The Pop Up of Craft Soda: How a Big Brand’s Smaller Focus Makes a Giant Impact

[Editor’s Note: This is a sponsored post.]

Soft drinks have been going through some hard times.

Soda is falling flat, not necessarily in flavor, but in consumption. ABC News reported that 2015 marked the lowest consumption per capita in the last 30 years, and according to Fortune, sales for carbonated soft drinks have declined for the 11th year in a row. Needless to say, this isn’t a mere trend we’re seeing in consumer demand. It’s a tremendous societal shift.

The bloodline of a brand is consumer love and loyalty, but it has become increasingly challenging for brands to thrive and woo today’s consumer. As buyers have become more educated and more invested in the quality of experience in their foodservice, they expect more — more transparency on ingredient sourcing, more unique culinary flavor profiles, or more storytelling to resonate with their purchasing decisions.

However, it’s not to say that the pop industry is about burst. A CDC study revealed that one in three American consumers drink soda every day. Major brand sodas have a relatively high consumer sentiment score of 78.12 out of 100, as shown in a recent Foodable Labs report. Still, there’s no denying that the soda industry has to rethink its strategies to avoid a complete fizz out. But how? By offering more options in terms of fun flavor selections and premium ingredients. And what new beverage segment does just that?

Two words: craft soda.

Much like how the fast casual movement — with its bold flavor offerings and ability to address consumer awareness of high-quality ingredients  — became the answer to the many decades of QSR or fast food domination, craft soda, which is often made with natural ingredients, has become the rising player in the beverage sector, catering to the consumer’s quest for new alternatives to traditional soda.

Foodable Labs show that craft soda had a higher average sentiment score than traditional soda at 85.03. Mintel noted that three in five adults agree that soft drinks made with natural ingredients are a better choice and 34 percent are interested in soda with additional benefits.

Big brand reactivity, or reactive marketing, is key for a brand to survive these changes in consumer demand. Sometimes big brands taking a smaller, artisan approach can lead to a giant impact. The consumers have spoken. Are big brands listening? Well, PepsiCo has not only listened, but has responded in this conversation by emerging with its latest craft beverage brand, STUBBORN SODA.

The Story Behind STUBBORN SODA

STUBBORN SODA'S TAPPER UNIT, COURTESY OF PEPSICO.

STUBBORN SODA'S TAPPER UNIT, COURTESY OF PEPSICO.

Part of being stubborn is saying “no.” In this case, STUBBORN SODA is saying no artificial sweeteners, no high fructose corn syrup, no azo dyes, and above all, no compromise.

“The word sometimes has a bad rap, but we feel like to create something great, there’s very little room to compromise. And so ‘STUBBORN’ for us means having unwavering determination and passion for life, sweating all the details until you make something worthwhile. ...That’s kind of STUBBORN in a nutshell,” Megan Gagnon, the brand’s director of marketing, said.

Consumers today are looking for a wide variety of choice when it comes to their beverage options, she continued. Consumers are looking for premium ingredients, elevated experiences, differentiated packaging, and a distinct backstory.

So, what have they come up with? Black cherry with a hint of tarragon. Cream soda with a swirl of agave vanilla. From an ingredient standpoint, STUBBORN SODA has taken classic flavors and gave them an unexpected twist. Other flavors in their lineup include: Lemon Berry Açai, Orange Hibiscus, and Classic Root Beer. The best part? Only 90 to 100 calories in every glass.  

While STUBBORN SODA hit shelves nationwide in early August, this is not PepsiCo’s first rodeo into the craft soda sector, as we’ve already gotten a sip of Caleb’s Kola and Mtn Dew DEWshine. However, STUBBORN SODA’s backstory is just as unique as its flavors.

“I think one of our biggest successes is taking this brand and creating it in ways that we had never done before here in PepsiCo. This is the first time we’ve ever created a brand out of a foodservice group, which we are really excited about,” Gagnon said. “We were seeing a tremendous amount of growth — I’m sure you’ve seen, as well — in our fast casual segment and especially those kind of operators. We felt like there was an opportunity to create a really wonderful beverage experience and brand for these consumers.”

STUBBORN SODA was first incubated around July 2015. Gagnon called looking at consumer trends a bit of an art and science, as they studied qualitative and quantitative consumer insights and explored marketplaces for ideas. Whether it was pulling inspiration from emerging bars and restaurants in New York City, to different fairs, food trucks, and food festivals around the country, the team was dedicated to crafting the ultimate experience.

“As a marketer, it’s all about the experience. Consumers are willing to pay more of a premium on an experience versus product these days, so it’s delivering really great, compelling storytelling and experiences that elevate the brand. For example, we really took that to heart when creating the tapper unit that was unique from any sort of fountain equipment we’ve ever had in the past,” Gagnon said.

The tapper unit, made with real, dark wood handles and with a focus on high-quality design, gives consumers the same, nostalgic feel of craft beer as they watch their pour come up and foam. STUBBORN SODA’s commitment to this process helps consumers interact with this experience as one that is a far departure from the standard fountain drink, she said, and they’re excited to see where the STUBBORN SODA brand can go.

Oath Craft Pizza and Craft Soda

Oath Craft Pizza Founder Doug Ferriman says that he has a restless commitment to innovating for his guests. Much like an oath is a promise and word of honor, he honors his promise to provide new elements for his consumers, from the way the restaurant’s pizza crusts are baked to the toppings they throw together.

“We want to elevate pizza to the next level. We want to change perceptions and experiences, ‘cause it’s all about experiences. ...That’s my job. To change your perception of pizza and elevate it. Leave you with a strong impression,” he said.

He not only does that with his food, but also with his fast casual restaurant’s beverage options. His brand serves STUBBORN SODA on tap. Consumers would come in proclaiming they didn’t drink soda, but as he and his team would talk to them about STUBBORN SODA’s all-natural ingredients, educate them on the brand’s differentiation from traditional soda, and encourage them to try a glass, they found that people who dared to experiment and taste STUBBORN SODA were wowed by the product.

“I think you start to change perception of all things in that initial engagement. When you ask them if they want a craft soda, it’s different from asking them if they want a fountain beverage,” Ferriman said.

The success of fast casual and craft soda tie in well together — not surprising, considering that the top demographic consuming craft soda falls in the 25 to 34 age range, which aligns with the Millennial generation driving fast casual, according to Foodable Labs. The two are the perfect vehicle for one another.

“We’re starting to experiment with pairing pizza with soda. And I think [those] are some of the next levels of the brand...to try to pair and try to craft certain flavor profiles of a pizza that will complement a soda,” Ferriman said.

Where Will the Future of Craft Beverage Go?

Craft soda, although a young concept, is already growing in popularity, especially as more brands like STUBBORN SODA set out with a goal to broaden their portfolio to meet the consumer need for new flavors and premium ingredients.

On the other hand, there are other brands that market craft soda as a healthier alternative to traditional soft drinks. In response, there have been some consumers who remain skeptical to the validity of that healthier-for-you-claim by asking how much healthier can those brands really be, and Mintel reported that 42 percent fear natural products won’t taste like their favorite soda brands, while 18 percent who do not consume craft soda still prefer the taste of the traditional soft drink.

Food Business News listed other barriers to craft soda consumption, such as unfamiliarity with the product and high prices. About a quarter of consumers do not recognize craft soda brands or flavors, while another 22 percent don’t even know what craft soda itself is. More than half of all consumers agree that craft options are too pricey to purchase regularly.

Still, this is only the beginning of the shift. Despite the fact Mintel reported that only one-third of adults in the U.S. drink craft soda, 44 percent of non-craft drinkers are keen on trying out these new brands. As craft soda becomes a more familiar name in households and as prices even out, or at least as more people understand the value of the ingredients that come with this premium pricing, the future of craft soda looks like it will continue to bubble up and shake the soda industry.