From Fizz to Function: Which Nonalcoholic Beverage Brands Are Winning with Emotion

For the first time, our 2025 Brand Intimacy Study separates nonalcoholic from alcoholic beverages to more accurately capture the dramatic changes reshaping consumer choices and brand performance. The results are striking: beverages rank 12th overall in the study, while alcoholic beverages rank near the bottom in 20th place. This gap reflects ongoing generational and cultural shifts, as well as changing consumption patterns. Younger consumers are drinking less alcohol than ever before, choosing alternatives that align with wellness, functionality, and identity.

The beverages category excels at creating pleasure and cultivating rituals. Indulgence is the dominant archetype, and the category ranks third overall for indulgence, just behind fast food and consumer goods. The beverages industry also ranks third for the ritual archetype, after health & hygiene and beauty & personal care.

The rapid growth in functional beverages is a striking recent industry development. The global functional drinks market size was estimated at $149.75 billion in 2024 and is projected to reach $248.51 billion by 2030.¹ Adaptogens, probiotics, electrolytes, and collagen waters are reframing what a nonalcoholic drink can be. Poppi’s positioning as a “healthy soda alternative” taps into nostalgia for fizzy drinks while promising gut health and wellness. The brand’s rise was so swift that PepsiCo recently acquired it for $1.95 billion,² reflecting how seriously incumbents take these challengers and how wellness has become central to the category’s future.

Generational behaviors reinforce this health narrative. Millennials and Generation Z members are drinking less alcohol than older cohorts and deliberately choosing beverages that signal care, balance, and identity. The share of adults under 35 who report drinking alcohol declined by ten percentage points over two decades, from 72% in 2001–2003 to 62% in 2021–2023.³ Many consumers now embrace periods of abstinence, such as Dry January, or avoid alcohol altogether. This shift may be redefining how consumers interpret indulgence not only as pleasure for the palate but also as pampering for a healthier body.

Sugar reduction remains another major driver. Giants such as Coca-Cola and PepsiCo have aggressively expanded their low- and zero-sugar portfolios, reflecting consumer concerns around obesity and diabetes. Today, 68%⁴ of Coca-Cola’s offerings and 67%⁵ of Pepsi’s deliver fewer than 100 calories per 12-ounce serving. Coca-Cola and Pepsi remain iconic rivals, with Coca-Cola outpacing its competitor by just 0.1 in its Brand Intimacy Quotient (BIQ). Whereas yesterday’s battlegrounds were about flavor loyalty, today’s rivalry centers on portfolio breadth, innovation speed, and health positioning.

These industry trends show both major brands and smaller contenders leaning into the Brand Intimacy archetypes of ritual and identity to create stronger consumer bonds. Ritual is when a brand becomes ingrained as a vital part of a customer’s existence. Reinforcing the restorative nature of sugar-free health-boosting drinks enables brands to play on daily consumption as a route to emotional connection. Identity is when a brand reflects an aspirational image or admired values that resonate deeply with customers. By connecting products with the wellness lifestyle and customer beliefs, brands are improving how they create emotional resonance.

Despite these approaches, the industry also faces challenges that threaten to weaken the relationships brands are trying to build with customers.

Credibility is one such barrier to the ritualistic nature of functional beverages. Functional claims such as “gut health,” “immunity,” or “detox” lack robust scientific definitions or validation. As scrutiny increases, consumers are quick to suspect “wellness-washing.” In one such example, the FDA does not regulate adaptogens, and they aren’t proven to provide the health benefits they claim, as some people experience adverse effects and should limit their intake.⁶ For companies trying to build intimacy based on wellness as a shared value, this is both a reputational and operational risk.

Sustainability challenges are another vulnerability, working against brands that try to leverage the identity archetype. While the industry has made strides in packaging innovation, beverages remain a significant source of plastic waste. Plastic still accounts for 45% of beverage packaging, yet optimistically, only 25% of plastics are recycled in the US.⁷ At the same time, concerns are mounting over the presence of microplastics in food and beverages and the risks they pose to human health.⁸ Aluminum has emerged as a favored alternative, thanks to its lightweight design, strong performance, and high recyclability making it a more circular solution.⁹ Nonetheless, a credibility gap remains with eco-conscious Millennials and Generation  Z consumers: when sustainability messaging outpaces actual impact, it can result in a damaging erosion of trust.

Meanwhile, everyday drinks are being reimagined as lifestyle products. No brand has demonstrated this better than Liquid Death, which has transformed canned water into a cultural symbol through humor, irreverence, and edgy design. The brand ranks second in the industry in our study, trailing only Lavazza and outperforming many long-established competitors. Its cult following shows how beverages can transcend function and become part of identity and self-expression.

Innovation is also blurring category lines. Coffee–energy hybrids (like Starbucks’ collaboration with Monster), sparkling teas, and prebiotic sodas show how beverages are crossing functional and cultural boundaries. These crossovers create novelty and reinforce intimacy by embedding brands into multiple aspects of daily life.

Trust and intimacy will decide The beverages category illustrates how consumption is being redefined by health, identity, and cultural meaning. The fact that it ranked well above alcoholic drinks in this year’s study signals a decisive shift in consumer priorities, especially among younger generations.

The brands that will win may well be those that can lean into the patterns that help establish Brand Intimacy in the category. These brands will successfully embed themselves into daily rituals while still building trust. They will create recipes and packaging that appeal to consumer identities, while still fostering transparency. They will also have to work hard to create distinct and culturally relevant brand essences that help them become household names.

From nostalgic “healthy sodas” to cult-like water brands, the beverage industry shows that the future is not only in taste or refreshment, but also in becoming part of how consumers define themselves in terms of what they consume, which is tied to what they believe in.

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¹ Grand View Research. (2024, June). Functional drinks market (2025–2030). Grand View Research. https://www.grandviewresearch.com/industry-analysis/functional-drinks-market

² PepsiCo. (2025, May 19). PepsiCo completes acquisition of Poppi, accelerating strategic portfolio transformation. PepsiCo. https://www.pepsico.com/our-stories/press-release/pepsico-completes-acquisition-of-poppi-accelerating-strategic-portfolio-transfor05192025

³ Gajanan, M. (2024, July 10). Why Gen Z is drinking less alcohol. Time. https://time.com/7203140/gen-z-drinking-less-alcohol/

⁴ Nasdaq. (2024, October 14). Coca-Cola’s brand mix shifts: Zero Sugar push paying off. Nasdaq. https://www.nasdaq.com/articles/coca-colas-brand-mix-shifts-zero-sugar-push-paying

5 PepsiCo. (2024). Positive choices: Helping people make better choices through our brands. PepsiCo ESG Summary. https://www.pepsico.com/our-impact/sustainability/esg-summary/pepsico-positive-pillars/positive-choices

⁶ University Hospitals. (2024, February 6). Zero-proof: Why more people are choosing low- or no-alcohol drinks. University Hospitals Blog. https://www.uhhospitals.org/blog/articles/2024/02/zero-proof-why-more-people-are-choosing-low-or-no-alcohol-drinks

⁷ GenEdge. (2024, March 1). Eco-packaging solutions changing the beverage packaging market for good. GenEdge. https://genedge.org/resources-tools/eco-packaging-solutions-changing-beverage-packaging-market-for-good/

⁸ Cimbalo, G., & Catone, G. (2024). “Microplastics in food and beverages: Potential implications for human health.” Science of the Total Environment, 927, 173989. https://www.sciencedirect.com/science/article/abs/pii/S0304389424011543

⁹ Beverage Industry. (2024, May 16). Sustainability and convenience drive demand for aluminum packaging. Beverage Industry. https://www.bevindustry.com/articles/97301-sustainability-convenience-drive-demand-for-aluminum-packaging