First the bad news: There’s been an across-the-board slowdown in beverage purchases, in 2008 and again in 2009, thanks to both less consumer discretionary income as well as higher ingredient prices and costs. Beer – beer! – declined in 2009 for first time in more than a decade.
Now the good news: People are drinking just as much as ever. One-third of consumers report refilling hitherto disposable plastic water bottles. And the new age beverage space is full of innovation – ready-to-drink teas, energy drinks, relaxation drinks, protein drinks and more.
“New and better functionality is moving in the market,” said beverage consultant Jim Tonkin, president of Healthy Brand Builders. ”Beverage innovation is clearly not dead.”
Perhaps the hottest new trend is coconut water, a sector Tonkin predicts “is going to be a billion-dollar category. This category is clearly on fire.” Coconut water is also moving into fruit juices and drinks and coconut water-based smoothies, notes Tom Vierhile, director of product launch analytics at Datamonitor.
One new beverage launch is heralding the condition-specific age, with drinks purporting to aid certain organs or health conditions. Energy drinks and energy shots – 5-Hour Energy atop the heap of the shots world, Red Bull and Monster riding hard on the drinks – have caught on with, ironically, the age demographic least in need of energy, which is young males. In fact, the lines are blurring between energy shots and larger-size energy drinks.
New diet drinks
For their part, young girls continue to gravitate toward diet soft drinks. In this category, the no-calorie, all-natural sweetener stevia is quickly gaining cache among the Cokes and Pepsis, and everyone else for that matter. Issues with stevia’s notorious bitter, licorice-like off notes continues to challenge, but suppliers are working to smooth out these issues.
“Stevia is challenged, burdened as it is with the inherent taste issues of delayed onset of sweetness, low maximal response, bitterness and lingering sweetness,” said Greg Horn, senior director of technical services at WILD Flavors. “Only by correcting these issues will consumers further embrace this new sweetener. Since these are very diverse issues, the optimal solution is not a single ingredient. A combination of several tools employing different technologies is needed.”
One interesting note to marketers is that “diet” and “dieting” have decidedly lost steam as a means of communicating the calorie-cutting element of stevia. In their place – zero. “We looked at US product launches and companies are going away from those two words for verbiage in products,” said Vierhile. “Whatever you do, don’t use “diet” or “dieting” in the branding or product name. ‘Zero’ is gaining steam as popular verbiage in the beverage industry, as with Coke Zero.”
Along those lines, calorie-burning or fat-burning types of claims have risen since 2007 moreso than any other claim, said Vierhile. “Enviga (with green tea catechin EGCG) from Nestle has had legal problems, and sales are one-seventh what they were at their peak,” said Vierhile. “Celsius, which has not been subject to warning letters from FDA, is doing well.
“One caveat with this is this particular claim – fat or cal burning claim – is that it has the highest percentage of skepticism from consumers, so there’s a believability issue,” Vierhile said.
Targeting health conditions
Gatorade of course was the pioneering functional beverage (if you don’t count water or coffee or alcohol). When it was discovered a couple years ago that protein can help with muscle recovery more than traditional carbohydrate-type sports drinks, protein made its way into the category. Today, protein has taken off on its own, led by Kellogg's Special K brand.
Nawgan is another potential category-creator, targeting the ol’ noggin. Formulated by scientist Rob Paul, Ph.D., Nawgan has a handful of functional ingredients. First and foremost is the Cognizin brand citicoline, from supplier Kyowa Hakko. The ingredient, which supports phospholipid building blocks of brain cells, has also found a home in 5-Hour Energy. Other ingredients include the memory supporting cholinergic precurssor alpha-GPC, the anti-inflammatory carotenoid lycopene, natural antioxidant vitamin E and, in some varieties, caffeine.
The company is based in St. Louis, and currently has only regional distribution in the Midwest. A light, noncarbonated flavor is closer to the VitaminWater franchise than the sugar-laden soft drinks currently in decline. Want to know why? Nawgan is your answer.