Retail sales of concentrates in the US recorded unprecedented growth in 2022 and 2023. Concentrates are becoming increasingly popular due to their affordability and specific functional benefits. While they are generally still a cheaper alternative to ready-to-drink beverages, consumers are now seeking more premium powder mix options with health, flavour, sugar reduction, convenience, and functionality as the main drivers. Players are experimenting with innovation in products, packaging, and ingredients to transform the category from simple, low-value flavour mixes to functional supplements offering specific value.
Concentrates became the fastest-growing category in US soft drinks, with more than 7% off-trade RTD volume growth
Source: Euromonitor International
Sports and energy drink concentrates are now leading the charge as the fastest-growing types of powder concentrates. US consumers demand products that aid hydration and energy, making concentrates a convenient and affordable option. These concentrates often include electrolytes and sugar for hydration, probiotics and plant extracts for gut health and immune support, melatonin for sleep, and caffeine and coffee extracts for energy and/or adaptogens for cognitive function improvement.
With consumers becoming increasingly budget-conscious and mindful of their purchasing decisions, carrying sports and energy drink concentrates in their bags has become a practical option. Additionally, consumers perceive these products as healthier than regular fruit flavour concentrates, and they enjoy the ritual (and control) of preparing their drinks.
Although the growth has been distributed among many players, Liquid I.V. is a leading force in concentrates. In 2020, Unilever acquired the brand and expanded its product line. It now offers immune support options, as well as an Energy Multiplier, Sleep Multiplier, and a probiotic kombucha mix, in addition to its original Hydration Multiplier. It has also cultivated robust online distribution and accelerated growth due to distribution via warehouse clubs. The growth of Liquid I.V. has enabled the development of many other brands riding the hydration wave.
Retail sales of concentrates are expected to exceed USD6 billion by 2028
Source: Euromonitor International
For example, Celsius, PRIME, Gatorade, and Bodyarmor have launched concentrated formats to keep up with the trend. Traditional players in ORS (oral rehydration solutions), such as Electrolit and Pedialyte, have also launched powder mix formats. Concentrates with high unit prices are suitable for cost-cutting and increasing revenues as they allow companies to move greater volumes in an efficient way. On the other hand, this enables consumers to stockpile, better plan purchases and carry these products around more efficiently while on the go, due to the more affordable price per litre and convenient format size.
Affordability and segmentation across need states are key
An increasing number of brands are expected to explore non-RTD product lines, such as sports and energy drinks concentrates. This trend includes coconut water brands, niche functional products, and even cannabis concentrates, especially when tied to functional claims. However, carbonates have yet to gain traction in the concentrates arena. Brands must consider consumption occasions and need states to offer the appropriate product format and delivery.
Concentrates increasingly feature specific functional ingredients, such as vitamins and botanicals, to meet the growing demand for multifunctional products. This trend is expected to continue, with more brands leveraging dietary supplements to expand their product claims. Players in vitamins and dietary supplements could partner with concentrate manufacturers to offer products for diverse consumption occasions and need states. Concentrates could become a complement to other categories, such as bottled water and carbonates or, even better, stand on their own as package-free options, with companies taking advantage of the already fashionable refillable bottles.
The affordability of concentrates is critical to their growth, and unit price rises need to align with RTD formats for consumers. Companies must innovate packaging and play with price architecture to offer diverse products. Crucially, concentrates are also a relatively eco-friendly option for consumers and companies, reducing plastic packaging, water use and costs. Companies could pass on savings to consumers, invest in ESG initiatives, or pay shareholders. Overall, concentrates offer further potential for growth, and it is just a matter of time until consumers looking for hydration, as wellness, will help the category expand globally.
Learn about the current state of the US Soft Drinks industry as it navigates volume pressures in this article: North American Soft Drinks Volume Under Pressure from Price Increases
Check out our report on measuring the size of the added value hydration market: Hydration: The Gateway to Wellness