Non-carbonated refreshment with benefits
October 13, 2009
by Allison Sebolt
While carbonated soft drinks lead the liquid refreshment beverage market, some non-carbonated segments are steadily gaining market share.
The liquid refreshment beverage market declined 2% between 2007 and 2008, according to the Beverage Marketing Corp., New York. Most segments in the market declined during the period as well, but flavored and enhanced water, energy drinks and ready-to-drink coffee grew during the period. While carbonated soft drinks experienced a 4% decline in growth, energy drinks actually grew 9%. Gary Hemphill, senior vice-president of information services for the B.M.C., said the refreshment market as a whole likely will decline once again in 2009, but at a more moderate level than the previous year.
"Non-carbonated products are likely to outpace carbonated products," Mr. Hemphill said. "The non-carbonated products that are likely to perform the best are R.-T.-D. tea, value-waters, single-serve bottled waters and possibly R.-T.-D. coffee. Coconut water is a segment to watch. Over the last five years, bottled water has taken the most share from carbonated products. Today’s consumers want healthier refreshment but the economic downturn has also underlined how important value is to today’s consumers."
Better-for-you products are the No. 1 driver of new product innovation in the beverage landscape, according to a Culinary Trend Mapping Report from the Center for Culinary Development and Packaged Facts. The next most popular area of innovation is "quality quest" beverages, which include organic, local and artisan-made beverages. Other areas of growth in the beverage market include exotic functional flavors such as goji berry, mangosteen and acai; beverages with Asian flavors and ingredients; coconut water; and functional beverages for children.
Some of the flavored waters that have become popular include Aquafina FlavorSplash, which is available in citrus blend, raspberry and wild berry flavors, and Clearly Canadian Sparkling water, which is available in various fruit flavors. Some of the enhanced waters on the market include Glaceau Vitaminwater with citric acid, caffeine, vitamin C and electrolytes, and various beverages from TalkingRain Beverage, which includes some options enhanced with fruit flavors and enriched with natural herbal supplements and vitamins.
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Fruit juice beverages face hurdles
The B.M.C. ranked fruit beverages as the second overall category in terms of sales for the liquid refreshment beverage market in 2008. The category was second only to carbonated soft drinks.
Despite the high ranking, Mintel International, Chicago, said the fruit juice and juice drinks market faces major challenges from other beverages, especially beverages marketed as low-calorie replacements for fruit juice and juice drinks, such as fruit-flavored enhanced water and ready-to-drink tea. In addition, Mintel said the rising price of fruit juice and juice drinks has eroded the consumer base, and the average price of such beverages increased 23% to $5.27 per gallon between 2005 and 2008. Mintel said about one-fifth of those who don’t drink fruit juice and juice drinks would rather consume other beverages such as sports drinks and flavored water. Eating fresh fruit is the biggest reason consumers do not drink fruit juice or juice drinks, Mintel said.
Despite the challenges, innovation in the category still continues. Mikel Durham, general manager for Naked Juice, Azusa, Calif., a part of PepsiCo, Inc., Purchase, N.Y., said superfruits continue to be popular among consumers. The company recently launched Acai Machine, a product that has received a favorable response. Consumers also are interested in exotic flavors such as mangosteen, and after the company launched Naked Juice Bare Breeze Peach Mangosteen Bliss last year, it quickly became popular.
"Consumers are increasingly aware of how their dietary choices affect overall well-being," Mr. Durham said. "They’re looking for 100% all-natural juices that don’t have added sugars and preservatives. Flavors that provide functional benefits are important to consumers. Whether acai, pomegranate, blueberry or mango, the nutrients these fruits offer are important to the overall well-being of health conscious consumers."
Naked Juice has the Protein Zone line, and the company recently added mango and double berry flavors to the line. One of the company’s consistent top sellers is the Green Machine, which is a blend of kiwis, apples, mangos, bananas and pineapple, including spirullina, chlorella, broccoli, spinach and wheat grass.
Coffee and tea on the rise
Mintel also said consumers are choosing ready-to-drink tea over carbonated soft drinks as the result of tea’s perceived health benefits. Superfruit flavors are becoming popular with Yumberry Green Tea, Pomegranate Green Tea, and Green Tea with Ginseng and Honey available from AriZona Beverage Co., Lake Success, N.Y. In addition, many tea brands are differentiating themselves by identifying the country and providence where tea leaves are sourced. The Republic of Tea has even developed a new line of child-targeted teas to encourage younger consumers in the market.
In terms of specific products, NBI Juiceworks recently launched Drenchers All-Natural Fit ‘N Lean Chai Tea Latte with nutrients such as vitamin A, vitamin E, zinc, calcium and magnesium. Drenchers also has a line of 100% super juices and a line of Fit ‘N Lean super juice beverages with 10 calories per serving.
Mintel said Unilever and PepsiCo, through the Pepsi/Lipton Tea Partnership, lead the tea market with a 28% share of sales for the year ended Feb. 22, 2009. While nearly all leading tea companies declined in sales in 2008 due to the economy, AriZona Iced Tea grew 7% and private label grew 10%.
Mintel said coffee manufacturers need to focus more on the comfort of the home market and remind consumers getting up a few minutes earlier each day to make coffee at home can pay off financially. Consumers are still drinking coffee, but with a lower demand for $4 lattes at coffee shops and an increased interest on coffee in the home.