According to an October 2024 report by global strategic insights practice Canvas8, as Australians continue to indulge in sugary soft drinks and face mounting pressure from both health and environmental movements, the call for a more sustainable and functional future for the beverage industry has never been more urgent. The report, Why Aussies want a functional future for soft drinks, was authored by Mariella Agapiou and features expert comment from award-winning nutritionist and entrepreneur, Mark Curry, and Nina Gbor, the founder of Eco Styles.
Canvas8’s report finds that with concerns over excessive sugar consumption, rising obesity and diabetes rates, not to mention the environmental impact from plastic pollution, the future of soft drinks in Australia is at a crossroads. Experts agree that a shift toward healthier, more sustainable, and functionally beneficial options is key to meeting evolving consumer expectations.
Mark Curry, CEO and founder of Savvy Beverage, a company that produces functional beverages, highlights the growing demand for alternatives to sugary drinks. “I hear countless people saying ‘drinking water is boring,’” Curry says. “They’re always after an alternative or fun way to consume more liquids, and more often than not, it ends up being sodas.” He explains that in Australia, carbonated soft drinks (CSDs) are commonly consumed at every meal, with over 2.4 billion litres of sugary beverages consumed each year. Yet, as health consciousness rises, the industry faces increasing scrutiny. “If the sugar tax included artificials, it would push everything toward natural alternatives,” Curry adds, advocating for reform that tackles not only sugar but also the artificial ingredients increasingly used in drinks.
Indeed, public health advocates have raised alarms over the rising rates of obesity and type 2 diabetes in Australia, conditions that are exacerbated by excessive sugary drink consumption. A proposed 20% tax on sugary beverages could raise an estimated $1.4 billion in two years, with experts like Curry agreeing that such measures, alongside a focus on natural ingredients, could help curb the health crisis.
However, the problems associated with soft drinks extend beyond sugar content. Nina Gbor, director of the circular economy and waste programme at The Australia Institute, points out the severe environmental impact of single-use plastics. “Australia is one of the biggest consumers of single-use plastic per person in the world,” Gbor says. “Australians are consuming 3.8 million tonnes of plastic each year. By 2050, this figure is expected to reach almost ten million tonnes. Only 14% of the plastic waste is recovered.” With so much plastic waste generated from soft drink packaging, the need for a more circular approach is becoming increasingly urgent.
Gbor advocates for taxing brands that produce or use packaging that pollutes the environment, suggesting that the revenue could be reinvested into research and initiatives aimed at creating reusable packaging systems. “The revenue from this can be used to fund environmental efforts like research into reusing plastics systemically, recycling and also the development of non-toxic, compostable packaging that is also reused systemically,” Gbor explains.
Australia’s growing environmental concerns are reflected in changing consumer behaviour. More than half of Australians now prioritize sustainability when making purchasing decisions, with many opting for brands that offer eco-friendly packaging and products. Companies like Refilled, a smart drink dispenser startup, are tapping into this shift by promoting systems that reduce reliance on single-use plastic bottles. According to Refilled’s founder, Ryan Nelson, “only one in five [plastic bottles] are ever recycled, and plastic bottles that are recycled can only be processed twice before they can no longer be used again.” The future, he suggests, lies in systems that reduce waste and promote sustainability through reusable packaging.
With consumers also becoming more health-conscious, the demand for functional beverages is on the rise. Drinks that provide health benefits – such as those containing vitamins, nootropics, and herbal active ingredients – are becoming increasingly popular, with the functional beverage market in Australia expected to grow from $451 million in 2022 to an estimated $698.1 million by 2024. Curry’s Savvy Beverage is a prime example of a company responding to this trend, offering drinks designed to “overcome mental barriers while meeting cognitive demands.”
“The functional drink category has really exploded since the pandemic,” Curry says. “People are looking for drinks that not only taste good but also provide tangible benefits. If you provide someone an alternative at a similar cost but with vitamins and herbal ingredients providing the uplift as opposed to chemicals, it’s just a much more attractive approach.”
Brands can also draw inspiration from consumer nostalgia to create successful product launches. The re-release of Halls, a beloved soft drink that was discontinued in 2000, has been met with excitement, particularly as it is being produced in classic glass bottles, which are better for the environment than plastic. Research has shown that producing glass bottles results in 85% fewer carbon emissions than single-use plastics. Companies can capitalize on this trend by combining nostalgia with eco-friendly packaging to attract both older generations and younger consumers who are more attuned to sustainability.
Looking ahead, the future of soft drinks in Australia hinges on a delicate balance of meeting consumer demand for taste and indulgence while also addressing the pressing issues of health and environmental sustainability. The key to success will be in offering drinks that provide both functional benefits and eco-friendly solutions. As Curry points out, “Fizzy drinks are best enjoyed in moderation, and growth in the sector will come from launches that are cantered on meeting both taste and indulgence.”
Nick Morris, UK-based founder and Managing Director of Canvas8, said, “The challenge for the beverage industry is clear: create drinks that not only taste great but also contribute positively to the health of consumers and the planet. As demand for healthier, more sustainable alternatives rises, soft drink companies have a unique opportunity to innovate and lead the way toward a more functional and eco-conscious future.”
Why Aussies want a functional future for soft drinks may be downloaded here for a limited period: https://www.canvas8.com/library/reports/2024/10/23/why-aussies-want-a-functional-future-for-soft-drinks
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