2025 Beverage trends to watch: Circana expects growth in water enhancers, functional drinks
“There [are] US demographic shifts that are going to help and or be a headwind for categories. ... The aging population bodes well for coffee, while a diversifying population really does bode well for global drinks innovation. Supply issues, which lead to higher prices, will also be something to contend with categories like orange juice and coffee," said Sally Lyons Wyatt, global EVP and chief advisor of consumer goods and foodservice insights at Circana.
She continued, "From a retail perspective, new and innovative products in general, merchandise that can influence the types of food and beverages being bought should be looked at like juicers [and] espresso makers."
‘Consumers are trying to up their game on water consumption’
Consumer demands for hydration solutions are increasing, and drinkware brands are elevating the water-drinking experience, Wyatt explained. Drinkware brands like STANLEY gained mainstream notoriety, and competitors like Cirkul are going vertical, releasing a range of water enhancers in energy, kid-friendly, juice, lemonade, rehydration and coffee varieties, Circana reported.
“We have all heard of drinking eight glasses of water a day, but what is not really stated is the type of water we should drink. It does appear that consumers are trying to up their game on water consumption but doing it in different ways,” explained Wyatt.
Liquid drink enhancers are the number one category of unit sales growth for Gen Z and the second for Millennials while refrigerated weight control and nutritional liquids and powders are the number one growth category for Millennials, Gen Xers and Boomers, according to Circana Receipt panel data for the year ending Sept. 8.
In September, Gatorade released a line of Hydration Boosters with a "heavier lifestyle lean" and a focus on everyday occasions and uses, according to a previous FoodNavigator-USA article. Earlier this year, drink enhancer Mio rebranded to focus on more energy occasions.
Younger consumers drive demand for energy drinks
Liquid drink enhancers are growing across all generations driven by energy enhancers, as demand for energy beverages remains high among young consumers, said Tatiana López Aranzaz, consumer and shopper insights consultant at Circana.
“Millennials over-index versus the total US population in energy drinks, and as you know they are in their prime earning years with growing families and growing careers, so they are searching for an energy boost. Then, we have seniors on the other side, which are underrepresented in liquid drink enhancers versus total date US, but they are growing versus last year,” Aranzaz elaborated.
Immune defense, protein, energy, probiotic and probiotic and digestion claims were the top functional beverage categories, growing by a compound annual growth rate of 28%, 21%, 17%, 17% and 16%, respectively, according to Circana panel data for the year ending Sept. 8.
“Millennials are the top growth driver for immune-defense claims, and Gen Z for the other top four claims. Higher-income households are the top growth driver for immune and protein, while mid to low-income households are driving the growth in energy, prebiotic and digestion claims,” noted Aranzaz.
Non-alc’s growth ‘is good for the consumer, [but] it creates a problem for the retailer’
Consumers are continuing to moderate their alcohol consumption and turning to a variety of non-alcoholic beers, spirits and cocktails. However, the non-alc category only represents about 1% of the total beer and wine market, according to data shared in a separate recent Circana webinar.
Non-alcoholic beer company Athletic Brewing Co. tapped into the zero-proof craze and is projected to crack into the 50 beer brands within the next couple of months, said Scott Scanlon EVP of BevAl Vertical for Circana.
As more entrants and products hit the shelf, retailers are feeling the pressure to fit all these new products on the shelf, Scanlon explained.
“We are meeting the consumer demand for these products, where the concern lies is at the shelf. As we have learned within the seltzer and ready-to-drink segments, when we infuse [the market] with new products that consumers are demanding, there is only a finite amount of shelf space that retailers have to work with. So, it is good for the consumer, [but] it creates a problem for the retailer. We have to find an opportunity to fit in products that consumers are looking for,” Scanlon elaborated.
