Comment | Ingredients
Gen Z’s flavour curiosity drives soft drinks innovation in Asia
Lucy Britner explores the drivers behind flavour migration in Asia-Pacific and explains why Gen Z's interest in health and wellness should boost soft drinks innovation around Asian ingredients.
GlobalData has highlighted an erosion in traditional drinks segments in Asia-Pacific, boosting the migration of flavours across markets in the region and renewing consumer interest in non-alcoholic drinks. Flavour curiosity is being driven by Generation Z, the research firm says, with 60% of 18- to 24-year-olds in Asia-Pacific claiming they are willing to experiment and try new flavours in soft drinks.
When it comes to defining exactly which ingredients they are interested in, the good old health & wellness trend provides the backdrop for innovation. When it comes to deciding which drink to buy, some 65% of consumers in the region are "always or often influenced by how a product impacts their health and wellbeing", GlobalData says.
"Asian ingredients are growing in popularity owing to the claims of natural health benefits and an exotic perception," says Shagun Sachdeva, consumer insights analyst at GlobalData. "The rise of Asian-inspired infused beverages featuring natural ingredients such as matcha, ginseng and guarana with energy qualities are at the forefront of consumers' product purchase decision-making, as they look to lead a healthy lifestyle."
According to the research firm, brands hoping to tap into Asia's rapidly developing markets use a combination of "unique flavours and healthy ingredients" to sell soft drinks.
Brands tapping into the thirst for flavour innovation
Those companies already making moves in healthy drinks and/or unique flavours are starting to reap the rewards. As part of Suntory Beverage & Food's results from the three months to the end of March 2019, CFO Takayuki Sanno said the company's Goodmood brand - a 'water plus' drink that also includes a clear yoghurt proposition - is rolling out across Asia. "Goodmood, a well-received product in Indonesia, was launched in Thailand in February followed by Vietnam in April as part of actions initiated to establish multinational brands in Asia," Sanno said.
At Goodmood's Thailand launch, Omer Malik, CEO of Thailand joint-venture Suntory PepsiCo Beverage (SPBT), said water and non-carbonated soft drinks now account for around 70% of the total Thai market. "SPBT believes this shift in beverage demand will continue, and that consumers' demand for natural and healthier beverages will increase," said Malik. "The launch of Goodmood helps us become the first key player to venture into the 'water plus' category."
In relation to the wider migration of flavours in Asia-Pacific, neighbouring Australia is also benefitting from the trend.
Over at The Coca-Cola Co, the Authentic Tea House range has now launched in six Asian markets, with plans for further expansion in 2020, according to the company's 2019 Investor Overview, published in July. The RTD teas contain no sugar, additives or preservatives and variants include Ayataka Japanese Green Tea, Da Hong Pao Oolong Tea and Chrysanthemum Tea.
In relation to the wider migration of flavours in Asia-Pacific, neighbouring Australia is also benefitting from the trend. GlobalData points to alternative energy ingredients in non-alcoholic beverages, including Nature's Way Sparkling Natural Energy Tea, available in Hibiscus & Pomegranate flavour in the country. The green tea, which features ginseng and B vitamins, comes with a "natural energy hit" claim and is "99% sugar-free".
Meanwhile, Australian firm Applelachia's sparkling apple cider drinks range, which launched in 2018, features the flavours Ginger Turmeric Yuzu and Raspberry & Native Lime. The drink rolled out to consumers in the country who are "looking to experiment with new and unique tastes", GlobalData says.
The Gen Z impact
What's really interesting is that the notion of migrating flavours flies in the face of the previously-fashionable trend towards localisation. Three or four years ago, the narrative for drinks companies was around Millennial consumers needing to feel special. They wanted a brand to speak to them on an individual level.
At an alcohol innovation conference in late 2015, the MD of brand strategy agency Webb Devlam, Dominic Burke, told delegates that the Millennial demographic wants personalised, localised products. By way of example, Burke highlighted Pernod Ricard's Our/Vodka concept.
But, Generation Z - the new kids on the block, driving curiosity around flavours - are different. For a start, they have never known a time without the internet. Access to information from anywhere at any time is the norm - a phenomenon that Trend Hunter chief insights officer Armida Ascano last year called "omniculturalism".
Younger consumers' exposure to a range of cuisine types creates opportunities for brands to offer more authentic and hybrid flavours.
This unprecedented access to information - and the fact that such access is habitual - means that Generation Z is more diverse in just about every way, including in their tastes.
According to a Mintel study last year, interest in international flavours among US Gen Z'ers stretches way beyond the regular line-up of Italian, Mexican and Chinese (particularly in terms of food). Gen Z consumers are, Mintel said, "driving consumption of more emerging international food and drink". The research company highlighted Indian, Middle Eastern and African flavours.
"Younger consumers' exposure to a range of cuisine types creates opportunities for brands to offer more authentic and hybrid flavours," said Jenny Zegler, associate director for Mintel Food & Drink.
The demographic is also more inclined than other, older generations to find flavour inspiration from social media. "The wide range of food media, whether MasterChef Junior or YouTube videos, has piqued an interest in food and drink among some members of Generation Z," added Zegler. "This younger generation's easy access to technology and interest in being creative presents an opening for interactive products that encourage Gen Z to safely experiment and extend their passion for food and drink."
While the health & wellness trend is helping the migration of certain ingredients across Asia-Pacific, Gen Z's tendency towards so-called 'omniculturalism', coupled with easy access to information, means demand is already stretching much further afield. For soft drinks companies, this presents an opportunity worth exploring.
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