Top Drink Trends of 2023

A new water bottle startup is making more than $100M per year selling flavored water that isn’t actually flavored at all.

The company, Air Up, adds a scented ring around the lip of the bottle that fools users’ senses into thinking that what they’re drinking tastes great, just because it smells great. As the company puts it, “Good taste doesn't need sugar.”

Diet sodas, first introduced in the mid-1900s, were intended to help consumers reduce their caloric intake–but in reality, many use them as an excuse to eat a higher calorie meal. This is consistent with the theory of moral licensing, where, in the context of fast food, consumers comfortably combine a healthy food option with a less healthy, indulgent one. Air Up leans into this effect, but for the better, letting consumers’ bodies get the benefit of plain water and their brains get the benefit of the sweet flavor.

This isn’t the first time a company has played these games. The interplay between smell and taste has long been known to businesses who have gone so far as to pump artificial smells into their restaurants in an attempt to make their food taste better.

Hydration is a growing health trend. It's simple, effective, and free. And it's massive: the single most-downloaded health & fitness app in 2019 was the Drink Water Reminder App at over 40M downloads.

Cirkul is turning regular hydration into a recurring revenue stream, by selling zero-calorie water flavors by subscription. Cirkul's product is a water bottle that incorporates a flavor dispenser. Staying hydrated is hard for many consumers as it's tough for many people to want to drink that much water. Adding flavor makes it much easier to drink so much water. Our culture's growing interest in self care has turned "stay hydrated" into a meme more people talked about the topic on Reddit in 2019 than in both 2017 and 2018 combined.

The company offers dozens of fruit flavors, some of which include B vitamins, electrolytes, or caffeine, setting it up to compete with sports drinks and sodas. One key difference between this and sports drinks or sodas is the do-it-yourself component: even though the end product may be the same, the user adding the flavoring in themselves makes it feel healthier.

Their marketing copy emphasizes hydration, and users talk about it as a way to help themselves want to drink more water. For companies, this is an opportunity to capture additional consumer surplus and for consumers this is another product that can help increase hydration.

Producing a shelf-stable version of an existing beverage is a good way to grow the market. Similar to how battery-powered devices are particularly popular in places with intermittent electricity, canned goods can become popular in places with initially unreliable or unavailable infrastructure.

In fact, milk has already undergone this evolution. While Americans are used to buying refrigerated milk, much of the rest of the world buys unrefrigerated boxed milk that has a 6-9 month shelf life. It’s called UHT milk and is made by momentarily heating milk to a high temperature to sterilize it. The UHT process has helped milk penetrate into new markets and, today, milk’s adoption in China, for example, is growing at a higher rate than ever before.

The benefits of shelf stability are now coming to boba tea in the form of canned boba; searches and online discussion of the term are at an all-time high.

Being shelf-stable also helps to make boba a snack. If people can consume it at any time, they'll keep it with them–in the car or on a hike, for example–and that reinforces the habit.

Another contributing factor to the rise of canned boba is the speed at which boba itself is becoming more popular. Boba’s popularity has outpaced retail infrastructure such that consumers in rural areas wanting boba are too far from trendy areas, forcing them to buy it online, in cans.

Often the new businesses that gain the most traction are those that introduce a new product but allow consumers to maintain their old habits.

The rise of non-alcoholic drinks highlights this: Most consumers interested in non-alcoholic drinks don’t want to have to stop socializing in bars or drinking their favorite cocktails — they just want to do so without the effects of alcohol.

The tricky part, which a growing number of businesses are successfully navigating, is maintaining price parity with alcohol. Alcoholic beverages are renowned for their high margins in the otherwise low-margin restaurant industry.

Sober Carpenter, alongside Atheltic Brewing is one of these brands. The growth of non-alcoholic beer, wine, and spirits also coincides with the rise of “sober bars” which have fascinating business dynamics.

Sober bars can capture more revenue and profit than normal bars through a few approaches. First, they can stay open throughout the day as an alternative to coffee dates, increasing revenue. They can also increase profit by maintaining prices while lowering costs given the lack of alcohol and liquor licenses and bouncers.

Instead of serving as an experience for former alcoholics as many may think, this growing experience is focused on creating a space where it's socially acceptable to mingle with strangers and spend money on a craft experience without the explicit need for booze. Nearly all sober bars even keep the 21+ rule to help preserve the environment and social context of the bar scene.

The rise in popularity of cold brew coffee is, behind the scenes, a push by coffee companies to escape the highly seasonal nature of hot coffee sales—a factor acknowledged by coffee chains like Peet’s.

Eliminating seasonality also means reducing the number of low consumption periods throughout the year that’d cause customers to drop off, thereby extending the customer lifetime value.

Turning a product into a subscription is generally seen as a smart move, even if the initial pricing is lower. Subscriptions mean that the consumer is opting to keep buying by default, and has to specifically decide that they're going to stop. Companies like Match have reported revenue drops following big credit card breaches at other companies, during which tens of millions of credit cards get replaced, as this causes people to finally churn out and never return.

As consumption patterns shift from hot coffee to iced coffee, or as some consumers opt for both, coffee turns from a seasonal business to a year-round one. The theme park business also used to be highly seasonal but turned into a year-round business through the addition of Halloween and Holiday events late in the year, and Mardi Gras celebrations ahead of the traditional Easter opening weekend. This has allowed theme parks to sell season passes rather than single-day tickets, locking their customers in over the long run.

For Jot, one key to the subscription model is when people consume their coffee, but another is how: Jot sells coffee concentrate, in a 1:16 ratio. This means they can cheaply ship a small bottle rather than a full-sized beverage—they’re selling less for more. The cost of Jot coffee works out to $1.70 per cup of coffee, which is expensive for at-home coffee but cheap for convenient coffee, whose price is effectively set by Starbucks and Dunkin’. Starbucks and Dunkin choose locations that are as convenient as possible, but neither one can be as close to the consumer as the in-home option.