If 2010 was any indication of a sluggish future for functional beverages, 2011 is proof of that reality. For several reasons—reduced consumer spending, market saturation, increased consumer skepticism, a terrible economy, lack of new ideas—the market has reached a new low in terms of product introductions and market activity, particularly among the “Big Three”—Coca-Cola, PepsiCo and Dr. Pepper Snapple Group. The latter had nothing new to add to the category this year.
If anything, according to Garima Goel Lal, beverage analyst with Chicago, IL-based Mintel, the market remains flat. Further, she said, “In terms of functional claims, there hasn’t been anything remarkable.”
Still, the market is making some gains in categories like energy beverages. In fact, according to Packaged Facts, energy drinks are keeping the functional beverage category afloat. “Sales of energy drinks—along with the performance of ready-to-drink (RTD) teas and sports drinks—have helped the functional and natural RTD beverage market grow to $23 billion,” Packaged Facts stated in its latest report, “Functional and Natural Ready-to-Drink Beverages in the U.S.”
During the height of the recession between 2008 and 2009, Packaged Facts said functional beverages—including energy drinks, sports drinks and functional waters; ready-to-drink tea and coffee; and yogurt drinks and smoothies—flat-lined in sales growth, keeping with an overall slump in the beverage market due to the stagnant economy and reduced consumer spending.
“Nevertheless, by 2010 energy drinks/shots, sports drinks, RTD teas, and fruit/vegetable smoothies all showed renewed dynamism, signaling the onset of a new cycle of sales growth for the market,” the market research firm said. “All had gains of at least 5%, with energy drinks/shots experiencing the highest gain at 10%.”
A ‘Natural’ Progression
Most beverage experts agree the nutraceutical beverage market is currently awash in “me-too” energy beverages and shots, as well as coconut water-based elixirs and Vitaminwater knockoffs. Never before has the category been so barren when it comes to new innovations.
As a result, companies have been hard at work, trimming product lines and simplifying formulations and product labels, especially from a “natural” standpoint. The latter is a trend analysts predict will rake in huge sales down the road.
Far outpacing growth in conventional groceries, U.S. retail sales of natural and organic foods and beverages rose to nearly $39 billion in 2010, an increase of 9% over the previous year, and 63% higher than sales five years earlier, according to "Natural and Organic Foods and Beverages in the U.S., 3rd Edition" a report released by Packaged Facts in June.
And the market research firm predicts even greater growth during the next several years. “Packaged Facts projects 2011 will serve as a jump-start for the market as sales ultimately increase by a dramatic 45% by the end of the year. Overall projections are that the market will grow by 103% between 2010 and 2015, with total annual sales exceeding $78 billion in 2015.”
Ms. Goel Lal of Mintel said consumers are indeed interested in natural ingredients, and beverages free from artificial ingredients. As a result, she explained, “This impacts the functional beverage market in a big way because these consumers are concerned about their health, so if a product is not all-natural, then it automatically undermines the functional health attributes of the product.”
Recent analysis by Netherlands-based Innova Market Insights offered a similar view. “The most popular health-related claims recorded by Innova Market Insights during 2010 were undoubtedly concerned with naturalness and freedom from artificial additives and preservatives. This encompassed a wide range of products, led by juices and water, which tend to be seen as inherently fairly natural.”
The more traditional health-related area of low-calorie or diet drinks also continued to receive considerable attention, Innova said, with reduced sugar, sugar-free and no-added-sugar lines taking second place overall in terms of health claims. The next place, but at a distance, went to drinks marketed as containing antioxidants.
Not surprisingly, the natural trend has spilled over to several beverage categories, notably energy beverages, where players are looking to capitalize on the inherent energizing benefits of fruits or natural sources of caffeine. A case in point is Nestle’s arrangement with Jamba juice, which culminated in the launch of three new energy beverages in March.
According to U.K.-based New Nutrition Business (NNB), “Creating an all-natural energy drink proposition is the holy grail of many beverage companies. Without the co-branding with Jamba—a brand with significant credibility among the target market of young, mostly female consumers—Nestle could not have had any hope of launching such a product, since its brand has no credibility in categories such as these.”
Moving away from energy, the growth in relaxation beverages—which rose to popularity last year on the heels of several launches—has significantly slowed. While analysts believe consumer demand is there for foods and beverages that can provide stress relief, products have not yet delivered in a way that has garnered mainstream acceptance. “The market is still very small and not growing exponentially like energy beverages; it’s still dominated by small players and limited distribution. Further, none of the major players have shown interest in the relaxation trend, especially as products continue to espouse negative connotations.”
With an eye squarely on misleading claims and products that run afoul of regulations, FDA will eventually get to these types of beverages too, Ms. Goel Lal concluded.
Playing in the Sports & Energy Drinks Arena
Innova says sports drinks, once the preserve of sportsmen and athletes for use before, during and after exercise, have started to be used for refreshment by a range of consumers on a more casual basis, while energy drinks have an even wider spectrum of use, varying from the drink of choice for night clubbers to an aid for concentration when working long hours or driving long distances.
According to Mintel’s Ms. Goel Lal, the energy drink category remains a top contender in terms of growth, holding second place overall in terms of functional beverages. “Energy drinks attained the highest growth in 2010 across all categories, and is the second largest segment overall, next to juices, which have been declining,” she said. “What we are noticing is that the category has continued to perform well during the recession—it’s retaining its consumer base very well. However, what we are not seeing is an increase in the consumer base at this time.” Consequently, she believes the market will probably reach its peak during the next five years, especially as the rate of adding new consumers slows down.
The Innova Database recorded well over 800 global sports and energy drink launches in 2010. By comparison, the overall number of sports and energy drink launches recorded on the Innova Database peaked at more than 1400 in 2005, as the energy drinks market really started to take off—equivalent to more than 13% of total soft drinks launches recorded for that year.
“As the market has matured,” the market researcher said, “the number of launches has fallen steadily, but remained fairly consistent in 2009 and 2010 with over 820 launches each year, equivalent to between 7% and 8% of total soft drinks launches recorded in each of those years.”
In terms of growth from a geographic standpoint, Innova said while the U.S. and Asia lead the sports and energy drinks markets in volume and value terms, Europe is seeing the highest levels of new product activity, reflecting the large number of countries involved, as well as many of the strongest growth rates.
The Power of Protein
To many industry pundits, protein represents a relatively untapped opportunity as far as beverages go. Once the domain of bodybuilders, companies are realizing that other consumer groups such as seniors, for example, could benefit from a daily injection of protein too. In response, there have been several moves to create protein-based beverages, using formats previously considered off-limits to the macronutrient—like clear beverages and juice.
“Protein beverages…have moved more into the mainstream sports and energy market in recent years, with the development of RTD products, taking the sector away from its traditional format of powder mixes and its traditional target of bodybuilders,” Innova explained. “The drinks are now starting to be targeted at consumers looking for basic nutrients, such as protein and fiber, for weight management and/or generally maintaining a healthy lifestyle, offering a convenient on-the-go snack or meal replacement.”
While the market is still undeveloped, Innova said there are high levels of product activity, particularly in the U.S., where PepsiCo’s mainstream Gatorade now features high-protein recovery options in its G Series and G Series Pro portfolios. “Other more mainstream products include Bolthouse Farms’ Perfectly Protein and Protein Plus ranges, while specialist companies include Abbott with its Ensure Muscle Health range,” the market researcher noted.
Nevertheless, NNB believes beverages may not be the best format for delivering protein. “Most companies have focused on bars and beverages to deliver a high dose of protein, but these are not formats that have a strong association in most people’s minds with protein. They are still a new and unfamiliar way of getting protein and this has been an important factor in the slow development of the market.”
Hit Me With Your Best Shot
Innova contends that while overall sales of energy drinks now appear to be stabilizing in more established markets, the key growth area in recent years has been that of energy shots, although it remains largely focused on the U.S. market, where sales are reported to have risen 37% to $952 million in 2010.
Additionally, the market researcher said sales are forecast to more than double by 2015. “Pioneer 5-Hour Energy continues to lead the market by a wide margin, but Red Bull is now in second place, ahead of another specialist 6-Hour Power, then Monster Hitman,” it said.
As the market has developed, Innova points out that the range of products available has broadened and now includes sugar-free, caffeine-free, extra-strength, all-natural and organic products. In addition to the traditional caffeine, taurine, B-vitamins, herbs, antioxidants and amino acids, emerging ingredients include juice and superfruit extracts, resveratrol, protein, ribose and omega 3 fatty acids.
And shots aren’t just for the younger crowd anymore. According to a June 2 Wall Street Journal article, energy shot leader 5-Hour Energy is tapping the Baby Boomer segment to generate additional sales. In fact, the company has started working with AARP, the aging persons advocacy group, to advertise and promote its product. Moreover, it made an appearance at last October’s annual AARP convention, and started running full page ads in the AARP bulletin, which goes to 22 million households.
(The following is a snapshot of product activity in the functional beverage sector during the last year.)
The last year has been all about reducing calories, artificial additives and sugar for PepsiCo, Purchase, NY. Accordingly, it introduced Pepsi NEXT for consumers seeking the rich taste of full-calorie cola but have decreased their consumption in order to reduce the sugar in their diet. The company claims this product delivers real cola flavor and 60% less sugar.
Under the Tropicana brand, PepsiCo launched Trop50 in Lemonade and Raspberry Lemonade flavors. These new varieties deliver 50% less sugar and calories, and no artificial sweeteners.
According to Innova Market Insights, PepsiCo continues to perform well with Gatorade, which is the number five soft drinks brand in the U.S. overall after Coca-Cola, Pepsi, Mountain Dew and Dr Pepper. But it has seen difficulties in recent years, the market research firm said, with volume suffering a double-digit decline in 2009 as it began a brand revamp to move it from a sports drink maker to a sports performance innovation positioning with its G Series addressing pre-, during- and post-performance requirements.
The G Series includes the Perform 02 rebranded identity of Gatorade Thirst Quencher and low calorie G2, as well as Perform 01 performance gels and Recover 03 protein enhanced sports beverages. The company also launched G Series Pro, an elite athlete range using the same numbering system but with a Prime prefix. G Natural and G2 Natural were also introduced for those looking for the benefits of a sports drink, but with all-natural ingredients.
Lipton Iced Tea, a product of the Pepsi-Lipton Tea Partnership, has launched 100% Natural Lipton Iced Tea, a new line of beverages with a simple, all-natural ingredient list. New 100% Natural Lipton Iced Tea became available in April in four flavors—Green Tea with Citrus, Iced Tea with Lemon, Iced Tea with Blueberry Pomegranate and Green Tea with Passionfruit Mango. The diet portfolio also expanded to include Diet Green Tea with Watermelon.
PepsiCo’s SoBe business launched SoBe Lifewater with Electrolytes in January. It has zero calories, contains a range of vitamins and minerals and comes in MacIntosh Apple Cherry and Strawberry Kiwi Lemonade flavors.
PepsiCo’s IZZE brand also added Sparkling Watermelon to its product line-up. It is low-calorie and contains natural ingredients.
In partnership with GNC, Pittsburgh, PA, PepsiCo has rolled out Phenom, a line of fortified coconut water products. It is low in fat and calories and is a “good source” of vitamin C and potassium. The products are available exclusively at GNC locations, with a wider release planned for later this year.
In other news, GNC has formed a joint venture with Shadow Beverages, which will develop, produce, market and sell drinks under the GNC Live Well trademark for sale across a wide range of retail outlets. These products will be developed and produced in coordination with GNC and will continue to focus on the strength of the GNC brand. It is anticipated that the first products developed under the agreement will go into distribution in the third quarter of 2011.
Perhaps the biggest news to hit the functional beverage world in the last year was Atlanta, GA-based Coca-Cola’s acquisition of Honest Tea in the beginning of March. The deal followed a 40% stake Coke took in the company in 2008. Since then sales have tripled as a result of expanded distribution. Honest Tea, a leading organic bottled tea company, will continue to be based out of Bethesda, MD. In order to retain its entrepreneurial culture, it will operate as a standalone business under current “TeaEO” Seth Goldman, his management team and current Honest Tea employees.
Shortly after sealing the Coke deal, Honest Tea unveiled CocoaNova, a line of low-calorie, brewed cocoa beverages. Honest CocoaNova is a brewed cacao infusion that contains antioxidants and theobromine naturally found in dark chocolate. Made with certified organic and fair trade certified cacao beans, the main ingredient in chocolate, the products contain 50 calories per 10-oz. bottle, as well as 50 mg of theobromine. Honest CocoaNova is available in three varieties: Mint Cacao, Mocha Cacao and Cherry Cacao. These innovations were made possible in close cooperation with Hershey.
In Coca-Cola’s Vitaminwater line, a new variety called Stur-D was unveiled last October. It blends blue agave, passionfruit and citrus flavors, and according to the company, is the very first enhanced water and juice beverage to combine vitamin D, calcium and vitamin C. Each 8-oz. serving contains 10% of the Daily Value (DV) for vitamin D and calcium, 120% of the DV for vitamin C and 40% of the DV of four essential B vitamins (B3, B5, B6, B12). Vitaminwater stur-D is also the first nationally available enhanced water and juice beverage with a blue color that’s derived solely from fruit.
On the Odwalla side of the business, Heart Health Superfood was introduced last September. This new variety contains .4 grams of plant sterols per 8-oz. serving, along with a mix of juices and purées: apple, peach, banana and strawberry. Then Odwalla says it adds a touch of tasty purple boysenberry puree and Concord grape juice.
FUZE, part of Coke’s glacéau business unit, has relaunched its line of flavored beverages. Each of the 12 flavors contains an “excellent source” of antioxidant vitamins A, C and E. FUZE is available in seven base flavor varieties (Banana Colada, Peach Mango, Strawberry Guava, Orange Mango, Mixed Berry, Black & Green Tea and Green Tea) and five FUZE Slenderize flavor varieties (Tropical Punch, Strawberry Melon, Blueberry Raspberry, Cranberry Raspberry and Pomegranate Acai Berry). Slenderize varieties contain Super Citrimax, L-carnitine and chromium.
Campbell Soup Company, Camden, NJ, has added two new varieties to its V8 V-Fusion vegetable and fruit juice: Concord Grape Raspberry and Concord Grape Raspberry Light. Each 8-oz. serving provides one full serving of vegetables and one full serving of fruit.
It also expanded its V8 V-Fusion line of beverages with new V8 V-Fusion + Tea juice. The product provides a combined serving of vegetables and fruit (1/4 cup vegetables and 1/4 cup of fruit) in each 8-oz. serving, along with antioxidants from natural green tea. It is available in three flavors: Raspberry Green Tea, Pomegranate Green Tea and Pineapple Mango Green Tea.
Most recently, Campbell’s entered the energy drink category with two new products: V8 V-Fusion + Energy drinks and V8 Energy Shots. V8 V-Fusion + Energy drinks combine vegetable and fruit juices and natural green tea. Each single-serving can contains 80 mg of caffeine, comparable to the leading energy drink on the market, the company says. The drinks are 50 calories, provide an “excellent source” of B vitamins and do not contain added sugar.
V8 Energy Shots feature 100% vegetable and fruit juices combined with green tea extract, which provides natural caffeine comparable to an 8-oz. cup of the leading premium coffee. Each V8 Energy Shot also provides an “excellent source” of antioxidant vitamins A, C and E, along with vitamins B1, B2, B3, B6 and B12, which support metabolism.
After making an initial investment of $15.6 million in 2009, Nestle Waters North America, Stamford, CT, completed its acquisition of Sweet Leaf Tea Company, Austin, TX in May. The deal offers Sweet Leaf far greater access to Nestlé’s distribution channels as well as its expertise in supply chain management and a powerful sales and marketing force. The Sweet Leaf and Tradewinds brands’ combined sales totaled more than $53 million in 2010.
In other news, Jamba Juice announced in March that in addition to the Nestlé USA retail launch in the Northeast, which began in February 2011, the company will begin selling Nestlé Jamba All-Natural Energy Drinks in almost 600 Jamba Juice locations across the U.S. The Nestlé Jamba All-Natural Energy Drinks are available in three fruit flavors: Strawberry Banana, Crisp Apple and Pomegranate Blueberry. The energy drinks contain no artificial preservatives, flavors or colors, 0 grams of trans fat and no high fructose corn syrup. Additionally, each 8.4-oz. can contains 70% real fruit juice, 80 mg of caffeine derived from natural sources, is fat free and 90 calories per serving.
Jamba has also launched Fruit & Veggie Smoothies, which contain three servings of fruits and vegetables in each 16-oz. offering. Products are available in three flavors: Berry UpBEET, Apple ‘n Greens and Orange Carrot Karma. Each contains less than 250 calories and represents an “excellent source” of vitamins A and C. Berry UpBEET contains strawberries, blueberries, carrots, beets, broccoli and lettuce. Apple ‘n Greens blends apple-strawberry juice with dark leafy green vegetables, carrots and lettuce, as well as spirulina, peaches, mangos and bananas. Orange Carrot Karma contains carrot juice, orange juice, mangos, bananas and ice.
Also released recently, Jamba Probiotic Fruit and Yogurt Blends contain more than 500 million active probiotic cultures per serving from Jamba’s Probiotic Boost. The blends are available in three flavors: Vibrant Blueberry, Strawberries Alive and Thrivin’ Mango. All Jamba Juice Probiotic Fruit and Yogurt Blends are made with whole fruits and probiotics and are an “excellent source” of vitamin C.
Last but not least, Jamba has launched Fruit Refreshers, beverages that contain coconut water and are an “excellent source” of vitamin C. Offering essential electrolytes and the natural hydration benefits of coconut water, the beverages are available in Purely Pineapple, Strawberry Lemonade and Tropical Mango flavors.
AriZona Beverage Company, Woodbury, NY, has launched AriZona Sports, a line of 100% natural isotonic sports drinks. Products include a proprietary formula that contains pure cane sugar and a balanced concentration of salts and minerals designed for rapid absorption. Each flavor—Fruit Punch, Lemon-Lime and Orange—contains electrolytes, including sodium, potassium chloride and sodium citrate. AriZona Sports contains no artificial colors or flavors and no preservatives. Products also contain 50 calories per 8-oz. serving.
AgroLabs, Hillside, NJ, has added Coconut Water Recovery to its line of shots. The 3-oz. shot hydrates, replenishes and nourishes the body before or after exercise, and whenever the body feels tired, according to the company. It contains young coconut water concentrate, potassium citrate, guarana seed extract, green tea extract, vitamin B6 and vitamin B12.
Genesis Today, Austin, TX, has launched Pure Energy organic shots, which deliver a 100% all-natural energy boost harnessing the power of two potent superfoods—acai and goji. Pure Energy merges these superfoods with naturally-occurring sources of caffeine like dried, fermented tea leaves, and essential vitamins in a 2-oz. shot. They come in Organic Acai Berry and Organic Goji Berry flavors.
Abbott Nutrition, Abbott Park, IL, has introduced two new nutrition shakes: Ensure Muscle Health and Ensure Clinical Strength, which contain the proprietary ingredient, Revigor, a source of HMB (beta-hydroxy-beta-methylbutyrate, an amino-acid metabolite), as well as 13 grams of protein. Ensure Clinical Strength also contains Immune Balance, a blend of prebiotic fiber.
Xango, LLC, Lehi, UT, has released Xango 3Sixty5, a liquid dietary supplement that contains Active Defense Complex. The product is designed to shield the body from harmful microorganisms, environmental impurities and oxidative stresses, according to the company. Active Defense Complex contains bioflavonoids, reseveratrol, tocotrienols and a proprietary polysaccharide called Primactive.
Looking to promote rest and restoration, Vemma Nutrition Company, Scottsdale, AZ, has added Vemma PM to its line of liquid supplement products. It contains antioxidants from mangosteen along with vitamins and minerals.
HealthGuard Wellness, LLC, has launched Be Happy, a 2-oz. shot that contains amino acids and antioxidants, including Chocomine (a patented proprietary cocoa extract) and L-theanine. The product is designed to promote calm and focus, according to the company. It is available in Chocolate Cherry flavor.
U.K. retailer Marks & Spencer has launched a new Super Juice designed to lower cholesterol. The product contains 0.75 grams of PromOat oat beta-glucan soluble fiber per 300 ml serving, providing consumers with 25% of the 3 gram daily intake of oat beta-glucan recommended by FDA and the European Food Safety Authority for the reduction of cholesterol and subsequent maintenance of healthy cholesterol levels. The juice is available in Red Grape, Blueberry and Blackcurrant flavors.
ViVa Beverages, Southfield, MI, has launched Quick Beverages Sleep and Quick Beverages Relax, 2-oz. liquid shots that contain a proprietary blend of all-natural botanical ingredients, including melatonin, GABA, valerian root, lemon balm, chamomile and passionflower. Available in Berry flavor, the products are zero-calorie and sugar-free.
Also looking to get in on the coconut water craze, NextFoods, Boulder, CO, has added Probiotic Coconut Water, as well as SuperGreen Live and StraightShot to its GoodBelly line of probiotic fruit drinks, which contain the patented Lp299v strain. GoodBelly Probiotic Coconut Water contains 20 billion live and active probiotic cultures and 80 calories per serving. GoodBelly SuperGreen Live contains a blend of antioxidants, vitamins and mineral-rich organic ingredients like spinach, spirulina, chlorella, parsley, alfalfa grass and oat grass. GoodBelly StraightShot contains 20 billion live and active probiotic cultures per 2.7-oz. shot.
The FRS Company, Foster City, CA, has added Healthy Protein and Healthy Energy formulas to its FRS line of RTD products. Both products contain the patented FRS quercetin formula. Healthy Protein debuted in two flavors: Orange Cream and Blackberry Acai. Each contains 25 grams of whey protein, 7 grams of dietary fiber and essential vitamins. FRS Healthy Energy products contain 325 mg of quercetin, 85 mg of green tea catechins, seven essential vitamins and 90 calories. They are offered in Cherry Limeade and Wild Berry flavors, which are formulated with organic sugar and stevia. Peach Mango, a low-calorie flavor option at 20-calories, is available with sucralose.
Eternal Energy, Brighton, MI, has released Eternal Energy Shot, a 2-oz. energy supplement intended to increase energy, focus and alertness. The product’s formula features 24 vitamins, minerals, amino acids and antioxidants. It is available in three flavors: Tropical Punch, Wild Berry and Pomegranate.
Juice behemoth Ocean Spray, Lakeville-Middleboro, MA, has launched Sparkling Juice Drinks, which contain 70% real fruit juice and no added sugar. Available in Cranberry and Pomegranate Blueberry, the beverages contain 90 calories per serving. One can is a “good source” of vitamin C and equals a full serving of fruit, according to the company. Diet Ocean Spray Sparkling Juice Drinks contain 10 calories per serving.
Prometheus Springs, New York, NY, has expanded its line of capsaicin-spiced beverages to include three new flavors: Mango Chili, Citrus Cayenne and Spicy Pear. Each contains a proprietary blend of chili pepper extracts.
Zola, San Francisco, CA, has added Acai with Pomegranate, available in 12-oz. and 32-oz. varieties, and Acai with Blueberry, available in 32-oz. value size, to its line of juices. The company has also launched Brazilian Caja with Mango Juice in Canada.
In other news, the company is the force behind the launch of Daily Superfruit Shots at Jamba stores nationwide. They are available in three flavors: Acai Antioxidant Booster, which helps fight free radicals; Cupuacu + Mango Vitality Booster, which boosts vitality and endurance; and Acerola + Caja Vitamin C Booster, which helps support the immune system.
WhiteWave Foods, Broomfield, CO, has introduced Silk Pure Coconut milk, which contains no dairy, lactose or cholesterol. Silk Pure Coconut is calcium-fortified, and is an “excellent source” of vitamin D and vegetarian-friendly vitamin B12. It is available in two low-calorie flavors: Original and Vanilla, with 80 and 90 calories per serving, respectively.
Hoping to cash in on the facebook phenomenon, new beverage entrant facedrink LLC, San Luis Obispo, CA, has unveiled a 2.5-oz. liquid energy shot of the same name, which it claims will give consumers “social energy"—referring to the particular energy needed to manage a social life. facedrink is free of sugar, carbohydrates and only has three calories. It contains a blend of natural fruit flavors, taurine and caffeine, along with green tea and guarana.
Cincinnati, OH-based Bossa Nova has added Organic Acai Pomegranate to its line of superfruit juice beverages. In other news, all five varieties of Bossa Nova’s acai juice beverages received organic certification from Quality Assurance International (QAI) in December last year.
Hype Energy, New Haven, CT, has added Hype Energy Organic to its line of energy drinks. The lightly carbonated beverage contains apple juice, aloe vera, tea and guarana extract, as well as natural flavors, vitamins and antioxidants.
U.K.-based Shotz Health has launched Big Shotz multivitamin and mineral juice shot, which contains MEG-3 brand omega 3 EPA/DHA. Each 120 ml bottle of Big Shotz contains 179 mg of omega 3s, as well as 11 vitamins, six minerals, prebiotics, antioxidants and ginseng. The product is available in Mango and Passionfruit flavors.
Brands continue to fight for market share in this exploding category.
According to U.K.-based New Nutrition Business (NNB), the coconut water category has grown about $200 million a year in sales in the U.S., “a staggering 400% increase over its estimated size just a year ago.”
NNB says the “Big Three” of the American coconut water market—Vita Coco, Zico and O.N.E.—also continue to grow. And the category should remain healthy for some time, according to beverage experts.
Tom Pirko, a beverage consultant who was quoted in the March issue of NNB, said coconut water products “have succeeded on their own merits. There’s always an ongoing search by consumers for something new and different and exciting and well-packaged. Coconut water has an inherently good image—people smile when you talk about it.”
The battle being waged at retail is a fierce one, filled with complex partnerships, unique formulations and new positionings. In terms of the former, Pepsi seems to have the most deals cooking—it has a 50% stake in O.N.E., its own Naked Juice version of coconut water, and a partnership with GNC to create and sell a product line called Phenom, consisting of fortified coconut water products. The Phenom joint venture follows the successful retail launch of PepsiCo’s Gatorade G Series Pro at GNC stores in May 2010.
Vita Coco, one of the original brands in the category, maintains a 62% share of the market—far ahead of other players in the category—as well as a significant minority stake held by InBev, NNB reported in its March issue. It also maintains distribution agreements with Dr. Pepper Snapple Group and GNC. Recently, it added heavy-hitter Alex Rodriguez of the New York Yankees to its celebrity fan base. He will begin appearing in Vita Coco ads this July.
As for Zico, Coca-Cola showed its interest by taking a minority stake (less than 20%) in the company in 2009. It also counts basketball great Kevin Garnett of the Boston Celtics among its celebrity athlete endorsers.
Beyond these major players, there are several others vying for a piece of the coconut water pie. And if they’re not launching their own coconut water products, they’re using it as the main attraction in several new beverage formulations.