Finding Your Space with Clean Label Energy Drinks
Today’s consumers, across all demographics, are more aware than ever of what they’re putting in their bodies. There’s a demand for more natural ingredients and increased functional benefits. Our research revealed that 68% of consumers pay attention to ingredient content.1 They also consider the social and environmental practices of the brands they support and how they conduct themselves in society and the environment, including how and where they source their ingredients.
Though those may sound like disparate ideas, they are connected under an umbrella called “clean label.” No doubt, that’s a term you’re familiar with as a food and beverage industry insider. However, the average consumer has a much lower awareness of it; just 41% say they’ve heard the phrase “clean label.”1 When you explain what it’s all about, though, they’re very interested in the concept—78% find clean label appealing when provided a definition.1 But what is the definition of “clean label”? And what should anyone in the functional beverages space know about it? For those answers, we turn to two of our experts.
Louisa White is Tate & Lyle’s Senior Manager of Consumer Insights and Analytics, and Becca Henrickson is our Beverage Category Development Manager. They combine a wealth of experience and insights into what motivates consumers. Fresh off their exciting webinar, “Unlocking the Clean Energy Consumer,” they share further thoughts on this dynamic and emerging space.
Can You Put a Label on Clean Label?
Louisa: Tate & Lyle recently conducted multiple studies on “clean label” and functional beverages. A big thing about “clean label” is that it's in the eye of the beholder. A good starting point is having a good brand ethos and a trusting relationship with your consumers.
Becca: Agreed. One of the “aha!” moments for me when we talk about clean label is that it’s primarily an industry term. If you ask, “What is ‘clean label’?” you will get a different answer from every consumer. From an industry standpoint, though, especially as a supplier of ingredients, when we talk about clean label at Tate & Lyle, it's very much about what's on the ingredient panel.
Louisa: In this age of information, you can search for any topic online, and interested consumers can be more aware and knowledgeable about ingredients. Our combined proprietary and secondary data confirmed a move towards more natural ingredients and more transparency.
For example, we know that almost half of consumers cite food and beverage as their top category for health and wellness; they're paying more attention to what they eat and shifting towards a healthier mindset.
Becca: We also see consumers paying more attention to sustainability and how brands are showing up, not only for their customers but also for society. I view the clean label trend as something that, whether or not people understand the ingredients, we don’t need to focus on. Instead, brands should continue to improve the health and nutrition of their products. If you choose to do that, and in a way that's, to your point, Louisa, reputable and trustworthy in the market, I think those trends will carry forward. So, whether we call it “clean label,” “sustainable,” or just being a good organization in society, it all stems from the same root.
Can You Have a Clean Label Functional Beverage Without Compromising the Experience?
Louisa: Short answer: Yes. Let’s start with one of the most commonly adjusted ingredients, sugar. As consumers look for beverages with cleaner labels, their attention to sugar and sweeteners has sharpened. Sugar-free energy beverages have grown significantly in sales and volume, and those without sugar-free claims have seen minimal growth. In the latest wave of our ingredient tracker, we found that 79% of consumers actively avoid high amounts of sugar in their functional beverages.1
So, you have to remove or reduce the sugar, but then also make sure that it tastes good. We talk about this constantly at Tate & Lyle: Taste is the most important thing when it comes to food. People will buy it over and over again if it tastes good.
Becca: However, taking sugar out and adding a sweetener to match that sweetness perception isn’t always as simple as swapping one for the other; removing sugar also removes mouthfeel, which affects the overall drinking experience. Another challenge in clean label formulation is the consumer demand for more natural ingredients. That might be the biggest challenge in product development right now because many of these ingredients come with off-notes, changes to the product's mouthfeel, or even sedimentation. That means there's new opportunity for ingredient innovation and changing what you might have typically thought of as a standard energy drink formula.
That's one of the things that our scientists are so good at; they are experts in this area and can build back that experience you're looking for or even improve upon it.
Does Going Clean Label Mean My Energy Drink Will Cost More?
Louisa: One of the things we see time and time again in all our surveys is that value doesn't just mean price; it can mean an assortment of things to consumers, especially as they're beginning to value their health and wellness a lot more. So yes, we do provide solutions to our customers that are cost-effective, because not all consumers are like that. But we're seeing time and time again that they value nutrition, quality, and the functions they're getting out of a beverage.
Becca: It's always something we're trying to balance: quality and price. In part, it depends on your target market because in the functional space, you must also keep in mind that these are high-value items. People are already spending three, four, maybe even five dollars a can. So there is that opportunity and that wiggle room to offer a more premium set of ingredients.
Within Tate & Lyle, we have an extensive portfolio of solutions. For example, with stevia, we have multiple formulations. Some are more economical, and some cost more but provide a better taste perception. We've also created some compositions in our Optimizer line that balance taste parity with cost. Those tend to be attractive solutions for our customers where affordability is a concern.
But then, you get into other highly desirable ingredients, like monk fruit, for example. It’s a premium solution cost-wise, but it will provide you a cleaner label. That might be attractive for certain categories.
Louisa: It’s essential to know your target. Some consumers will establish a habit where they like a product no matter how expensive it is. They become repeat buyers because they believe in that brand. However, each customer's product is different, and they have different target markets, so they have to adapt to the current macroeconomic environment as well.
Becca: Price is a reason why we offer a range of solutions; it's “known” in the industry that artificial sweeteners are less expensive than natural sweeteners, and in some cases, it’s true. In the beverage industry, we have seen that some brands try to reduce costs because sugar prices can go up and down; they're highly volatile, especially in North America.
You can mitigate that by reducing your sugar—not all the way but a bit—and then add back some of that sweetness. You still get the mouthfeel and the sweetness level you want, but the cost may be more consistent from the supply chain side. In addition to cost savings, from a clean label point of view, you also get that “natural” perception by having stevia leaf extract on the label.
Looking at energy drinks specifically, as part of our ingredient tracker survey, we did ask, “Would you be interested, or would this have a positive, negative, or neutral purchase impact on you buying this drink if it had a natural versus artificial sweetener?” And we asked about a combination. For the energy category, consumers are okay with having a combination of artificial and natural ingredients, especially Gen Z consumers.
That doesn't mean that there's no opportunity to develop products that are 100% plant-based and “natural.” But there's definitely room to build in that combination space, and I think consumers will respond in a positive way.
What Are Some Things to Know About the Functional Beverage Market?
Louisa: One great thing we see with the energy drinks category is that it's bleeding into more than one function. So maybe that energy drink also boosts your metabolism or boosts your mood.
Becca: You have to go back to thinking about the need state of the consumer. Why are they drinking the beverage? What are they trying to get out of it? And if it's something other than “I'm going to drink this to enjoy it,” or simply because they’re thirsty, that's where the functional piece comes in.
If you think about it, one of the first functional beverages was coffee! (And we do consider coffee drinks to be functional beverages as well.) And yes, energy is absolutely a functional category. When we think about some of the newer claims we're seeing, like boosting metabolism or the gut and brain health claims, those are definitely trending.
That's a way for brands to differentiate in the market, especially in a mature market like energy. You're going to have to work hard to find your spot. Maybe this demand and need space for plant-based sweeteners could be an area to build a successful brand. From there, it makes sense why beverage companies are looking to pair that with some of these trending health-focused claims to really stand out.
Louisa: I always say this to my team: Gen Z consumers are very important—they're the future of our industry. We know from third-party studies that they’re open to artificial and non-artificial ingredients and, partly because they're just starting their careers and not making much money, they choose cost-effective products. Also, they're younger and might not think as much about their health because they still feel invincible; our survey showed they scored lowest of all generations for reading nutrition panels on packaging.
But don't forget the Gen Xers and the boomers; they have a lot of influence in the market. However, they are concerned about high sugar levels and are more likely to buy based on taste. My point is that different demographics have different needs, so your formulation depends on your target. Functional drinks are for everyone, and you can innovate by filling generational gaps in the market.
Making Claims On-Pack for Clean Energy Drinks
Louisa: First off, Tate & Lyle takes on-pack nutritional and benefit claims seriously. When it comes to our ingredient solutions, we prove them with clinical studies, and I think that's a differentiation for us. We're very mindful of the marketing and regulatory claims that we can make for our ingredients.
Becca: We have a wide bench of regulatory teammates who can support us when our customers have questions about making claims. A lot of times for us, the claims are around sugar reduction, but we are seeing, as we've been talking about, that the functional space is really interesting, with many ingredients that might have a functional claim on them.
As to making claims, there’s a limit to that; you can’t be everything to everyone. You need to pick a lane and have a strong strategy to create brand awareness within a certain subcategory of consumers and grow from there. When you have a lot of claims on a can, consumers may wonder if one is more meaningful than another. And if I drink this, will I feel all these things? It just creates confusion.
What Does the Future Look Like for Clean Label Energy Drinks?
Becca: We have brands that have skyrocketed in the beverage category, and the gut health claims drive that. I think it's fascinating, and Louisa talked about it at the very beginning to see how consumers are becoming more aware of these ingredients and how they can affect them in a positive way. I think you're just going to continue to see more adoption.
Louisa: The space is growing, and the demographics consuming energy drinks are massively expanding. There are some major players in the category already. Still, there is a big opportunity to break through by offering something new or trendy and targeting a growing or underserved market. Maybe combining gut health with something else, like reduced sugar intake, to tap into the desire to drink a healthier version of what consumers already enjoy. The energy space is crowded, but there's always room for growth because the audience is becoming so broad.
Tate & Lyle is Your Partner for Clean Label Functional Beverages
Becca: An interesting subset of customers have been telling us they want to get in on this growing piece of the food and beverage market. But they’re not sure what direction is right for them and their brands. Through our sweetening, fortification, and mouthfeel ingredients, we can help them find their place in these categories, like clean energy drinks, sports hydration, and other functional beverages. We can help mitigate the off-notes and provide the solutions to enter the gut health space through prebiotics like soluble corn fiber.
Louisa: We're proud that at Tate & Lyle, we can pair proprietary studies with the secondary research we invest in for a broad picture of what consumers want, and we understand their awareness of ingredients. We can help you create your unique approach to the market. And as you shape your clean label, we’ll ensure your product tastes competitive—or even better.
Have questions about clean labels and creating your custom ingredients solution for the Functional Beverage space? Contact us today
to get started.
- Tate & Lyle, Ingredient Tracker Survey, February 2024