Late last year, Walmart launched a new beverage section dubbed “modern soda.” Available both in stores and online, it brings the chain’s growing selection of functional beverages together in one place.

“It includes brands such as Zevia, Poppi, Olipop and Culture Pop, which are classified as sodas and offer a wellness feature,” said a Walmart spokesperson. “The distinction makes it easier for customers to shop. For example, Poppi, Olipop and Culture Pop provide prebiotics/probiotics and Zevia is naturally sweetened. We plan to add more [brands] in the future.”

The modern drink assortment gives health-conscious customers the beverages they seek. Three-quarters of participants in a 2023 Datassential survey said that they believe con-suming functional products will result in a longer life without the need to make major dietary changes.

Most drinks on the market today provide hydration, but functional beverages attempt to do more. They’re enhanced with vitamins, minerals, herbs, antioxidants, probiotics and ingredients that may help consumers deal with stress, boost brain function, improve gut health, lift their spirits and bolster energy levels. Plus, they’re available in various formats, including energy drinks, sports drinks, sodas, waters, shots, shakes, drink powders and teas.

Who Drinks What

While skeptics may question the health benefits attributed to some functional ingredients, many health-focused consumers are believers. The demand for functional beverages is being driven by Millennials and Gen Z, who together make up almost 40% of the U.S. population. The Brightfield Group, a research organization that studies wellness industries, reports that Millennials comprise 46.5% and Gen Z accounts for 10.1% of functional drink consumers, with 57.4% of interested buyers being female. 

“Functional is a mixed bag, and it relates to how consumers look at health,” said Donna Hood Crecca, senior principal at Technomic. “Today, health is about nourishing your body and mind, and consumers are personalizing what ‘better for you’ means to them.”

Technomic research found that 61% of c-store drink purchases are planned and 39% are impulse buys, according to Crecca. “That means c-store operators must be engaging with consumers when they’re starting to think about wanting a beverage. They must draw them to the brand and location. Retailers must be messaging about the categories customers are looking for and what’s new and different. Social media is top of mind because younger people use it.”

“Functional is one of the few categories within beverages that continues to show growth,” said Lex Shankle, vice president of accounts for Celsius, an energy drink containing ingredients such as ginger, guarana, green tea and essential vitamins while forgoing sugar, aspartame, artificial colors and high-fructose corn syrup. 

“Celsius has contributed over 45% of the energy drink category’s volume growth in c-stores. It’s outpacing Red Bull, Monster, Alani Nu and C4 by a factor of 1.3,” Shankle said. “There are a lot of brands coming on the heels of what has been created, and you’re still going to see brands emerging, trying to get their 1% of the category.”

According to Shankle, functional beverage fans want drink innovation, new flavors and zero-sugar options. "When you look at our growth, a big portion is driven by innovation and staying relevant,” he said. 

Manufacturers of all sizes recognize the importance of functional drinks. Coca-Cola has enjoyed more than a century of success selling traditional sodas. However, the company has expanded its portfolio, and in 2023, 30% of the Coca-Cola volume sold was low- or no-calorie beverages. Coca-Cola is investing heavily in functional drink production with products such as Bodyarmor, Health-Ade kombucha and Honest Tea. In February, the company introduced its first prebiotic soda. Simply Pop was rolled out online and in select regions. It has six grams of fiber for gut health, plus vitamin C and zinc for immunity support, and comes in five fruity flavors. 

“Coca-Cola is committed to meeting the evolving preferences of consumers, particularly Gen Zs and Millennials,” said Kevin LeMoyne, vice president of convenience retail for The Coca-Cola Company North America. He cited the company’s Bodyarmor Flash I.V. drink, which contains 2,290 mg of electrolytes, zinc and vitamins B & C, and Smartwater Antioxidant. “Both products are performing well in c-stores, reflecting the growing interest in functional drinks.”

Fill the Cooler

Consumer research firm Brightfield Group reports that 48% of energy-drink consumers purchase their beverages from convenience stores.

“More than two-thirds of customer store trips include a beverage, making it essential for us to offer a wide variety of high-quality, differentiated options to meet evolving consumer preferences,” said a 7-Eleven spokesperson. “Energy drinks were among our top-selling items over the last year. In response, we introduced more than 200 new and quality improved private-label brand items and categories last year, including highly competitive categories.”

At Love’s Travel Stops, the company “knows customers are becoming increasingly interested in modern soda and healthier options,” said Don Caudill, supervisor of beverages at the Oklahoma-based retailer. “A large portion of travelers, professional drivers and other road warriors who visit Love’s fuel their drive with energy drinks. But functional beverages are popular and growing at a rapid rate.”

“Last year, we introduced organic, cold-pressed juices to our coolers, including AllWellO Berry Delight, Go Green and Tropical Escape. They’ve been a big hit with customers, and we’re adding Poppi and Olipop in stores this year,” Caudill added. “They may be selected for some bundling promotions, but we won’t force a pairing that doesn’t make sense.”

QuikTrip, headquartered in Oklahoma, carried Poppi in its juice functional section last year, but “It’s being moved to the floor cooler this year for better visibility,” said Aisha Jefferson, corporate communications manager for QuikTrip. “We haven’t bundled it with any food yet, but we plan to do so in the future.”

At Casey’s, “We continually strive to listen to our guests, ensuring we offer the products they want most to make Casey’s their beverage destination,” said Chris Stewart, vice president of merchandising for the Iowa-based retailer. 

Last year, Casey’s helped launch Throne Sport’s ready-to-drink coffee nationwide. The drink combines natural caffeine, electrolytes, amino acids and B vitamins and comes in several flavors. Other new brands in the Casey’s cold case include Yerbaé plant-based energy drinks and seltzers, Health-Ade kombucha, Karma water products and HOP WTR, an alcohol-free, carbonated beverage that infuses water with hops and contains L-theanine, an ingredient that claims to boost brain function. 

Casey’s merchandises functional beverages inside reach-in coolers near the front of stores in some locations and ensures they’re strategically placed in the cold vault. “This arrangement not only provides guests with a familiar shopping experience but allows those who might not be actively searching for these new drinks to easily discover them,” Stewart said.

At The Market by Tiger Fuel in Charlottesville, Virginia, “Our team is currently strategizing on what modern soda should look like,” said Nick Rogers, retail merchandising manager for The Market. “We’re a small retailer, and we’re careful with decisions to add new products and categories to our shelves. Currently, we’ve invested shelf space to offer locally produced beverage products like Greenberry’s and Snowing in Space coffee drinks, Running Lights energy drinks and The Good Reverand and Mountain Culture kombucha. The success of these products gives us confidence that modern soda will be a hit in many of our markets.”

Right Drink for the Right Customer

To succeed with any product, convenience retailers must determine the right assortment for the customers of each store and consider rotating products by daypart, according to Sally Lyons Wyatt, global executive vice president and chief advisor and consumer goods and foodservice insights at Circana. 

“Knowing more about your shopper today is incredibly important,” she said. “You don’t necessarily need to carry everything, but you need a sampling of the different types of beverages. Currently, immune defense is one of the top-selling claims in beverages. Do you need three immune defense beverages? If you live in an area where health is first, and you see that in your shoppers, I’d have more variety. But if you’re in an area where they come in and want a carbonated drink and a salty snack, maybe not. But you may want to ensure that you have an assortment of carbonated beverages and perhaps one immune defense option in case they’d like to try it.”

When it comes to merchandising functional beverages, “Retailers need to do a store-specific assortment, because not everyone walking into a convenience store is looking for healthier options,” Wyatt said. “So, you don’t want functional beverages in all stores. Just the stores that have the right clientele.”“If I were a convenience store operator, I’d have my top sellers—the ones you want day in and day out—in certain stores. I’d also want some of the new products, but I’d have a special place for them,” she added. “Beverages can be rotated throughout the day the same way retailers rotate food. The hottest functional drink right now may not be the hottest drink in two months. So, do you want a permanent shelf space for that, or do you want to be able to bring in the new drinks that are the latest ones on TikTok and Instagram to excite and delight? That gives you the ability to have the core products that are selling now and the opportunity to rotate in some innovation.”