With healthfulness driving consumer grocery purchases, the beverage category is undergoing a transformation to meet shoppers’ unwavering demands.
Price used to run the shop. Consumers would stop in front of the juice shelf, compare the prices of their favorite national and store brands, and then put what they deemed to be the most valuable in their cart before moving on to the next product.
One category in particular going through a transformation is beverages. Following the push for transparency in the food supply, shelf-stable beverages are now under the same scrutiny as packaged and frozen foods.
“Health and wellness” and “variety” are the two overriding trends driving consumer purchases in the shelf-stable beverage category at the moment, according to Gary Hemphill, managing director of research for New York-based Beverage Marketing Corp. (BMC).
“Consumers are looking for healthier refreshments, and at the same time, they want a variety of options,” he says. “Most people do not want to drink the same thing when they get out of bed in the morning as they do when they close out their day.”
On the surface the beverage category did not show many ripples this year: According to the BMC, the U.S. liquid refreshment market remained essentially unchanged in 2013—after three years of growth.
However, a closer look reveals a whirlpool of action across many category segments. Despite growth for a couple brands, the carbonated soft drinks segment saw a decline in market share and 3.2% drop in volume. Bottled water benefited from consumers choosing better-for-you options, swelling by 4.7% in volume.
Niche segments, like ready-to-drink coffee, energy drinks and sports drinks, all showed significant growth, as well. Consumers’ increasing experimentation with these niche segments is resulting in market fragmentation, says Hemphill, and the industry has learned that consumers are willing to pay a higher price if they get the product that fills a very specific need for them, such as healthfulness.
Across the board, Hemphill adds, it is the innovative smaller companies that are playing with new flavors and formulas—and everyone in the industry is aware that they have to pay attention to emerging segments if they want to grow.
Coconut water is a prime example of a still-emerging segment that has benefited from brand recognition and innovation allowing manufacturers to forge a path to retailer shelves—and into health-conscious consumers’ stomachs. In some markets there is still a “discovery” element to it, say observers; while in others, like New York and Southern California, it is a mainstay.
A leading coconut water manufacturer is Vita Coco. Officials for the New York-based company estimate that they control 65-70% of the segment.
Innovation plays a big role in building brand awareness, says Arthur Gallego, communications director for Vita Coco, noting its most recent flavor addition, lemonade. “This is our innovation to pull more people into the category: Lemonade consumers.”
A lot of retailers have gotten behind coconut water, says Gallego, but not all retailers are confident in where to position it. “Sometimes its next to the iced tea, sometimes the Kombucha and in other stores, near the cold-pressed juice,” says Gallego. Many retailers have found that coconut water sells better outside the beverage aisle in a standalone display, he adds.
“At Wegman’s it is displayed adjacent to the produce section on an end cap. It works. I believe people recognize the brand as a healthy beverage so it fits in with the mindset of consumers shopping for produce,” he adds.
Sales with sparkle
Coconut water is not the only water gaining ground either. As consumers look for more healthful alternatives to carbonated soft drinks, sales of sparkling water, seltzer and club soda have been bubbling. According to a Mintel June 2013 report on carbonated soft drinks in the U.S., carbonated alternatives like sparkling water and the seltzer water, tonic water and club soda segments have been growing because of consumers’ desire to try products that offer carbonation without the caloric impact of a full-calorie soft drink.
LaCroix’s sparkling water has been up about 25% year over year, says Nicole Cheifetz, trade promotions manager for LaCroix, a subsidiary of National Beverage Corp., based in Fort Lauderdale, Fla., adding that the sparkling water category overall has doubled in the past six years.
“Something we discuss is ‘Switch to Sparkling,’” she says about LaCroix’s line of flavored sparkling water packaged in 12-ounce cans. “People want something portable that is easy to grab and run with, and they are used to soda in a can. La Croix is an alternative without sweeteners, sodium or any artificial colorings, so we encourage consumers to switch to sparkling LaCroix.”
A presence in stores like Whole Foods, LaCroix appeals to those shoppers who are already acclimated to eating healthy, but Cheifetz says it has taken off with mainstream shoppers who “want to drink soda but know it is not as good for them. We reach the spectrum of people who are health conscious.”
The brand’s newest line, Cúrate takes the segment up a notch with bolder flavors and a new size can.
Seltzer is also getting a flavor-lift. Vintage Seltzer, a national brand popular in the Northeast, made by Cott Beverages, has introduced limited edition flavors to help bring excitement to the segment.
“Last summer we had some successful limited edition flavors, so much so that one will be permanent—Watermelon,” says Keith Mohler, brand marketing manager for Cott Beverages, based in Tampa, Fla., adding that the limited editions act as a test route for potentially permanent flavors.
This summer, Cott looked somewhere new for inspiration—behind the bar. The company teamed up with mixologists to develop three high-class limited edition Seltzers that mimic popular alcohol beverages—Whiskey Sour, Peach Bellini and Mint Mojito. The bottles will come with a black foil label featuring vintage graphics that mimic old-style cocktails and can be used as a mixer with alcohol or alone.
“The idea behind it is ‘let Vintage transport you to a new place this summer.’ Peach Bellini will take you to a café in Paris and the Mint Mojito makes you think of sitting on a beach,” says Mohler.
The company is also kicking off a line of sparkling water, “which has a completely different formulation than its seltzer,” says Mohler, adding that the company is making a point to clarify to consumers that it is not just Seltzer in a new bottle. The line will include flavors like Coconut, Pink Grapefruit and Cucumber Melon.
Hold the sugar
Now more than ever, bottled juice has some serious competition. Cold-pressed beverages and freshly made fruit and vegetable drinks have been gaining momentum as consumers’ minds turn towards nutrition and fresh. Shelf-stable beverage companies have to step up and remind consumers that they offer nutritional value—without the short shelf life.
Juice companies are mixing up the juice category with more on-trend fruits and less of the unhealthy stuff. Old Orchards Brands, for instance, has a company-wide initiative to develop and launch products aimed at calorie- and sugar-reduction. Kevin Miller, vice president of marketing for the Sparta, Mich.-based company, says high fructose corn syrup has been eliminated from Old Orchards entire product line, and they do not use artificial flavors, colors or preservatives.
“There are a lot of people looking for beverages with a lower caloric value,” says Miller, adding that the brand’s Healthy Balance line, which has been around for about 10 years, appeals to people looking to cut sugar and carbohydrates, as well as diabetics.
One way that the company adapts its products to have a better-for-you profile is by exploring alternative sweeteners. “We are always looking at different sweetener trends and what is emerging,” Miller says. “Right now there is a shift toward natural sweeteners.” The company uses a branded version of stevia in its Cranberry Naturals line.
With product launches like the Cranberry Naturals line (available in six flavors and sweetened with Truvia) and Healthy Balance Cherry (sweetened with Splenda), Old Orchards Brands is merging “better-for-you” with growing flavor trends. Other offerings are focused on unique flavors, like the company’s Very Cherre product line and its Limited Edition Holiday collection—Apple Pie and Cranberry Relish.
A veteran of the better-for-you juice segment is also honing in on flavor trends. The Campbell Co.’s V8 brand recently brought nearly 20 new items to market, say company officials. They attribute a lot of current flavor trends to changing demographics and the growing influence of the millennial generation and multicultural consumers.
“This generation has a lot of affinity for taste adventure,” says Bill Curtis, brand manager for V8, owned by Camden, N.J.-based Campbell Soup Co. “So we launched varieties like Bloody Mary, V-Fusion Black Cherry Apple and Pineapple Strawberry.”
Get them young
What appeals to a kid more than a cold glass of apple juice? A container of apple juice featuring their favorite TV character or superhero.
Good2Grow’s recently rebranded line of kids juices offer just that. The 4- and 6-ounce all-natural juices have spill-proof toppers shaped with popular kids’ characters that can be reused with the company’s refill juice packs.
Helping moms give their kids happier and healthier lives is the company’s mission, says Carl Sweat, chief marketing and commercials officer, for the Atlanta-based company. “We learned that if you put something healthy inside a package that kids enjoy and want to play with they will drink healthier products.”
The spill-proof topper also restricts the amount of juice a child can drink at once, and the different sizes offer built-in portion control, says Sweat.
The 6-ounce containers feature characters aimed at older children, while the 4-ounce have those faces younger children recognize. The company partners with companies like Disney and Nickelodeon to license characters at their peak of popularity.
Slim down while on the town
A night out on the town does not mean a night off from healthy habits.
Officials at Social Blends say they have the answer for the woman in search of an alcoholic beverage that does not tack on calories: Slim Lizzy. Introduced last year, the wine-based beverage, made from fermented orange peels, has only 10 calories per ounce and 5% alcohol.
“We think of ourselves as the slim social cocktail for woman,” says Nicole Saj, director, on-premise for Social Blends, based in Westmont, Ill. “It is something women can drink like a beer, in a pint glass over ice, but does not have the calories that beer does. It is gluten-free and non-carbonated. Those were the things that we wanted to stay true to when we were looking at the formulation.”
Margarita and Cosmo are the staple flavors, with a seasonal variety debuting this fall. Slim Lizzy is available in a keg for on-premise sales, in 750ml bottles and 8-ounce cans.
According to officials, women have been a neglected demographic, and this is specifically for women and focuses on all the touchpoints important to them.
“We are excited about the future of Slim Lizzy’s,” says Sean Mc Girr, CEO and founder. “We are creating great cocktails for women based on what they have told us they want in a terrific alcohol drink—low calories, a great taste and no bloat. Women want to be able to enjoy cocktails at home or when they are out on the town and our variety of package options gives them that opportunity.”
The company is planning a nationwide launch in early 2015.