Beverages are an exceptional platform for innovation because they are the ideal vehicle to leverage some of today’s most important macro trends, such as health-consciousness, clean-label, customization and convenience. These macro trends are good indicators of consumer demands and should help influence your new product design.

In addition to aligning your product concept with the market trends, there are four key areas I recommend you consider in order to create a truly innovative beverage: formulation, functional benefits, experience (characterized by packaging and branding), and of course, taste. The best and most innovative products will hit on the macro trends AND at least one of these attributes. An improved understanding of the following areas will drive you to push the envelope and create new products that better fit the needs of our consumers.

Formulation

The inclusion of certain ingredients, such as natural sweeteners, probiotics, protein, etc., or the exclusion of undesirable ingredients, such as preservatives, artificial colors, high-fructose corn syrup (HFCS), dairy and sugar, are key ways to attract consumers and differentiate your product. For example, the change of a sweetener system alone created an entire category of low-calorie stevia-sweetened beverages (Coca-Cola’s Life, Pepsi True, Zevia, etc.). Another new product based on a formulation change is Pepsi’s launch of its cane sugar-sweetened 1893 Pepsi Original Cola, an alternative to the traditional HFCS-sweetened offerings. As consumers become even more cognizant of nutrition labels, expect to see an enduring popularity of low-calorie sweeteners like stevia, as well as a general shift toward reformulations that align will health and better-for-you values.

Function

Functional claims are an extremely popular and effective way to capture consumers and differentiate your product. A decade ago, beverages that simply touted energy-boosting benefits led the functional beverage category. Today, beverages incorporate proprietary energy blends marketed toward much more specific need-states, such as post-workout energy. Other major functional categories today include cognitive health, digestive health and beauty. Look for ways to address the needs of your clients through nuanced functional benefits, or if there are inherent health benefits in your ingredients, make sure your messaging clearly communicates that to the consumer (i.e. resveratrol content in red wine).

Experience

Consumer experience is characterized in a variety of ways, including packaging, branding, and delivery. These are all powerful means that can help revitalize a fading brand through differentiation. Clear and consistent messaging along with compelling brand story is essential. If a brand is successful in communicating its ethos, consumers will relate to their products in a more meaningful and personal way. Another component of experience is product delivery. For example, the consumer experience of Pepsi Spire and Coke Freestyle breathed new life into the declining category of carbonated soft drinks. Consider how you can revolutionize your user experience in a way that adds value to your consumer.

Taste

The most important attribute of your product is taste. Consumers will forego taste and textural elements in a beverage for nutritional benefits, but only to a point. The consumer response to a beverage can vary greatly, but if a drink is hard to swallow, the likelihood of its success is low. Cooking shows, online instructional videos like Tasty, and recipe delivery services, such as Blue Apron and Plated, have made modern consumers more educated and informed on culinary techniques. Thus, consumers are now more discerning about their food and beverages, and as a result, many appreciate flavor profiles that are complex and authentic.

These four elements, which represent the greatest areas for potential innovation, do not exist in a vacuum. Modifying functional benefits with the addition of a botanical, for example, will likely also impact the formulation, flavor and possibly even the brand story. Brand owners should take societal trends and values into consideration as they approach new projects, in addition to looking at the most compelling attributes of individual categories. The future of innovation will take the form of an idea that at Imbibe, we call compositional convergence: combining the most appealing characteristics of categories to create new ones. I have some ideas on new categories that I think we’ll see, but I would love to hear your ideas. Please reach out to keep the conversation on beverage innovation going.

For more details on what’s next in functional food and beverage category, please reach out to me at [email protected]. I’d love to hear from you.

Looking for more on key considerations in formulating beverages with functional ingredients? Join us for the Sparking Beverage Innovation workshop on Wednesday, Oct. 5, at SupplySide West 2016, which will feature Imbibe's Andy Dratt.