Lazard Consumer Pulse Survey: A Drink to Health

Reports and studies — Financial Advisory, Consumer

July 24, 2023

Consumption of carbonated soft drinks and other sugar-sweetened beverages has been in steady decline since the mid-1990s, replaced by increased consumption of a wide range of healthier beverage alternatives and bottled water.

To capitalize on this shift, a proliferation of new beverage types, flavors, brands, and packaging pops up on grocers’ shelves each year, often produced by upstart companies with a mission to innovate and disrupt. The space in consumers’ shopping carts once commanded by flagship brands from large global companies is now being filled with products featuring unique ingredients, serving new occasions, utilizing alternative channel distribution, and prioritizing more sustainable packaging.

In our latest Consumer Pulse Survey with CH Consulting Advisors, we surveyed a demographically proportionate audience of more than 1,000 Americans on how they purchase and consume non-alcoholic beverages, how those habits have changed in the last year, and what they look for when choosing a new product. Our research focused on purchase and consumption of packaged water, flavored water, 100% fruit and vegetable juice, and the growing category of natural healthy beverages (NHBs), such as natural health shots, cleansing drinks, kombucha, antioxidant-rich fruit drinks, natural energy drinks (including canned ready-to-drink coffee or tea), gut health, and pro- or prebiotics.

Overall, each of these beverage categories remains strong, with portions of the population both purchasing and consuming frequently. However, digging into the specific consumer behavior around each beverage category yields insights into market stability, growth potential, and how investors and brands could capitalize on the opportunity presented by the different product groups.

Our Survey Results with Selected Exhibits:

The beverage buying habits of Millennial and Generation Z consumers (those born after 1981) differ starkly from older consumers in purchase frequency, beverage package size, and new product trial. While the stereotypical image of a young adult may be of a budget-constrained and eco-conscious consumer, we find that this cohort is highly engaged with the beverage category.

Exhibit 3 – Gen Z and Millennial consumers purchase more packaged beverages than older consumers, belying the assertion that younger consumers purchase less due to budget and environmental concerns
Frequent purchase (2-3x per month), by beverage type and generation

Just as Millennials and Gen Z are the most prominent cohort leading online purchasing in general—with some estimates stating over 60% of their total purchases are made over the internet—these generations continue to be the most prominent cohort for online beverage transactions as well.

Exhibit 7 – Younger consumers are 70% of the market for purchasing beverages through online channels
“Where do you most frequently purchase your beverages?” Percent of people choosing channel, by generation

One thing that younger and older consumers continue to have in common is their reliance on coffee and tea for their morning pick-me-up.

Exhibit 8 – Morning pick-me-up
Primary drink of choice for occasion

The category of natural healthy beverages (NHBs) has emerged as a true contender over the past decade, competing against existing functional or energy drinks with a promise of fewer ingredients but additional functional benefits provided naturopathically thanks to superfoods, pre- and pro-biotics, and infused botanicals. According to our survey, digestive health is the second most common benefit sought by consumers, behind only immunity support.

Exhibit 9 – NHB: Most important health benefits
Percent of people selecting benefit as one of their top three reasons for purchase

When selecting and purchasing natural healthy beverages, consumers are consistently less concerned about the price than they are about the quality and effectiveness of the product.

Exhibit 13 – Price is less important than many product characteristics for NHB consumers
Important NHB characteristics
(Percent selecting top two boxes on a 1-7 scale)

Natural healthy beverages have become “anytime” drinks—consumed throughout the day, not just at mealtime.

Exhibit 14 – Usage Occasions
“Which of these describe when you generally drink NHB?”

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