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Bubble Burst: Is Sparkling Water the New Soda?

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As consumer preferences for more nutritional beverages become increasingly intense, food and beverage companies are looking for new ways to deliver the bubbly sensation consumers love outside of their trademark unhealthy soda products. This challenge is what enabled SodaStream to work its way into 20% of homes in Finland and Sweden, delivering home carbonation for average consumers.

“Consumers want bubbles. But they want healthy bubbles.”
— Marco Settembri, CEO at Nestle Waters

Despite its success in European countries, SodaStream has struggled in the US (just 1.5% of homes), prompting a drastic change in messaging. What was once marketed as a home-based soda replacement with the slogan, “set the bubbles free” has become a home carbonated-water solution for “water made exciting."

SodaStream’s shift in messaging is a microcosm of a much larger food and beverage trend. As consumer preferences change, the food and beverage industry is pivoting toward sparkling waters and “clean label” craft sodas to create more nutritional brand images.

The “Cola War” is Becoming the “Sparkling Water War”

Bottled water will soon overtake soda in terms of consumption in the United States. While sparkling water is only a small part of this growing demand for nutritional beverages, the segment grew significantly while sodas continued to fall. While Coke and Pepsi consumption fell a couple of percentage points each, the sparkling water segment grew nearly 29% in 2015.

In the wake of this sparkling water growth, Coca-Cola and PepsiCo have launched their own brand extensions in this market segment—Minute Maid Sparkling and Aquafina Sparkling, respectively. The goal of these products is to deliver low calorie (under 50 per bottle) beverages that eliminate many of the artificial ingredients that consumers now avoid.

Aquafina Sparkling, in particular, fits into a wider brand marketing campaign called “For Healthy Bodies.” In an effort to push the benefits of drinking water (both still and sparkling) to consumers, Aquafina’s mission is to convey the “feel-good” moments the body experiences after drinking these beverages.

According to Linda Bethea, Senior Director of Brand Marketing at Aquafina, “with Aquafina Sparkling, we hope to provide our fans with another fun way to keep their bodies happy and hydrated."

The industry is a long way away from replacing soda with strictly nutritional beverages, but it’s clear that incumbent food and beverage players are shifting their focus to prepare for a much more health-conscious consumer base both now and in the future.

Daniel Birnbaum, CEO of SodaStream, has said that “we feel like we are now at the early stages of a revolution in the beverage industry in America.” As such, Coca-Cola and PepsiCo are far from the only companies innovating to deliver a more nutritional “bubbly” experience.

Nutritional Beverages: The Bubble Movement is Taking Shape

Carbonated water products have long been popular in Europe, but the American market is just now catching up in terms of consumer preferences. This has led to a diverse market for fizzy drinks as companies take advantage of the segment’s ability to give consumers the variety they demand.

In terms of large-scale food and beverage companies, Nestle seems to be one of the first to start innovating around water with bubbles. Between 2014 and 2015, Nestle launched Exotic Sparkling Water, a Perrier line of sparkling water, and a Poland Spring line of sparkling water.

As Nestle continues to redefine its brand for a more nutritional image, these sparkling water brands have led to 14% growth in the United States compared to just 8% growth for still water brands.

One smaller company that is finding success with sparkling waters is the Talking Rain Beverage Company. The niche sparkling water company saw low sales numbers until it grew rapidly in parallel with sparkling water demands, reaching over $380 million in revenue in 2014 alone.

According to CEO Kevin Klock, "It’s great that it’s zero calories, but it’s probably not the number one thing the consumer is looking for.” While consumers are attracted to the nutritional value of sparkling water, the real value is in the carbonation effect—the satisfaction consumers get from the variety of flavored fizzy drinks as opposed to plain still waters.

The success of Talking Rain Beverage Company points to a major opportunity for even the largest food and beverage company. However, the soda category isn’t disappearing any time soon.

Just like how brands such as Evian and Fiji bring a more sophisticated image to the still bottled water segment, craft sodas are emerging as healthy designer alternatives to traditional sodas that can support dwindling soda consumption.

Craft soda companies are finding success in the food and beverage industry in ways that never would have been possible in the days of Coca-Cola’s and PepsiCo’s dominance thanks to healthier consumer preferences for nutritional beverages.

Brands in this category include:

  • Reed’s Craft Sodas
  • Q Drinks
  • Dry Sparkling Sodas
  • Appalachian Craft Sodas
  • Craft Artisan Sodas

The simple truth is that consumers are increasingly abandoning traditional sodas in spite of efforts by incumbents such as selling higher-priced mini cans for portion control. Joining the sparkling water and craft soda movement to satisfy the persistent desire for fizzy drinks will help these companies survive as health trends continue to grow.

Planning for Success During the Evolution of Junk Food

The shift toward sparkling water and nutritional beverages in general is an important one for incumbent food and beverage companies, but it’s far from the only health trend for them to address.

If you want to learn more about the evolution of junk food and the specific health trends you need to adapt to in the food and beverage industry, contact Signals Analytics for a free demo of the Signals Playbook™.


Written by Eric Blum
Eric Blum is the Executive Vice President of Food & Beverage Accounts at Signals Analytics, a Decision Science as a Service company, that enables global organizations to continuously experience the “aha moment” through Signals Playbook™, a cloud-based analytical intelligence platform that transforms the world’s unconnected data into actionable insights to enhance customer experience, optimize product portfolio health and propel innovation. Eric is a Senior Marketing executive with 16 years experience from the leading food company worldwide, Nestlé, and 5 years as entrepreneur and consultant in Israel. Eric brings strong expertise in brand strategy and implementation, product and business development, for both retail and out-of-home.

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Chris Thatcher
5W Public Relations 646-430-5161
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