Food & Beverage
Sparkling water bubbles to the surface in QSRs
Sparkling waters — which some consider strictly the domain of higher service categories than QSRs — are now bubbling to the surface at quick-service brands with increasing regularity. Here, recent research and one of the biggest sparkling water players, Coca-Cola, provide a snapshot of sparkling water's sparkling future.
July 20, 2021 by S.A. Whitehead — Food Editor, Net World Media Group
QSRs — particularly the biggest quick-service chains — have tended to offer a relatively standard list of beverages, often delineated only by whether a specific restaurant brand contracts with those biggies of the beverage world, Coca-Cola and Pepsi. But, just like those two cola-centered drink producing companies, many quick-service brands are starting to venture beyond highly flavored sodas and more into the world of sparkling waters to meet customers' growing demands for something sip-able, with less additives, calories and possibly even containing some vitamins and minerals.
In fact, according to a study published recently by Grandview Research, increasing demand for a bit of the bubbly will drive the global sparkling water market from its 2020 level of $29.7 billion to $76.95 billion, between now and 2028, a compound annual growth rate of 12.6%. And a growing portion of that sparkling action is expected to take place in restaurants, as opposed to the online, grocery and c-store sales categories where most of the action happens now for these products.
The spark that lit the sparkling trend
So why is all this new allegiance to effervescent H2O happening? Well, according to the International Bottled Water Association, you might say the three reasons are health, health and more good health. In fact, the association told Grandview Research that bottled water businesses have been increasing their production capacity to meet the demand largely for sparkling water.
In fact, bottled waters — long favored by European restaurant consumers — is also driving a major move in those nations to sparkling waters as well. And many of those that are most highly preferred in Europe are brands that contain minerals, like sodium, magnesium and calcium to support their "health-loving consumer" sales, Grandview's analyses found. In return, major players like Coke and Pepsi are incorporating more places for sparkling offerings in their product offerings, as well.
For instance, in February 2021, PepsiCo Inc. introduced five new caffeinated sparkling water flavors, like mango passionfruit and blood orange grapefruit, among its sparkling brand offerings. And at Coca-Cola, a company spokeswoman said it currently has six sparkling water brands under its parentage, with the top two being Aha and Topo Chico.
In fact, the Grandview research indicates that one of the most explosive areas for growth within the sparkling water category, includes caffeinated sparkling water varieties, like some of Aha's products. The research also found that a lot of growth is taking place in the category of mineral sparkling waters, like Topo Chico.
With a beverage behemoth like Coca-Cola behind both of those brands, we wanted to learn more about what Coke's extensive restaurant research indicates about the use of these beverages across quick-service now and in the future. In order to do that, we were able to shoot a few questions at Coca-Cola's Lindsay Lyons, group director, National Foodservice/On Premise and Digital Category Leadership in the North America Business Unit, which we're sharing along with their responses here today.
Q: How popular are sparkling waters, including those that are flavored, with Coke's current restaurant customers?
A: Sparkling waters are growing in importance in the foodservice channel. Restaurants can leverage them as a differentiated offering to attract wellness-minded millennials and what is a broader, growing overall consumer base for the category.
Q: But how does Coca-Cola truly ascertain the real demand for sparkling waters in restaurants, since currently – particularly among QSRs – so many brands don't offer them?
A: The Coca-Cola Company is focused on testing and learning alongside our restaurant partners. We leverage consumer preference and demand research to offer actionable insights to our foodservice customers and identify potential opportunities. Then we experiment in outlet with various beverages, messaging and POS, evaluating what performs best and adapting accordingly. This is part of our commitment to agility and being our customers' best business partner.
Q: What then, are restaurant brands telling Coca-Cola about their demand for these waters, plus how do your company's specific sparkling water brands address those needs?
A: Sparkling waters are widely popular among consumers, but still fairly nascent to the foodservice channel, so restaurants that roll them out now can leverage their early adoption as a differentiator from competitors. It is important that restaurants offer flavors that pair well with food and that they clearly display those flavors and brands on their menus and menu boards.
Q: Within the specific restaurant service categories, it seems like flavored and regular sparkling waters are more the domain of higher service categories than fast food. Is that impression accurate?
A: This may have been the case in the past, but sparkling water has gone mainstream with consumers. In fact, today the category has as many drinkers as diet sparkling (according to Coca-Cola research). It makes sense that consumers will expect and hope to see those beverages they are drinking at home available when dining or ordering out as well.
Q: What's the best-selling regular sparkling water and best-selling flavored sparkling water that Coke brands offer currently?
A:Topo Chico is our leading sparkling mineral water, and Aha is our best-selling flavored sparkling water.
Q: Are there any advantages for diners when it comes to pairing food with sparkling waters, particularly over other more heavily flavored soft drinks?
A: It all comes down to personal choice, which is why Coca-Cola offers a total beverage portfolio of drinks across categories and flavors. We know that some of our consumers love to pair Aha or Topo Chico with food, while others enjoy regular sparkling beverages.
Q: What does Coke anticipate the growth in this category to be in the next few years?
A:We expect this category to grow around 8% annually. Our dual strategy with Aha and Topo Chico puts us in a great position to continue offering relevant choices in this category, helping our restaurant customers meet the evolving desires of their guests.
Inset photo: Coca-Cola
About S.A. Whitehead
Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.
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