverage consumption over the past years. The desire to treat oneself serves as a top driver to choose beverages such as milkshakes, hot chocolate, slushies, smoothies and cold coffee beverages.

Consumers are also turning to beverages they perceive as healthier, including smoothies, juice and sparkling water, as well as functional beverages. This segment serves as a growth opportunity for retailers because Gen Z and millennials are more likely to want functional health benefits from nonalcoholic beverages even though they are less likely to have health concerns at their age, Datassential found.

Inflation, supply chain snags and labor woes continue to be challenges that affect operators' decisions regarding beverages, but there are also key beverage opportunities that operators can leverage this year:

Seasonal beverages — More than a third of consumers and half of Gen Zers look forward to getting a specific beverage limited-time offer from a specific restaurant every year. Women are particularly drawn to seasonal beverages, as more than a quarter report they would be more motivated to try a new beverage if it were a seasonal variety or featured seasonal flavors.

Experimental flavors — There is plenty of room for growth by globally inspired beverages; beverages that feature new, innovative flavors like sweet, spicy or herbal; and sugar and dairy milk alternatives. All of these options appeal to the core demographics of Gen Z and millennials.

The incorporation of trendy tropical fruits such as yuzu, guava and dragon fruit can be another particularly strong growth opportunity, as half of millennials are interested in beverages that feature these flavors. This trend represents the largest gap between overall consumer interest and the number of operators currently offering it.

Plant-based milks — Operators who don't currently invest in plant-based milks should consider that more than a third of consumers say it is "very" or "extremely" important to them to have plant-based milk options when purchasing hot or cold coffee beverages, smoothies and hot chocolate.

A chilly opportunity — More than half of operators who serve cold beverages, including iced and frozen coffee drinks, say that cold coffee sales rose in the last year. There is room for growth in this space, especially due to the rise of trendy global offerings like Thai and Vietnamese iced coffees, viral TikTok creations like Dalgona coffee and ready-to-drink options such as canned cold brew.

Mocktails — These nonalcoholic cocktails have grown 233 percent on menus in the last four years, according to Datassential's MenuTrends. Consumers who take part in timed alcohol-free challenges like Dry January or who want to reduce their overall intake of alcohol are drawn to the increasing number of complex mocktails. Thirty-seven percent of consumers say they drink mocktails at least one per week, marking an increase of 21 percent compared to one year ago. Despite this, just 20 percent of operators currently offer mocktails.