Permissible indulgence is a sweet spot for consumers

It’s a tough balance that can create cognitive dissonance for individuals who look to food and beverage products for an emotionally beneficial treat but also want to improve their physical well-being.

Many brands are helping consumers have their cake and eat it, too (or milkshake, soda, etc.) by incorporating better-for-you ingredients in products that don’t fall in the traditional health foods category. By providing options for permissible indulgence, brands can win over diet-conscious consumers and sell their products at a premium. The proof is in the (BFY) pudding (or liquor, cake etc.)

Alcohol sales have been significantly impacted by health-conscious Millennials who account for 32% of spirits consumed in the United States. Although craft beer has been a huge trend in the alcohol category, Nielsen reported beer sales declined in 2018 while spirits and wine sales grew.

One of the rising stars of the alcohol category is hard seltzer that is marketed as a low-carb, low-sugar alternative to beer, wine and spirits. They skyrocketed in popularity since being introduced to the market a few years ago and experienced 169% sales growth from 2017 to 2018 alone. White Claw, a leading hard seltzer brand, found there were various motivators for purchasing their product, but a healthy lifestyle was the common thread.

CPG brands and establishments that serve alcohol also are targeting the healthy consumer by incorporating functional ingredients like blue algae and turmeric into boozy beverages. Probiotic-rich kombucha naturally has a little alcohol in it from the fermentation process, but most brands remove all or most of it to so consumers can enjoy its digestive health benefits without getting a buzz. However, brands like Wild Tonic and Booch Craft offer kombuchas with an ABV (alcohol by volume) of 5 to 7%. Additionally, kombucha is being used as a better-for-you cocktail mixer at bars and restaurants. Shrubs, which are made with apple cider vinegar, are another gut-friendly ingredient currently dominating cocktail menus.

Carbonated soft drinks (CSDs) have been the target of negative press and sugar taxes because of health risks associated with highly sweetened beverages which resulted in a significant sales decline; however, Euromonitor reported the U.S. market is worth US$74.6 billion, indicating opportunity for brands to innovate in the category. Market leaders Coca-Cola, PepsiCo and Keurig Dr Pepper are innovating by introducing new flavors and sweetener options for flagship products and creating craft soda lines.

A handful of entrepreneurial brands also are innovating in this space by incorporating functional ingredients and offering unique flavor profiles. Sodas like Olipop, which is enhanced with prebiotics, and Live Soda, which is enhanced with probiotics, are positioned as better-for-you alternatives to traditional soda because they’re suggested to aid with digestive health. Koios is another functional CSD enhanced with brain boosting nootropics, medium chain triglycerides (MCTs) and electrolytes and comes in flavors like apricot vanilla and pear guava. The stigma against CSDs makes it a difficult segment to win over consumers, but the right combination of flavor and function could provide the incentive to pick up a CSD as a treat or daily boost.

Juice was thought to be a healthier alternative to soda, but a recent study published by The Journal of the American Medical Association (JAMA) found that 12-oz daily serving of fruit juice is associated with a 24% higher mortality risk. High-sugar juice drinks haven’t faced as much scrutiny as CSDs yet, but brands are still finding ways to cut sugar and calories in juice drinks and incorporate function to create a better-for-you appeal. Probiotic-enhanced juices like Tropicana Essentials and GoodBelly Probiotics suggest their products will help consumers improve their overall wellness because of their regular juice routine. Other brands like Natalie’s and Evolution use a combination of fruits, vegetables and botanicals that have inherent benefits like high antioxidant content and immune support.

Dairy desserts like ice cream, whipped cream, and milkshakes are getting a better-for-you makeover via plant-based ingredients, sugar reduction or replacement, and added function. Halo Top found a sweet spot with consumers when they launched a low-sugar, low-calorie ice cream enhanced with protein that has dairy and nondairy options in decadent flavors like birthday cake and caramel macchiato. In 2017, five years after the brand’s initial product launch, Halo Top’s sales surpassed market leaders Ben & Jerry’s and Haagen-Dazs. Other brands like Enlightened and Wink have followed suit offering low-carb and low-sugar pints with 100 calories or less.

Dairy alternative frozen desserts made with almond, cashew, coconut, soy or oat milks have become commonplace in retail and foodservice, and demand for them is strong enough that brands are launching plant-based milkshakes and toppings. Hummus & Pita Co. launched a chickpea-based shake offered in flavors like original, pistachio, chocolate and butter pecan, and Burgerville partnered with the brand Coconut Bliss to craft a proprietary coconut milk-based shake. Reddi-Wip also entered the plant-based product market by launching whipped toppings made with almond and coconut milk.

Energy drinks are popular with consumers, but warnings from doctors and the media about excessive caffeine intake combined with the holistic health and wellness movement have led to a shift in the category. More brands are developing these types of beverages with organic and/or natural ingredients that are perceived as better-for-you. According to Grandview Market Research natural and/or organic energy drinks are expected to make up 40% of the energy drink market by 2025.

Brands in this space are making claims like clean energy, organic energy, natural energy and healthy energy. Some of the most common ingredients in natural and organic energy drinks are green coffee, green tea, guarana, ginseng and more recently cascara. Although these products can deliver as much caffeine as a traditional energy drink, the source of the caffeine is positioned as natural to give the perception that the product is better-for-you by delivering a less extreme or intense boost of energy. Natural and organic energy drinks also tend to contain less sugar and/or natural non-nutritive sweeteners than traditional energy drinks which contain upward of 25 g of sugar per serving in their original product lines.

Many of our favorite treats have sugar, dairy, alcohol or other ingredients that don’t necessarily support holistic health and wellness goals. Developing a product that consumers accept as a permissible indulgence is the holy grail for brands and can be achieved by incorporating ingredients like antioxidant-rich fruit and vegetables, protein, probiotics, and natural non-nutritive sweeteners.

Is there product type or ingredient that caught your attention, or is there a whitespace in the market you’d like to discuss? I’d love to continue the conversation about permissible indulgence more in depth. Feel free to email me at [email protected].

Holly McHugh is the marketing associate at Imbibe, a Chicago-based beverage development company. She focuses on the company's external communications and brand awareness. She also monitors and analyzes beverage trends to guide clients in making strategic decisions about product development.