bb guide - Beverage & Brewing 2024/2025

Raw Materials ·

Raw Materials · Ingredients 1 The Beverage Innovation Buzz ADM has issued an extensive new report examining the beverage landscape, spanning across categories within the functional non-alcoholic and alcoholic beverage sectors. The consumer shift toward a proactive and holistic approach to leading a healthy lifestyle combined with the increasing purchasing power of Generation Z is greatly impacting all facets of beverage offerings, from carbonated soft drinks (CSDs) and energy drinks to ready-to-drink cocktails or mocktails. Within this report, ADM explores key drivers and focus areas influencing innovation, with a spotlight on the blurred lines between certain product segments (i.e., energy and sports drinks), consumers' desire for tailored functional support and flavor exploration, as well as growing interest in getting more "bang for their buck" specifically within the alcoholic beverage arena. Like a fruit punch-flavored sports drink in a clear bottle, things are looking bright across the beverage landscape, if a bit hazy. Beverages are ubiquitous these days, with every gym-goer toting a water bottle full of their favorite performance drink, and Gen Z-ers trying to find a functional beverage that supports their particular blend of wellness needs. But, with energy drink-like ingredients finding their way into sports beverages and low-sugar alcohol and low- or no-alcohol options, the categorization of the beverage industry is fuzzy. This blurring of lines combined with a range of flavor trends is resulting in an enormous amount of experimentation by consumers1, priming the market for even bolder new entries. An important factor impacting the beverage landscape in 2024 and beyond is the purchasing power of Gen Z, especially as they come into legal drinking age. This generation is overwhelmingly more focused on long-term wellness, with 71%, globally, stating they’re taking a proactive approach to health centered on prevention2. This exceeds other generations’ focus on a proactive approach, with baby boomers at 64%, Gen X at 61% and millennials at 58%. Concurrently, 49% of Gen Z and 56% of millennials, globally, state they have reduced their consumption of alcoholic beverages to follow a healthier lifestyle1. This is leading to continued innovation opportunities for the alcohol-free category and low ABV RTDs, and nuanced takes on traditional cocktails and beer. This is in addition to an even greater focus on functional beverages, from carbonated soft drinks (CSDs) to functional waters, energy drinks and active nutrition beverages. With all this variety, the report is divided into two categories: Functional Non-Alcoholic Beverages and Alcoholic Beverages, with each segmented into further details. Full references and a copy of the report are available on request. Functional Non-Alcoholic Beverages This space is characterized by consumers’ desire to be better versions of themselves. To be more active, to stay hydrated while they do so, and to foster a more holistic sense of well-being. Here are the key needs influencing innovation in functional beverages. Active Lifestyle Sports nutrition has expanded into a larger active nutrition category, welcoming not only athletes but any consumer aiming to lead an active lifestyle. Hydration The number one functional attribute for which consumers are currently using beverages is hydration, with 54% drinking this type of beverage and an additional 17% interested in trying hydrating options1. Rapid rehydration, often in the form of electrolytes, is a focus for many. Energy and Focus The second most sought-after functional claim in beverages (behind hydration) is energy. This encompasses physical energy for the day, along with mental clarity and focus. 57% of consumers have looked to improve their mental well-being in the past two years – up from 36% in 2021. Digestive Health Digestive health and gut microbiome support is also emerging as a highly sought-after attribute for beverages, with 38% of consumers interested in products offering this claim. 12 Beverage & Brewing · Suppliers‘ Guide 2024/25

Rohstoffe · Inhaltsstoffe 1 Alcoholic Beverages The needs of these consumers are far different than in the non-alcoholic space, but not as different as they used to be. Traditional alcoholic drinks are still enormously popular at social gatherings or for relaxing at home, but better-for-you attributes are finding their way into low/no alcohol seltzers and RTD cocktails and mocktails. Here are the key needs influencing innovation in alcoholic beverages. Social Events Alcoholic beverages continue to be enjoyed by adults in many social gatherings, and the enjoyment of these beverages is seen as an important part of making social connections. Much of the innovation in the alcoholic beverage arena is driven by flavor exploration. Emerging flavor profiles, twists on classic cocktails and unique combinations are fueling fun and exciting new products in this space. High-ABV offerings provide an option for consumers interested in drinking less volume while still getting the desired satisfaction. Conclusion If anything is clear, it’s that a winning beverage in 2024 has to be a combination of flavor and function – you’ve got to add a little punch to your fruit punch. Finding a popular mix can be tricky. Partnering with a global supplier like ADM provides an enormous competitive advantage with a pantry of flavors, colors and functional ingredients coupled with consumer insights and formulation expertise to craft your next concoction. adm.com Enjoyment at Home The pandemic was a turning point for the at-home bar, as consumers experimented with different cocktails and mocktails in the comfort of their own homes. This has enabled a surge in unique spirits (including nonalcoholic options), mixer kits and more. At the same time, consumers are still looking for convenience when drinking at home, and they have primarily turned to the RTD segment to meet their needs. Holistic Lifestyles For RTD pre-mixed beverages, both millennials (65%) and legal drinking age Gen Z consumers (58%) find “better-for-me” options highly appealing, as well as low- or reduced-sugar content (60% of millennials and 56% of Gen Z)1. There is also increasing opportunity for new product development within the growing low/ no alcohol sector. In 2024, you’re hard-pressed not to see mocktail options when out at bar or shopping at a liquor store. The Four Consumers Groups for Functional Beverages Edge-Seekers: Participate in regular, intense exercise and seek pre-workout and functional drinks with branch-chain amino acids (BCAAs), cognitive health and energy support, rapid rehydration, probiotics and vitamins. Traditionalists: Interested in ingredients they recognize and meet clean label expectations. They also want to see key claims like added protein, hydration, immune function and digestive health support and no added sugar. Specialty Diets: These consumers seek out specific benefits that fit into their routine. This may include protein, energy, immune function support, ketogenic, among other attributes. Free Spirits: Taste is most important for these folks, although they’re also interested in energy support and rapid hydration. Beverage & Brewing · Suppliers‘ Guide 2024/25 13