Between the foodie movement, the upscale-ization of everything from hot dogs to burgers, and the booming craft beer industry, there’s no denying that today’s customers are looking for new twists on national faves—and soda is no exception. International food and restaurant consultants Baum+Whiteman named craft sodas one of the biggest beverage trends for 2014, noting that some restaurants are even creating their own sodas (both bottled and on tap) using house-made fruit syrups and infusions. “The craft beer movement spawns craft sodas,” the company reports, adopting the “same mantra: local, natural, artisan.”
Experts agree that the explosion in craft sodas and craft beer are driven by many of the same forces. “Craft sodas are about authenticity, better quality, healthy ingredients and unique flavors—similar to the difference between mass-produced beer and craft beer,” says Jennifer A. Martin, chief soda officer at SIPsoda Co. in Vancouver, British Columbia, Canada. “These drinks appeal to discerning customers who care about quality, health and how the product is produced.”
Chris Taylor, senior vice president at New York-based Boylan Bottling Company, agrees. “Pizzeria owners are looking for the best possible products to offer customers, and if you can differentiate yourself by giving them high-quality beverages while increasing your margins, it’s a no-brainer. In pizza, there has been a real shift in the marketplace to incorporate different ingredients and toppings as well as fresher and more natural offerings. So why not do the same with sodas?”
Back to Nature
Indeed, the health-conscious movement has led consumers to seek sodas with better, all-natural ingredients and no high-fructose corn syrup, says Ed Doyle, president and founder of RealFood Consulting in Boston. “People want something different, with unique ingredient profiles—often sweetened with agave or cane sugar,” he explains. “There’s a move away from the long ingredient lists you see on many bigger soda brands.”
At Gusto Pizza Co. (gustopizzaco.com), with two locations in Des Moines and West Des Moines, Iowa, owner Josh Holderness has witnessed widespread rejection of synthetic ingredients. “Artificial sweeteners have received a lot of negative press, so anything with natural sweeteners like cane sugar stands out,” he notes. “People are also growing discontented with the abundance of high-fructose corn syrup in drinks.”
Craft sodas are made in smaller batches, with unique flavor combos and more detailed manufacturing processes, Martin says. They can bring in new customers who would not normally order a soda or convert water drinkers to drink buyers. “They especially appeal to health-conscious and foodie consumers; it’s a totally different demographic than the average soda drinker,” she says.
Like many craft brewers, Boylan Bottling rolls out seasonal varieties throughout the year. “Last year we did Shirley Temple, Sparkling Lemonade and Orange Cream,” Taylor says. “This fall, we’ll do a Sparkling Cider. We’ve looked at what works for craft beers and are adopting those practices for our sodas. Seasonal flavors get both retailers and customers excited.”
Steven Walker, co-founder of Minneapolis-based Boundary Waters Brands (creator of Joia All-Natural Soda), believes that the market for craft sodas has only begun to bloom. “I think we’ll see a lot more in the future, and a lot of them look toward the past, offering fresher colas, orange sodas, root beers and cream sodas,” he says. “People are looking for a healthier beverage, and they want variety.”
At Gusto Pizza Co., Holderness has tapped into this craft craze by offering specialty sodas in bottles: citrus-based San Pellegrino sodas; Chicago’s original Green River; cream soda, black cherry soda and root beer from the local Millstream Brewing Co.; and Dr. Brown’s Black Cherry. “People are looking for something different with their sodas,” he notes. “There’s a sentimental value, too. When I was a kid, our local deli had Dr. Brown’s Black Cherry, so when I found it available, I jumped on it.” He believes that customers like the idea of drinking sodas brewed in a more traditional style. Doyle agrees, adding that many also increasingly seek “retro flavors,” such as birch and cream sodas, which offer an “old-timey,” nostalgic feel.
Josh Holderness, owner of Gusto Pizza Co., says his pizzeria offers a wide selection of craft sodas to accommodate customers who prefer natural sweeteners, such as cane sugar, in their soft drinks. Photo by Gusto Pizza Co.
A Matter of Margins
Some pizzeria owners may worry that pricier craft sodas could hurt their profit margins. It is difficult to beat the margins you’ll find on behemoth fountain brands, but offering craft sodas is about looking at the bigger picture—and, when positioned correctly, they can offer real benefits to your operation. “In a crowded marketplace, it’s all about differentiating yourself, and in the pizza industry in particular, there’s a lot of replication,” Doyle notes. “But with artisan pizzerias or smaller operations, [offering craft soda] is one way to get the message across: ‘We’re not the other guys.’”
Doyle adds that few craft soda makers are offering fountain drinks; most package their beverages in a bottle or can. But a swap from a major brand to, say, Boylan’s (one of the few that offer fountain drinks), translates to about a 25% difference in cost. “When you consider that you’re paying 6 to 10 cents for a traditional cola, a 25% difference isn’t much,” he says. “You have to look at this as a bigger menu strategy; it’s really about branding, messaging and carving out who you are as a company and a brand.”
Restaurants can make up for the difference by charging more for craft sodas, Taylor points out. “In both glass bottles and on fountain, the profit margins for our sodas are right in line with—and in some cases higher than—major soda brands, especially in a pizzeria or fast-casual setting because the restaurateur has the ability to command a higher price for a premium product.”
Walker, meanwhile, believes it’s a volume game; selling a lot of craft sodas will help hedge against thinner margins, he says. “Our sodas are often priced from $2.25 to $3.50 in pizzerias, cafes and delis, so there’s a fair amount of room to mark up for convenience, originality and uniqueness. In areas where there are fewer craft soda options, you can mark up on the higher end of the scale.”
For his part, Holderness says he sacrifices a bit in profit margins with his craft sodas, but he believes these options work to uphold the Gusto Pizza Co. brand’s values. “We find that customers will pay a little more for premium craft soda, just as with our food we offer a premium menu that people pay a little more for,” he says. “It’s also part of our brand to support local producers and products as much as we can. Even if you sacrifice a bit on margins, you have to look at the bigger picture in terms of what it relays about your brand. From offering all-natural food ingredients to craft beers and sodas, these choices convey a positive image to customers.”
“Selling craft beverages isn’t about matching margins,” Martin concludes. “It’s about differentiating yourself from your competitors by offering something special, something ‘homemade’ from a trusted producer. And, because they’re premium-priced, margins can still be reasonable.”
Craft sodas, many agree, are a natural fit for pizzerias, particularly those who tout artisan or made-from-scratch menus that incorporate local or seasonal ingredients. Doyle notes that serving craft sodas in glass bottles conveys an upscale image, differentiating the product and helping customers justify spending a few bucks on a bottle. “You have to make sure you’re getting the message across and letting customers know you’re doing something different, or you might even find yourself getting a negative response,” Doyle notes. “Position the sodas not as an alternative choice, but as an extension of your menu—‘We use only artisan products’—so there’s a linear menu message and you get more bang for your buck.”
Once you have some unique sodas in place, don’t forget to advertise (through your website, e-blasts, newsletters and social media) the unique flavor combinations that your sodas offer. While kids and adults alike still love classic flavors like root beer, cola and lemon-lime, younger customers and adventurous types might be attracted to experimental flavors, such as those that incorporate herbs, florals or spices. Tell the story behind the brand, whether it’s a small local company or a manufacturer that’s been bottling since the 1800s with old-fashioned recipes. And explain how the sodas are different—all-natural, organic, lower-calorie, or free of high-fructose corn syrup. To help spread the word, try sampling in the pizzeria or at local festivals or charity events. “Getting in front of people in a low-key, no-pressure atmosphere can be very effective,” Walker says.
Craft sodas are also a perfect way to offer a more upscale experience. If you have sit-down service, consider serving the soda in a special glass or even a champagne flute. “When a customer isn’t having wine or beer, these types of sodas are a way to offer something with a little more flavor,” Walker says.
Additionally, craft soda flavors pair well with a variety of foods, so offer pairing suggestions on the menu, as you would with wine or beer. Walker points out that because craft soda companies are smaller, they’re often willing to work with chefs and restaurants to generate pairing ideas.
Finally, don’t overlook the myriad opportunities to enrich your bar program. Martin notes that craft sodas are popular as mixers because their lower sugar content doesn’t mask the taste of spirits, and ingredients found in craft sodas (like botanicals) are already popular ingredients in mixed drinks. Walker adds that craft sodas often mimic craft cocktails, so instead of your bartenders whipping up fancy drinks from scratch (impossible in many pizzerias), they can use craft sodas to create complex flavor profiles without all of the prep.
“On the cocktail side, there can be a real profit,” says Doyle. “In bigger cities, there’s a huge craft cocktail movement, but that can be hard to tap into when you have a simple or smaller bar. With craft sodas, you can make unique drinks without requiring an amazing bartender. They’re a great way to extend your bar program.”
Making Your Own
Some operators have even taken the craft soda process in-house. Hot Lips Pizza (hotlipspizza.com), with five locations in Portland, Oregon, details its from-scratch process on its website: Ripe fruit is picked and cooked in open kettles; seeds are filtered out (with the pulp left in); sparkling water, pure cane sugar and organic lemon juice are added; and the product is carbonated, put into bottles and pasteurized. The result, according to the website: “High percentages of real fruit. No shortcuts, supplements, artificial flavors or trickery. And no corn syrup. Even the bottles are local, manufactured from 80% recycled glass right here in Portland.” The sodas, driven and overseen by chefs, are brewed throughout the year and bottled using refurbished 1960s-era equipment.
Most pizzerias can’t bottle their own sodas, but Doyle says you can offer the same experience on a smaller scale. “The key is to provide a differentiated product that your competition can’t replicate, and in-house craft soda guarantees that,” he says. “Chef-driven drinks, like hand-crafted sodas with fresh ginger or herbs, give you a lot of freedom, but you can also simply make a syrup, mix with soda water from the tap and hand-shake, which keeps costs low,” he adds. “Try two to three sodas per season, using seasonal ingredients, and make them to order. A fresh sparkling lemonade is really easy, but it gets a lot of attention!”
In fact, says Doyle, the process is part of the show—when customers see your staff hand-shaking sodas, they’re likely to order one. Or you can set up a system with your vendors to put house-made sodas on soda guns in the pizzeria, mixing beforehand and storing in five-gallon kegs. “Making your own sodas is a great way to drive not only profit, but menu discussions,” he explains. “It shows why you’re different and is the key to unlocking those same conversations around your pizza.”
You can even partner with a local microbrewery to make beverages like naturally fermented root beer, says Doyle, or source ingredients from local farms to make your sodas. Your partners will also help promote you to their own customers. “It’s a matter of trial, so start testing to find out what works for you. Try one flavor and feature it. Once you go down that road, customers will respond—and drive social media. It’s just another way to make your business stand out.”
Tracy Morin is PMQ’s senior copy editor.
|Five Marketing Takeaways|
For many customers, dining out isn’t a complete experience without a soft drink—and it’s usually the exact same soft drink every time. Craft sodas offer an opportunity to lure these diners away from the boringly familiar to something new and exciting. But, first, you’ve got to get their attention. Here are some suggestions: