Beverages dominate 2021’s top new products, IRI says

Dive Brief:

• Eight of the top 10 launches in the food and beverage industry last year were beverages, according to IRI’s 2021 New Product Pacesetters report. Keurig Dr Pepper’s Dr Pepper & Cream Soda led the ranking with $137.3 million in sales, followed by Coca-Cola’s Aha sparkling water at $128.6 million.
• Hard seltzers had a strong showing, with new products including Constellation’s Corona-branded line, E&J Gallo’s High Noon Sun Sips, Boston Beer’s Truly Iced Tea and Michelob Ultra’s Organic Seltzer.
• Median dollar sales for 2021 food and beverage New Product Pacesetter launches was $20 million, slightly less than in 2020 and about equal to 2019, according to IRI. While they enjoyed a strong start, many of the top products will be challenged to maintain their momentum in 2022, as category crowding, supply chain issues and higher food prices take their toll.

Dive Insight:

Beverage’s dominance of IRI’s New Product Pacesetter ranking continued in 2021, with a record-setting 46 beverages making the top 100 list, and 13 within the top 25 coming from the category. 

In addition to Dr Pepper & Cream Soda and Aha, Oatly’s oat milk and Coca-Cola’s Minute Maid Zero Sugar juices were among the top nonalcoholic beverages. IRI also flagged several beverage products as “rising stars,” set to perform well in 2022, including hard seltzers like Molson Coors’ Topo Chico and Boston Beer’s Truly Punch, and energy drinks such as PepsiCo’s Mtn Dew Energy and Alani Nu from startup Alani Nutrition. PepsiCo’s Bubly Bounce caffeinated sparkling water also got a call-out. 

While the products are all very different — from carbonated soft drinks like Dr Pepper & Cream Soda to Truly’s new seltzers to next-generation caffeinated sparkling waters like Aha and Bubly Bounce — many are being driven by the same force: young adult consumers. In its report, IRI noted how Dr Pepper & Cream Soda’s success hinged on its appeal to “a large portion of Gen Z eager to explore flavor combinations.” Truly has been chasing millennials with new flavors like its January 2021 iced tea hard seltzer launch, which rang up $90.5 million in sales last year, according to IRI.

Plant-based beverage brands also earned spots among the New Product Pacesetters thanks to their sustainability appeal to Gen Z and millennial consumers. They include Oatly at No. 5 in 2021 dollar sales, Chobani Oat (18) and Coca-Cola’s Simply Almond (39) in plant-based dairy. 

Impossible Burger and Nestlé’s Life Cuisine frozen entrees represented the only food launches to make the top 10.

Despite the strong launches of the New Product Pacesetters, it could prove challenging to keep up the pace of growth. The hard seltzer category is showing signs of slowing as consumers struggle with a flood of products. Oatly has been dealing with supply chain-related delays and production issues over the past year that prevent it from meeting demand. 

There’s also the continued inflationary pressure on food prices, driven by higher ingredient, labor, transportation and other costs. According to the Bureau of Labor Statistics’ most recent data, the consumer price index for nonalcoholic beverages has jumped nearly 10% over the past 12 months.

Beverage makers that want to make next year’s Pacesetters will need to first make the sell to consumers. And it’s not an achievement that will hinge on a company’s size. Big CPGs — those with $6 billion or more in revenue — had 47% share of Pacesetter sales in 2021, but typically drove sales growth through higher prices. They also focused on core products to meet consumer demand, at the expense of brand extensions and innovation. 

Small companies, with $100 million to $1 billion in revenue, grew their share of Pacesetter dollar sales to 15% from the year prior, according to IRI. Many were able to take advantage of supply chain issues that pressured their larger competition and gain share through innovation and meeting consumers’ pandemic needs.