Rebecca Wright10.01.06
With the constant blurring of the lines in enhanced beverages these days, drawing a picture of the functional beverage market in 2006 is not an easy task. According to SPINS, a market research and consulting firm for the natural products industry based in San Francisco, CA, the functional beverage sector is currently pulling in $2.46 billion in sales in the natural and conventional channels combined (excluding Wal-Mart sales).
The functional beverage category, which includes isotonics (beverages that rehydrate), lifestyle/wellness drinks, meal replacements and medicinal teas, grew a phenomenal 23% over the last year. A lot of that growth took place in the conventional channel, which alone grew 24%, according to David Browne, director of content development for SPINS. The natural channel, he said, grew 14%. "The general theme here is products that have become successful in the natural channel are migrating over to the conventional channel," he explained.
The specific segments doing particularly well are isotonics, which grew 28% over the last year to over $5 million, and functional/lifestyle wellness beverages, which grew a whopping 39% over the last year to nearly $1.7 billion.
The functional beverage market has become, at best, complicated, as companies continue to break tradition and merge standard beverage categories. With various beverage categories literally spilling into each other, experts have noticed the rapid hybridization taking over. These new hybrids include things like teas combined with fruit juice and nutrients, and sodas enhanced with ingredients like green tea.
Andrea Foote, editor-in-chief, Beverage World Magazine, New York, NY, commented on the hybridization trend. "There has been a lot of crossover during the last six months where you are seeing 'functionality' appear in a wider range of beverages. Everyone used to look at functional drinks as a separate category but now it is difficult to do that with this 'nutraceutical hybridization' taking place in the market. At this point I can't think of any category that hasn't been touched from a functional standpoint," she said, adding, "And consumers have really latched on to this idea of beverages being a vehicle for enhanced nutrition."
SPINS' Mr. Browne agreed. "A lot of companies are coming out with products that are not quite water and not quite carbonated beverages. This trendhas been challenging for our market categorization, in fact, because we have very clear rules and specific places beverages should be," he said.
Although the functional beverage category is indeed growing by leaps and bounds, there is surprisingly not a lot of true innovation taking place. The market seems to be growing by virtue of "me too" products, especially in the energy drink segment, and as a result of consumers simply replacing soft drinks with functional beverages. "Consumers have been moving to functional beverages for quite some time because they are interested in alternatives, so a lot of the recent growth can be attributed to the switch consumers are making in the beverages they consume," said Mr. Browne.
The nature of functional beverage success may also be channel-specific, Mr. Browne suggested. "The natural and conventional channels are very distinct and so are their consumers," he said,"What works in one channel may not lend itself well to the other. Currently, pomegranate, acai and kombucha (a fermented drink based on the kombucha mushroom) are still really popular in the natural channel, in addition to green nutrients like spirulina and algae."
He continued, "Some of these products, however, probably wouldn't fare well in the conventional channel. A good example is kombucha, which has been wildly successful in the natural channel, but its success might be limited to this channel simply because of its taste."
In mainstream channels, energy beverages seem to be driving the growth there, along with teas and enhanced waters. "The energy drink category continues to explode," Ms. Foote said. "The water category, which used to be so simple, has become more complicated. One question to be raised here is when you add so many functional ingredients to water can you still call it water? Teas is another category that has really benefited from the health and wellness boom, especially because of its reputation of being inherently good for you. Now tea brands are adding other nutrients like vitamins and minerals to bolster their already healthy image."
One thing the functional beverage market can be thankful for is the 2005 sales slip in the soda sector. For the first time in 20 years, according to Beverage Marketing Corporation, New York, NY, the soda segment posted negative gains, while the functional beverage sector continued to grow in double digits. But the soft drink companies are not letting go easily, as they continue to hunt for nutrients with which they can lace their beverages, as well as other functional beverages to strengthen their product portfolios. Ms. Foote believes if innovation is where the big players are spending most of their time and money, then the functional beverage sector is where it's at. "A few years ago it was about flavor and today it's about functionality," she said.
For now, a lot of companies have chosen to float their functional beverages somewhere between health and refreshment. But for those approaching more of a medicinal positioning, will there eventually be some kind of health benefit backlash? "As popular as this category has become, there are still some questions with regard to efficacy," Ms. Foote said. "I wonder if there will be a point at which consumers really start to ask how much efficacy is really behind some of these things. They might start to wonder, for example, if functional beverages are the most appropriate vehicles for their nutrition."
Mr. Browne offered a different perspective. "I tend to think with mainstream functional beverages that consumers understand most of these products are not based on medical science. On the other hand, when you look at something like POM Wonderful, this is a company that went to great lengths not only to make their message interesting and entertaining, but also to base the health benefits on scientific evidence."
Unfortunately, some backlash might already be on the horizon. According to Loren Israelsen, executive director, Utah Natural Products Alliance (UNPA), Salt Lake City, UT, an FDA official announced in late September that the agency has decided to undertake the development of a new policy to review the regulatory status of beverages labeled and sold as dietary supplements. "For the last year, FDA has hinted that it has been thinking about this and has now apparently decided to push the issue fairly aggressively," he said. "The implications of this are very significant. Many beverage products are labeled and sold as dietary supplements in order to enjoy the benefits provided by the Dietary Supplement Health & Education Act (DSHEA). One of FDA's principal tools to limit the scope and value of DSHEA is to redefine the term 'dietary supplement.'"
Should FDA attempt to cut out beverage products, Mr. Israelsen says this would have a significant impact on the functional beverage market-and certainly would create a chilling effect on this fast-growing sector. "We believe the central issues will revolve around FDA's view that dietary supplements do not include products represented for use as conventional foods or as a sole item of a meal or the diet. This language is part of the definition section of DSHEA," he explained. "What remains open for discussion is whether FDA believes a beverage becomes a food simply because of its size or appearance, or if it is how the product is positioned and which claims are made with respect to such products."
So what are consumers truly looking for in functional beverages? What grabs their attention-health benefits/functionality or the ingredients?
When you look at combined channel data, Mr. Browne says perceived health benefits are driving much of the growth versus ingredients. "Many consumers, for example, would be hard pressed to name some of the ingredients in these beverages, they just know what health effects to expect," he said. "But again, it really comes down to the consumers in each channel. Consumers in the natural channel tend to be more educated label readers. Certainly if you purchase the kombucha product knowing what it tastes like, you are knowledgeable enough to know that the health benefits outweigh any tastes benefits."
From a company standpoint, Mr. Browne said the key in the natural channel is to seek out ingredients that are peripheral, try to get some IP (intellectual property) around them and garner a lot of distribution. "I think there is some truth to creating products that don't necessarily taste smooth, that they have a medicinal character to them because there is a perceived health benefit around that as well," he said. "For the future, I think you will see some ingredient innovation, especially new ingredients or the promotion of ingredients that were previously not popular. They will start in the natural channel and then migrate to the conventional channel."
Another trend to watch for, but that is still in its infancy, is the rise in beauty beverages. According to Ms. Foote, these types of beverages have real potential to gather a substantial following. "This category is really in an early stage, but it has a lot of promise. I think consumers are becoming more open to the idea of beauty beverages, similar to what happened with probiotics," she said. "Ten years ago probiotics were virtually unknown in the U.S., but now consumers are really embracing the concept of consuming beneficial bacteria because they know there is a true impact on health. The same goes for these beauty beverages that contain nutrients that can have a beneficial impact on appearance. I definitely think you will see more of these types of beverages. But as was the case with probiotics, companies will need to educate consumers on the connection between health and beauty in beverage form."
This year's beverage round-up is laid out according to company, and focuses on the most recent developments (the last six to eight months). A variety of beverages are covered, with the exception of teas, which are covered in the next article (page 62). Since there was a paucity of new, innovative developments for energy beverages, there was not a lot of attention paid to this sector.
Coca-Cola, Atlanta, GA
Functional Beverage Brands: KMX, Full Throttle, TaB Energy, Odwalla, Minute Maid
Of the "Big 3"-Coca-Cola, PepsiCo and Cadbury Schweppes-Coca-Cola continues to lag behind the functional beverage boom. With the exception of its energy drinks-KMX, Full Throttle and TaB Energy-Coke's activity in this sector of the beverage market has been sparse. Still, the company continues to assure the public that it is working on new, innovative beverage concepts.
In an August Business Week online article, it was suggested that innovative days are ahead for Coca-Cola, especially now that it has appointed a new head of marketing, strategy and innovation-Mary Minnick. The article said, "To Minnick, growth involves more than simply boosting sales of Coca-Cola Classic. And innovation involves more than repackaging existing beverages in slightly different flavors. Minnick is exploring new products as far afield as beauty and healthcare. If she accomplishes half of what's on her drawing board, she'll usher in the greatest flowering of creativity in the company's history."
The article said further that at a private mid-May meeting of Coke's top 200 global marketers, Ms. Minnick implored her troops to stop thinking in terms of existing drink categories and start thinking broadly about why people consume beverages in the first place. She said the goal is to come to market with products that satisfy those needs before the competition.
"To that end, Minnick loves to talk about what she considers the 10 primal need states that consumers have, including hunger and digestion, mental renewal and health and beauty. Imagine drinks, for example, that are fortified with vitamins or nutrients and provide women the same benefits as a facial scrub or cold cream," the article said.
The Business Week article went on to say that "nutraceutical" versions of Diet Coke, or new juices designed to help women with skin care, weight management and detoxification may be on the horizon. But the article claims Coca-Cola will not come to market without proof. In fact, it has already launched 18 clinical trials to test the health benefits of different new ingredients that it hopes to use in future drinks.
Ray Crockett, director of communications, Coca-Cola North America, Atlanta, GA, says wellness is definitely on the company's radar-big time. While he would not speculate about any impending functional beverage offerings, he did mention that adding certain nutrients and claiming some sort of functionality helps consumers identify which beverages are right for them. "This is precisely what happened with our Minute Maid Heartwise product, which continues to be the only national brand of orange juice with phytosterols in it; right now it is one of our top selling SKUs," he said. "Clearly we correctly identified that need among consumers."
Earlier this year, the company's Odwalla, Inc. (Half Moon Bay, CA) subsidiary introduced three new varieties of multi-serve (64 fl. oz.) Odwalla Soymilk in Plain, Vanilla Being and Choc-ahh-lot varieties. Boasting a combination of organic soybeans, the soluble fiber inulin, calcium and omega 3 DHA, Odwalla Soymilk is rich in nutrients essential to daily well-being. All three varieties are fortified with DHA (docosahexaenoic acid) from Martek Biosciences Corp., Columbia, MD.
Odwalla has also launched a new soymilk drink with green tea as part of its Super Protein line. It calls the new beverage Matcha-Licious. Unlike most forms of sun grown tea, matcha is derived from Gyokuro, which is grown under heavy shade for 40 days leading up to harvest. Odwalla claims that by shading the tea fields, the new leaves develop a higher chlorophyll content, giving the leaves a dark green hue and a lower tannin content, resulting in a sweeter, milder flavor.
Harvesting usually begins in May, when only the freshest, softest leaves are hand picked. The whole leaves are then streamed up to spread the chlorophyll throughout the leaves and stop the fermentation. Matcha-Licious contains 18 grams of soy protein per bottle, and is an excellent source of calcium, vitamin B6 and B12 and zinc. It is also a good source of iron, phosphorus, magnesium and manganese.
Odwalla continues to perform well in the mainstream channels of distribution, where it is currently soaking up nearly 30% of sales, according to AC Nielsen.
As stated by an article in Brandweek early this year, bottlers for the major beverage companies, including Coca-Cola, are starting to look outside their number one suppliers for cutting edge products. This has prompted many of them to form collaborations-such as the one Coca-Cola Enterprises formed with Bravo! Foods last year. Most recently, Coca-Cola Consolidated formed a deal with a New York City-based beverage developer called BrainTwist to launch a "Cinnabon" beverage. The Brandweek article said another product developed by the beverage incubator, Defense, is in test. It is a carbonated beverage that contains a variety of vitamins and minerals.
So far, Coke has not lived up to its "innovative" beverage promise this year, as there were virtually no new products with a "functional/wellness" bent launched in 2006. But there's always 2007.
PepsiCo, Purchase, NY
Functional Beverage Brands: airforce NutriSoda, Tropicana, Gatorade, SoBe, IZZE
Without a doubt, Pepsi has been the most active of the Big 3 in the functional beverage arena, and its ownership of SoBe, Gatorade and Tropicana certainly helps. Ms. Foote of Beverage World said the important thing to note about these acquisitions is that Pepsi continues to let these companies operate on their own. "While they became part of the Pepsi distribution system they were still free to go about their business in the functional beverage world because the company trusted them enough to operate on their own," she said.
In June, PepsiCo aligned with Ocean Spray, Lakeville-Middleboro, MA, to market, bottle and distribute single-serve cranberry juice products in the U.S. and Canada under the Ocean Spray name. Commenting on the new arrangement, Ocean Spray spokesperson Chris Phillips said, "For Ocean Spray it represents another route to market for our single-serve beverages. We needed to expand our distribution and Pepsi was the perfect partnerbecause they will take us to places we've never been."
In addition, the two companies plan to collaborate on beverages with a wellness slant in the future. Without getting into specific dates or talking about specific products, Mr. Phillips said there will be many opportunities to work on beverage innovations with Pepsi.
Speaking specifically about the Ocean Spray brand, Mr. Phillips said, "Even though we have a natural place in the health and wellness beverage sector, we never pursued that positioning-until recently. Our science base really evolved out of medical folklore, which today is being more heavily researched and substantiated."
Right now Ocean Spray is involved in several ongoing studies, but this is not the direction the company always wanted to go. "Honestly, the company was a bit back and forth with how they wanted to be perceived by consumers. Did they want to medicate the brand or talk more about refreshment?" Mr. Phillips said. "Clearly over time they realized the tremendous natural momentum toward health and wellness decided the company would do well to emphasize the health attributes of the cranberry."
He added, "We were a functional beverage long before it was fashionable to be a functional beverage, but we got there because of the naturally amazing properties of the cranberry. It is the definitive functional food."
On the new product front, Ocean Spray lightened up its beverage offerings this year by launching Diet Ocean Spray. These 5-calorie beverages come in Diet Cranberry Spray and Diet Orange Citrus Spray varieties.
Also on the acquisition front, PepsiAmericas, which is 40% owned by PepsiCo, acquired Ardea Beverage Company, Minneapolis, MN, early in 2006. As part of the agreement, Pepsi Americas will collaborate with Pepsi-Cola North America to market airforce NutriSoda in select PepsiAmericas markets with the possibility for future expansion.
Ardea is known for its trendy, nutrient-enhanced beverages called airforce NutriSoda. Sold mostly at fine grocers, airports, hotels, cruise lines, restaurants, clubs, spas and Super Target, the company inked a deal with Pepsi to bring the brand to a wider audience.
Commenting on the acquisition, Joe Herron, president and CEO, Ardea, said, "We are taking a functional proposition and wrapping it in an emotional package, which is why we represent what could well be the next big thing in beverages. We have carved out a brand with a unique identity, positioning and nutrient enhancement and we coupled that with talking to consumers in spas, hotels and luxury resorts and cruise liners.
"This deal is a good way for the company to incubate a concept without putting it into the 'big machine' too early," Mr. Herron added. "We always fit much better into the Pepsi family because they are pretty forward thinking as far as innovation goes, and they seem to be getting into the functional beverage game much quicker."
As this issue went to press, PepsiCo snapped up another "better-for-you" beverage company called IZZE, which is based in Boulder, CO, and makes all-natural sparkling fruit juices. According to PepsiCo, IZZE is an up-and-coming brand in the rapidly expanding market for wellness beverages. Founded in 2002, the company has built a passionate base of consumers, primarily through grassroots marketing and sales efforts. PepsiCo said that IZZE will remain in Boulder and continue to operate as a separate unit. IZZE is available in eight flavors: Sparkling Apple, Sparkling Blackberry, Sparkling Blueberry, Sparkling Clementine, Sparkling Grapefruit, Sparkling Lemon, Sparkling Pear and Sparkling Pomegranate.
Tropicana Products, Inc., a division of PepsiCo, Inc., Chicago, IL, recently launched a line of 100% fruit juices called Tropicana Pure. Building on its juice leadership and record of innovation, the company claims its Tropicana Pure goes beyond breakfast and Tropicana's flagship orange juice with four nutrient-rich blends that showcase the taste of purely luscious fruit in striking, clear one liter bottles. The four varieties include: Pomegranate Blueberry, Mango Orange, Triple Berry and Valencia Orange.
Gatorade, Chicago, IL, launched Propel Calcium earlier this year. A fitness water, Propel currently holds the largest share of the enhanced water segment. It launched a calcium-fortified version to emphasize the importance of bone health, especially for active people. The amount of calcium in one bottle of Propel Calcium is comparable to that in one 8-oz. glass of milk. This 10-calorie beverage also supplies a host of B vitamins and is available in three flavors, Mango, Mixed Berry and Mandarin Orange.
Also on the water front, SoBe Beverages, Norwalk, CT, has launched SoBe Life Water, which is a line of vitamin-enhanced water beverages that contain vitamins C and E, as well as members of the B vitamin family. The beverage is available in five flavors-Pomegranate Cherry, Blackberry Grape, Passionfruit Citrus, Orange Tangerine and Strawberry Kiwi. In addition to a full day's supply of vitamin C, SoBe Life Water provides 20% of the recommended daily value of vitamin E, as well as 10% of the recommended daily value of vitamins B6 and B12, niacin (B3) and pantothenic acid (B5). SoBe Life Water does not contain any artificial flavors or preservatives.
Cadbury Schweppes, Plano, TX
Functional Beverage Brands: 7Up Plus, Snapple, Motts
One thing Cadbury Schweppes did was bring functionality to traditional carbonated soft drinks with its 7Up Plus line, and it was able to do this relatively successfully by building on an existing brand.
Now it is all about being "natural" for 7Up. By decreasing sodium content and taking out one of the soft drink's artificial preservatives, 7Up decided to become one of the first mainstream soft drinks to clean up its image with a natural positioning. After contending with some strong protests from groups like the Center for Science in the Public Interest (CSPI), Washington, D.C., about its new natural makeover, sales started to re-bound after a two-year decline, according to a recent article in USA Today.
"A top-10 soft drink brand in sales as recently as 2003, its fortunes had declined. Sales dropped 9.3% for 2004 and 6.5% for 2005 (Beverage Digest)," the article said. "Since the all-natural campaign began in May, that sales trend has reversed. For the 15 weeks ended August 26, sales rose 18% vs. the same period a year ago. In the highly competitive, $70 billion soft drink business, that's an impressive sales turnaround."
Rye Brook, NY-based Mott's, a Cadbury Schweppes Americas Beverages (CSAB) brand, introduced Mott's Plus-a new line of juices and drinks specifically fortified with the entire family's health needs in mind-earlier this year. Mott's Plus for Kids' Health, available in Apple Grape and Apple Punch, is 100% juice and is fortified with 100% of the recommended daily allowance of vitamin C, 10% vitamin A and 10% calcium. It contains no added sugar and is naturally fat-free, cholesterol-free and low in sodium.
Glaceau, Whitestone, NY
Functional Beverage Brands: Vitaminwater, Smartwater
As rumors swirled around the possibility of Glaceau, Whitestone, NY, going public or being acquired this year, Tata, owners of Tetley Tea since 2000, decided to step up to the plate and buy a 30% ($677 million) stake in the company in late August.
Tata, Mumbai, India, had revenues of $22 billion in 2005-6, and it is intent on building its North American beverage business. "Tata is a visionary company," said Carol Dollard, PhD, COO, Glaceau. "They recognize that the world is in the midst of a health and wellness revolution and they see Vitaminwater as the icon of this revolution. They also see it as a great way for the company to tap the health and wellness market in the U.S."
Glaceau is privately held, so its figures are not public. But Ms. Dollard did say with confidence that the company has grown 100% every year for the last several years and it is looking to do the same in 2007.
This phenomenal growth, according to Ms. Dollard, is a reflection of the possibilities in the health and wellness sector. "I think we've just scratched the surface in functional beverages, as there's still a huge amount of opportunity. If you look at the growth potential in the context of health and wellness, there are a lot of beverages that still need revamping in this respect. We are just getting started," she said.
To put its "healthy" reputation to the test, the company recently conducted an independent clinical study to show that its Vitaminwater brand is a superior source of nutrients, particularly vitamins. The Vitaminwater study was conducted by Miami Research Associates, Miami, FL, to determine if vitamins C, B6 and B12 differed in their absorption when compared to an equivalent amount of vitamins in food in a carefully controlled meal. To test this, 12 subjects were asked to participate in an overnight fast and were then given a meal of steak, potatoes and an orange, while others were given a 20-oz. bottle of Vitaminwater's Power-C. After a few hours, the participants' blood was tested for vitamin content.
According to the results, Power-C delivered more usable vitamin C to the body at a faster rate compared to the meal. Further, it was found that over 500 calories were required for the mixed meal of steak, potatoes and an orange in order to deliver the equivalent amount of vitamins that was contained in one 20-oz. bottle of Vitaminwater at 120 calories. These findings were presented at the American College of Nutrition conference, which was held in the beginning of October.
For the future, Ms. Dollard pointed out, "Our brand and the functional beverage market will continue to grow as people continue to have a desire to live a healthier lifestyle and seek out healthier options whether it's food or beverages."
Asked whether or not the company would someday branch out into functional foods, Ms. Dollard replied, "I think there is great potential to do that because of the extendibility of the brand. However, right now we are really focused on Vitaminwater and we need to get into a lot more consumers' hands."
Naked Juice, Azusa, CA
Functional Beverage Brands: (Divided into Families)-Antioxidant, Energy, Just Juice, Protein, Superfood, Well-Being
Naked Juice is part of the super premium juice category, which grew 42% last year and is currently on a path to hit $1.4 billion by 2008, according to Rachel Kenney, public relations and education manager. "I think consumers are really starting to see the correlation between what they consume and it having a benefit on their body or well-being," she said. "As a result, companies are really clamoring to meet this need."
Naked Juice most recently added four nutrition-packed smoothies to its line-up-Gold Machine, Purple Machine, Chocolate Banana Protein and Black Currant. "We're excited to offer these innovative fruit and boost combinations to the growing family of Naked Juice consumers," says Naked Juice CEO Monty Sharma. "From boosting immunity to promoting skin health and maintaining healthy aging and sound memory, consumers increasingly want foods and beverages that help them look and feel good."
Gold Machine contains 11 vitamins and minerals, including green tea, vitamin E and grape seed extract for a cosmeceutical benefit to improve skin health and boost cellular renewal. It combines golden kiwi, pineapple, yellow passion fruit and banana.
Purple Machine is "supercharged" with purple fruits like purple plum, concord grapes and the antioxidant-packed aai berry. It is also enhanced with essential vitamins and minerals like vitamins A, B5, C, E and selenium, choline and grape seed extract.
Its Black Currant beverage is fortified with vitamin C, echinacea, rose hips and acerola cherry for immunity. It features a "collision" of sweet black currant, blackberries, bananas and pineapple. In addition, it packs in more than two times the daily value of vitamin C per serving.
On the protein front, the company has added Chocolate Banana Protein to help provide energy, support muscles and maintain the healthy look and feel of skin, hair and nails. It is positioned as an all-natural whey and soy protein smoothie that features a healthy indulgence of chocolate and bananas, with a hint of coconut. It provides 38 grams of protein in each serving.
Breaking the tradition of launching energy beverages in petite aluminum cans, Naked unveiled Orange Mango Motion and Strawberry-Kiwi Kick in May. Now, just a few months after introducing the Energy Family of smoothies, the company has expanded the line to include two new all-natural varieties-Black & Blueberry Rush and Cherry Pomegranate Power. Packed with a pound of fruit in every 15.2-oz. bottle, every smoothie in the Naked Juice Energy Family provides a smooth, even energy boost (43 mg of caffeine per serving) powered by green tea extract and guarana, 100% of the RDI of niacin, riboflavin, and vitamins B5, B6, B12 and C per serving. According to Ms. Kenney, these new energy beverages are performing very well. In fact, she says the newest beverages have made it into Naked's top 10 flavors. Overall, she said the company has grown nearly 96% and is considered the fastest growing brand in the premium juice category right now. "As long as we continue to match consumers' needs and wants to what they find palatable, I think there will be continued success in the premium juice category," she said.
Hansen Beverage Company, Corona, CA
Functional Beverage Brands: Rumba, Energade, Energy Formula, Energy Water, Natural Soda, Natural Green Tea Soda, Diet Green Tea Sodas, Fizzit, Blue Sky, plus a variety of juices
Talk about phenomenal growth, Hansen has been far outpacing most companies in the functional beverage sector for the last several years. In fact, a May 5th Boston Globe article noted that just a year ago Hansen's shares traded at a little over $30. As of this May, however, the stock had hit a high of $139.25.
Most recently, Hansen was number two on Fortune's 2006 list of the 100 Fastest-Growing Companies. According to Fortune, Hansen returned a whopping 344% a year to shareholders on average for the past three years. It was ranked 37 on the 2005 list. Hansen has a reputation of being a leader in "natural" beverages; it has also become exceedingly popular with the energy drink crowd.
Gregg Arends, vice president of marketing, Hansen's Carbonated Division, and manager of the Blue Sky brand, said "The energy drink sector is really driving the growth in functional beverages. This is because they have really created an image with which a lot of consumers want to be associated and the colas haven't really kept up in this respect."
In other developments, Mr. Arends said companies are avidly searching for other fortifications and nutrient combinations that consumers will find compelling enough to drink. "The next functional beverage category beyond energy drinks hasn't quite been defined yet," he said, adding, "So there is still some room for exploration."
As far as recent product developments go, the company has launched a line of Green Tea Sodas that combine the benefits and taste of green tea with several unique natural flavors. The sodas do not contain any artificial colors, preservatives, caffeine or sodium. Diet Hansen's Green Tea Sodas have no sugar, no carbohydrates, no aspartame, no calories and are sweetened with Splenda. Flavors include Lemon Mint, Tangerine, Pomegranate and Ginger, with diet versions available in Lemon Mint, Tangerine and Ginger. "Each can of soda contains 35 mg of epigallocatechin gallate (EGCG), which has 100 times the antioxidant properties of vitamin E," according to the company.
Over at Blue Sky, a new product called Blue Sport has been unveiled. This all natural sports drink contains a variety of B vitamins as well as electrolytes. In addition, there are no artificial flavors, colors, preservatives, caffeine, sodium, or high fructose corn syrup. It is also Kosher certified. This sports drink is available in Orange, Lemon Lime and Fruit Punch flavors.
Fuze Beverage, Englewood Cliffs, NJ
Functional Beverage Brands: Slenderize, Refresh, Tea, Vitalize
Fuze Beverage has added three new vitamin-rich refreshing flavors to two of its beverage lines. Dragonfruit Lime and Blueberry Raspberry, added to the Slenderize line, deliver L-carnitine, Super Citrimax, chromium and vitamin C to boost energy levels and help users get slender. This low calorie, low-carb beverage only contains 10 calories per serving, plus 5% real juice, contains no aspartame, and comes in an 18-oz. glass bottle. Strawberry Banana, added to the Refresh line, is fortified with seven significant vitamins, including A, C, E, B3, B5, B6 and B12, as well as calcium to nourish the body.
Fuze Vitalize was unveiled by the company earlier this year. This new line of non-carbonated beverages comes in three flavors, Blackberry Grape, Orange Mango and Fruit Punch. Vitalize is fortified with electrolytes to defend against dehydration and antioxidant-rich vitamins to help the body recover from cell damage. Vitalize contains 100% of the RDA of vitamins A, C and E, plus bone-building calcium.
8th Continent, Minneapolis, MN
Functional Beverage Brands: 8th Continent Soymilk, 8th Continent Refreshers
On the soy front, 8th Continent Soymilk, Minneapolis, MN, has added 8th Continent Refreshers, a refrigerated juice and soy protein blended beverage, to its product arsenal. Each 8-oz. serving of the heart healthy drink contains real fruit juice, 20% of the daily value of calcium, 100% of the daily value of vitamin C and 6.25 grams of Solae brand soy protein. 8th Continent Strawberry-Banana and Orange-Pineapple-Banana Refreshers are also available in 48-oz. bottles.
Pure Fruit Technologies, American Fork, UT
Functional Beverage Brands: Mangoxan, Seabuck7, GojiZen, GacChi
Banking on the rising interest in exotic fruits, Pure Fruit Technologies has unveiled three new juice supplements to join its flagship product Mangoxan Antioxidant Recovery Formula, a mangosteen fruit-based supplement. Seabuck7 Rejuvenation Formula is a potent blend of seabuckthorn berries and other pure fruit juices and purees; GojiZen Longevity Formula is made from a puree of whole goji berries and other pure fruit juices; and GacChi Heart & Vision Formula combines gac fruit and other pure fruit juices.
The Health Company, Reno, NV
Functional Beverage Brands: Logic Nutrition
The Health Company has launched an all-natural, ready-to-drink glucosamine and chondroitin sulfate liquid dietary supplement. Logic Nutrition Just4Joints is a natural 24% fruit juice-based liquid dietary supplement fortified with 1250 mg of glucosamine, 250 mg of chondroitin and 100% of the RDI of vitamin C in each 8.4-oz. can. Just4Joints is made with purified water and contains no added sugar, preservatives or additives and is non-carbonated. Just4Joints uses a U.S. "vegetable fermented" glucosamine that is a non-shellfish derivative for optimum benefit and GRAS (generally recognized as safe) chondroitin sulfate. The beverage is available in two flavors: Orange/Mandarin and Cranberry/Apple.
Rudy Beverage, St. Louis, MO
Functional Beverage Brands: Rudy! Rudy! Flying Colors, Rudy Revolution
Rudy Beverage, Inc., St. Louis, MO, has introduced Rudy! Rudy! Flying Colors beverages. These drinks feature eight vitamins and minerals, and have only 10 grams of sugar per 8-oz. serving. They also contain xylitol, a natural sweetener with a low glycemic index. Varieties include Blue Raz (blueberry), Black Cherry, Citrus Storm (lemon/lime), Glacial Grape and Red Berry (strawberry).
The company has also introduced Rudy Revolution. With only 8 grams of sugar per 8-oz. serving, Rudy Revolution contains half the sugar of leading sports drinks, as well as high levels of electrolytes, sea salts and natural vitamins and minerals to keep drinkers constantly energized and hydrated. Rudy Revolution also features EON Water, a purified, structured water that is easily absorbed by the body and sustains natural energy longer. Rudy Revolution comes in four flavors, including Blue Fuel, Citrus Slam, Fruit Punch Blast and Orange Lift.
Leading Brands, Vancouver, British Columbia, Canada
Functional Beverage Brands: TrueBlue, LiteBlue, TREK Natural Sports Drinks, NITRO Energy Drinks
Canadian functional beverage company Leading Brands, Inc. has launched Infinity Health Water in select North American markets. The new line combines a unique and healthful blend of vitamins C and E, B vitamins, calcium and soy extracts in four flavors: Blueberry Pomegranate, Strawberry Acai, Orange Cranberry and Lemon Green Tea. With 50 calories per 8-oz. serving, Infinity is available in 20-oz. PET bottles. Infinity Health Water will initially be released this winter in several select North American markets in advance of a broader roll-out next spring.
Le Nature's, Latrobe, PA
Functional Beverage Brands: Vitamin Dazzler's, Kettle Brewed Teas, AquaAde AquaEXTRA
Le Nature's recently entered the nutraceutical beverage market with its line of AquaAde fitness waters. These vitamin-enhanced beverages contain seven essential vitamins and minerals, with a splash of flavors and sweetness provided by Splenda. These zero calorie, zero carbohydrate beverages come in Wild Cherry, Peach Mango, Kiwi Strawberry and Mixed Berry flavors.
The company also said in mid-August that it was getting ready to launch a line of nutraceutical beverages in single serve recloseable PET Packaging. The company claims it will provide FDA approved nutraceutical levels in the following areas: joint/arthritis pain, mental clarity/antioxidants, digestion and swallowing, and lycopene/vitamin/protein meal replacements. The beverages are available in great tasting all natural fruit juice, tea or chocolate and coffee flavors.
Ritorna, Princeton, NJ
Functional Beverage Brands: LIV Natural
Looking to capture the attention of school athletes, a company called Ritorna Natural, Princeton, NJ, recently launched LIV, an all-natural sports drink that offers parents a way to give their children a healthy beverage during sports or other after school activities. The beverage is only one of few of its kind in the sports beverage arena due to the fact that it is all-natural. LIV contains no artificial dyes, flavors or sugars, and uses agave nectar instead of high fructose corn syrup for sweetening. In addition to being a healthy refreshment, LIV helps consumers recover more quickly from exercise due to the fact that it also functions as a carbohydrate-based electrolyte drink-it features an ideal mix of potassium and sodium to replace minerals lost during exertion. The drink is available in Lemon and Berry flavors.NW
The functional beverage category, which includes isotonics (beverages that rehydrate), lifestyle/wellness drinks, meal replacements and medicinal teas, grew a phenomenal 23% over the last year. A lot of that growth took place in the conventional channel, which alone grew 24%, according to David Browne, director of content development for SPINS. The natural channel, he said, grew 14%. "The general theme here is products that have become successful in the natural channel are migrating over to the conventional channel," he explained.
The specific segments doing particularly well are isotonics, which grew 28% over the last year to over $5 million, and functional/lifestyle wellness beverages, which grew a whopping 39% over the last year to nearly $1.7 billion.
Recent Observations
The functional beverage market has become, at best, complicated, as companies continue to break tradition and merge standard beverage categories. With various beverage categories literally spilling into each other, experts have noticed the rapid hybridization taking over. These new hybrids include things like teas combined with fruit juice and nutrients, and sodas enhanced with ingredients like green tea.
Andrea Foote, editor-in-chief, Beverage World Magazine, New York, NY, commented on the hybridization trend. "There has been a lot of crossover during the last six months where you are seeing 'functionality' appear in a wider range of beverages. Everyone used to look at functional drinks as a separate category but now it is difficult to do that with this 'nutraceutical hybridization' taking place in the market. At this point I can't think of any category that hasn't been touched from a functional standpoint," she said, adding, "And consumers have really latched on to this idea of beverages being a vehicle for enhanced nutrition."
SPINS' Mr. Browne agreed. "A lot of companies are coming out with products that are not quite water and not quite carbonated beverages. This trendhas been challenging for our market categorization, in fact, because we have very clear rules and specific places beverages should be," he said.
Although the functional beverage category is indeed growing by leaps and bounds, there is surprisingly not a lot of true innovation taking place. The market seems to be growing by virtue of "me too" products, especially in the energy drink segment, and as a result of consumers simply replacing soft drinks with functional beverages. "Consumers have been moving to functional beverages for quite some time because they are interested in alternatives, so a lot of the recent growth can be attributed to the switch consumers are making in the beverages they consume," said Mr. Browne.
The nature of functional beverage success may also be channel-specific, Mr. Browne suggested. "The natural and conventional channels are very distinct and so are their consumers," he said,"What works in one channel may not lend itself well to the other. Currently, pomegranate, acai and kombucha (a fermented drink based on the kombucha mushroom) are still really popular in the natural channel, in addition to green nutrients like spirulina and algae."
He continued, "Some of these products, however, probably wouldn't fare well in the conventional channel. A good example is kombucha, which has been wildly successful in the natural channel, but its success might be limited to this channel simply because of its taste."
In mainstream channels, energy beverages seem to be driving the growth there, along with teas and enhanced waters. "The energy drink category continues to explode," Ms. Foote said. "The water category, which used to be so simple, has become more complicated. One question to be raised here is when you add so many functional ingredients to water can you still call it water? Teas is another category that has really benefited from the health and wellness boom, especially because of its reputation of being inherently good for you. Now tea brands are adding other nutrients like vitamins and minerals to bolster their already healthy image."
One thing the functional beverage market can be thankful for is the 2005 sales slip in the soda sector. For the first time in 20 years, according to Beverage Marketing Corporation, New York, NY, the soda segment posted negative gains, while the functional beverage sector continued to grow in double digits. But the soft drink companies are not letting go easily, as they continue to hunt for nutrients with which they can lace their beverages, as well as other functional beverages to strengthen their product portfolios. Ms. Foote believes if innovation is where the big players are spending most of their time and money, then the functional beverage sector is where it's at. "A few years ago it was about flavor and today it's about functionality," she said.
For now, a lot of companies have chosen to float their functional beverages somewhere between health and refreshment. But for those approaching more of a medicinal positioning, will there eventually be some kind of health benefit backlash? "As popular as this category has become, there are still some questions with regard to efficacy," Ms. Foote said. "I wonder if there will be a point at which consumers really start to ask how much efficacy is really behind some of these things. They might start to wonder, for example, if functional beverages are the most appropriate vehicles for their nutrition."
Mr. Browne offered a different perspective. "I tend to think with mainstream functional beverages that consumers understand most of these products are not based on medical science. On the other hand, when you look at something like POM Wonderful, this is a company that went to great lengths not only to make their message interesting and entertaining, but also to base the health benefits on scientific evidence."
Unfortunately, some backlash might already be on the horizon. According to Loren Israelsen, executive director, Utah Natural Products Alliance (UNPA), Salt Lake City, UT, an FDA official announced in late September that the agency has decided to undertake the development of a new policy to review the regulatory status of beverages labeled and sold as dietary supplements. "For the last year, FDA has hinted that it has been thinking about this and has now apparently decided to push the issue fairly aggressively," he said. "The implications of this are very significant. Many beverage products are labeled and sold as dietary supplements in order to enjoy the benefits provided by the Dietary Supplement Health & Education Act (DSHEA). One of FDA's principal tools to limit the scope and value of DSHEA is to redefine the term 'dietary supplement.'"
Should FDA attempt to cut out beverage products, Mr. Israelsen says this would have a significant impact on the functional beverage market-and certainly would create a chilling effect on this fast-growing sector. "We believe the central issues will revolve around FDA's view that dietary supplements do not include products represented for use as conventional foods or as a sole item of a meal or the diet. This language is part of the definition section of DSHEA," he explained. "What remains open for discussion is whether FDA believes a beverage becomes a food simply because of its size or appearance, or if it is how the product is positioned and which claims are made with respect to such products."
Ingredients Vs. Functionality
So what are consumers truly looking for in functional beverages? What grabs their attention-health benefits/functionality or the ingredients?
When you look at combined channel data, Mr. Browne says perceived health benefits are driving much of the growth versus ingredients. "Many consumers, for example, would be hard pressed to name some of the ingredients in these beverages, they just know what health effects to expect," he said. "But again, it really comes down to the consumers in each channel. Consumers in the natural channel tend to be more educated label readers. Certainly if you purchase the kombucha product knowing what it tastes like, you are knowledgeable enough to know that the health benefits outweigh any tastes benefits."
From a company standpoint, Mr. Browne said the key in the natural channel is to seek out ingredients that are peripheral, try to get some IP (intellectual property) around them and garner a lot of distribution. "I think there is some truth to creating products that don't necessarily taste smooth, that they have a medicinal character to them because there is a perceived health benefit around that as well," he said. "For the future, I think you will see some ingredient innovation, especially new ingredients or the promotion of ingredients that were previously not popular. They will start in the natural channel and then migrate to the conventional channel."
Another trend to watch for, but that is still in its infancy, is the rise in beauty beverages. According to Ms. Foote, these types of beverages have real potential to gather a substantial following. "This category is really in an early stage, but it has a lot of promise. I think consumers are becoming more open to the idea of beauty beverages, similar to what happened with probiotics," she said. "Ten years ago probiotics were virtually unknown in the U.S., but now consumers are really embracing the concept of consuming beneficial bacteria because they know there is a true impact on health. The same goes for these beauty beverages that contain nutrients that can have a beneficial impact on appearance. I definitely think you will see more of these types of beverages. But as was the case with probiotics, companies will need to educate consumers on the connection between health and beauty in beverage form."
Beverage Round-Up
This year's beverage round-up is laid out according to company, and focuses on the most recent developments (the last six to eight months). A variety of beverages are covered, with the exception of teas, which are covered in the next article (page 62). Since there was a paucity of new, innovative developments for energy beverages, there was not a lot of attention paid to this sector.
Coca-Cola, Atlanta, GA
Functional Beverage Brands: KMX, Full Throttle, TaB Energy, Odwalla, Minute Maid
Of the "Big 3"-Coca-Cola, PepsiCo and Cadbury Schweppes-Coca-Cola continues to lag behind the functional beverage boom. With the exception of its energy drinks-KMX, Full Throttle and TaB Energy-Coke's activity in this sector of the beverage market has been sparse. Still, the company continues to assure the public that it is working on new, innovative beverage concepts.
In an August Business Week online article, it was suggested that innovative days are ahead for Coca-Cola, especially now that it has appointed a new head of marketing, strategy and innovation-Mary Minnick. The article said, "To Minnick, growth involves more than simply boosting sales of Coca-Cola Classic. And innovation involves more than repackaging existing beverages in slightly different flavors. Minnick is exploring new products as far afield as beauty and healthcare. If she accomplishes half of what's on her drawing board, she'll usher in the greatest flowering of creativity in the company's history."
The article said further that at a private mid-May meeting of Coke's top 200 global marketers, Ms. Minnick implored her troops to stop thinking in terms of existing drink categories and start thinking broadly about why people consume beverages in the first place. She said the goal is to come to market with products that satisfy those needs before the competition.
"To that end, Minnick loves to talk about what she considers the 10 primal need states that consumers have, including hunger and digestion, mental renewal and health and beauty. Imagine drinks, for example, that are fortified with vitamins or nutrients and provide women the same benefits as a facial scrub or cold cream," the article said.
The Business Week article went on to say that "nutraceutical" versions of Diet Coke, or new juices designed to help women with skin care, weight management and detoxification may be on the horizon. But the article claims Coca-Cola will not come to market without proof. In fact, it has already launched 18 clinical trials to test the health benefits of different new ingredients that it hopes to use in future drinks.
Ray Crockett, director of communications, Coca-Cola North America, Atlanta, GA, says wellness is definitely on the company's radar-big time. While he would not speculate about any impending functional beverage offerings, he did mention that adding certain nutrients and claiming some sort of functionality helps consumers identify which beverages are right for them. "This is precisely what happened with our Minute Maid Heartwise product, which continues to be the only national brand of orange juice with phytosterols in it; right now it is one of our top selling SKUs," he said. "Clearly we correctly identified that need among consumers."
Earlier this year, the company's Odwalla, Inc. (Half Moon Bay, CA) subsidiary introduced three new varieties of multi-serve (64 fl. oz.) Odwalla Soymilk in Plain, Vanilla Being and Choc-ahh-lot varieties. Boasting a combination of organic soybeans, the soluble fiber inulin, calcium and omega 3 DHA, Odwalla Soymilk is rich in nutrients essential to daily well-being. All three varieties are fortified with DHA (docosahexaenoic acid) from Martek Biosciences Corp., Columbia, MD.
Odwalla has also launched a new soymilk drink with green tea as part of its Super Protein line. It calls the new beverage Matcha-Licious. Unlike most forms of sun grown tea, matcha is derived from Gyokuro, which is grown under heavy shade for 40 days leading up to harvest. Odwalla claims that by shading the tea fields, the new leaves develop a higher chlorophyll content, giving the leaves a dark green hue and a lower tannin content, resulting in a sweeter, milder flavor.
Harvesting usually begins in May, when only the freshest, softest leaves are hand picked. The whole leaves are then streamed up to spread the chlorophyll throughout the leaves and stop the fermentation. Matcha-Licious contains 18 grams of soy protein per bottle, and is an excellent source of calcium, vitamin B6 and B12 and zinc. It is also a good source of iron, phosphorus, magnesium and manganese.
Odwalla continues to perform well in the mainstream channels of distribution, where it is currently soaking up nearly 30% of sales, according to AC Nielsen.
As stated by an article in Brandweek early this year, bottlers for the major beverage companies, including Coca-Cola, are starting to look outside their number one suppliers for cutting edge products. This has prompted many of them to form collaborations-such as the one Coca-Cola Enterprises formed with Bravo! Foods last year. Most recently, Coca-Cola Consolidated formed a deal with a New York City-based beverage developer called BrainTwist to launch a "Cinnabon" beverage. The Brandweek article said another product developed by the beverage incubator, Defense, is in test. It is a carbonated beverage that contains a variety of vitamins and minerals.
So far, Coke has not lived up to its "innovative" beverage promise this year, as there were virtually no new products with a "functional/wellness" bent launched in 2006. But there's always 2007.
PepsiCo, Purchase, NY
Functional Beverage Brands: airforce NutriSoda, Tropicana, Gatorade, SoBe, IZZE
Without a doubt, Pepsi has been the most active of the Big 3 in the functional beverage arena, and its ownership of SoBe, Gatorade and Tropicana certainly helps. Ms. Foote of Beverage World said the important thing to note about these acquisitions is that Pepsi continues to let these companies operate on their own. "While they became part of the Pepsi distribution system they were still free to go about their business in the functional beverage world because the company trusted them enough to operate on their own," she said.
In June, PepsiCo aligned with Ocean Spray, Lakeville-Middleboro, MA, to market, bottle and distribute single-serve cranberry juice products in the U.S. and Canada under the Ocean Spray name. Commenting on the new arrangement, Ocean Spray spokesperson Chris Phillips said, "For Ocean Spray it represents another route to market for our single-serve beverages. We needed to expand our distribution and Pepsi was the perfect partnerbecause they will take us to places we've never been."
In addition, the two companies plan to collaborate on beverages with a wellness slant in the future. Without getting into specific dates or talking about specific products, Mr. Phillips said there will be many opportunities to work on beverage innovations with Pepsi.
Speaking specifically about the Ocean Spray brand, Mr. Phillips said, "Even though we have a natural place in the health and wellness beverage sector, we never pursued that positioning-until recently. Our science base really evolved out of medical folklore, which today is being more heavily researched and substantiated."
Right now Ocean Spray is involved in several ongoing studies, but this is not the direction the company always wanted to go. "Honestly, the company was a bit back and forth with how they wanted to be perceived by consumers. Did they want to medicate the brand or talk more about refreshment?" Mr. Phillips said. "Clearly over time they realized the tremendous natural momentum toward health and wellness decided the company would do well to emphasize the health attributes of the cranberry."
He added, "We were a functional beverage long before it was fashionable to be a functional beverage, but we got there because of the naturally amazing properties of the cranberry. It is the definitive functional food."
On the new product front, Ocean Spray lightened up its beverage offerings this year by launching Diet Ocean Spray. These 5-calorie beverages come in Diet Cranberry Spray and Diet Orange Citrus Spray varieties.
Also on the acquisition front, PepsiAmericas, which is 40% owned by PepsiCo, acquired Ardea Beverage Company, Minneapolis, MN, early in 2006. As part of the agreement, Pepsi Americas will collaborate with Pepsi-Cola North America to market airforce NutriSoda in select PepsiAmericas markets with the possibility for future expansion.
Ardea is known for its trendy, nutrient-enhanced beverages called airforce NutriSoda. Sold mostly at fine grocers, airports, hotels, cruise lines, restaurants, clubs, spas and Super Target, the company inked a deal with Pepsi to bring the brand to a wider audience.
Commenting on the acquisition, Joe Herron, president and CEO, Ardea, said, "We are taking a functional proposition and wrapping it in an emotional package, which is why we represent what could well be the next big thing in beverages. We have carved out a brand with a unique identity, positioning and nutrient enhancement and we coupled that with talking to consumers in spas, hotels and luxury resorts and cruise liners.
"This deal is a good way for the company to incubate a concept without putting it into the 'big machine' too early," Mr. Herron added. "We always fit much better into the Pepsi family because they are pretty forward thinking as far as innovation goes, and they seem to be getting into the functional beverage game much quicker."
As this issue went to press, PepsiCo snapped up another "better-for-you" beverage company called IZZE, which is based in Boulder, CO, and makes all-natural sparkling fruit juices. According to PepsiCo, IZZE is an up-and-coming brand in the rapidly expanding market for wellness beverages. Founded in 2002, the company has built a passionate base of consumers, primarily through grassroots marketing and sales efforts. PepsiCo said that IZZE will remain in Boulder and continue to operate as a separate unit. IZZE is available in eight flavors: Sparkling Apple, Sparkling Blackberry, Sparkling Blueberry, Sparkling Clementine, Sparkling Grapefruit, Sparkling Lemon, Sparkling Pear and Sparkling Pomegranate.
Tropicana Products, Inc., a division of PepsiCo, Inc., Chicago, IL, recently launched a line of 100% fruit juices called Tropicana Pure. Building on its juice leadership and record of innovation, the company claims its Tropicana Pure goes beyond breakfast and Tropicana's flagship orange juice with four nutrient-rich blends that showcase the taste of purely luscious fruit in striking, clear one liter bottles. The four varieties include: Pomegranate Blueberry, Mango Orange, Triple Berry and Valencia Orange.
Gatorade, Chicago, IL, launched Propel Calcium earlier this year. A fitness water, Propel currently holds the largest share of the enhanced water segment. It launched a calcium-fortified version to emphasize the importance of bone health, especially for active people. The amount of calcium in one bottle of Propel Calcium is comparable to that in one 8-oz. glass of milk. This 10-calorie beverage also supplies a host of B vitamins and is available in three flavors, Mango, Mixed Berry and Mandarin Orange.
Also on the water front, SoBe Beverages, Norwalk, CT, has launched SoBe Life Water, which is a line of vitamin-enhanced water beverages that contain vitamins C and E, as well as members of the B vitamin family. The beverage is available in five flavors-Pomegranate Cherry, Blackberry Grape, Passionfruit Citrus, Orange Tangerine and Strawberry Kiwi. In addition to a full day's supply of vitamin C, SoBe Life Water provides 20% of the recommended daily value of vitamin E, as well as 10% of the recommended daily value of vitamins B6 and B12, niacin (B3) and pantothenic acid (B5). SoBe Life Water does not contain any artificial flavors or preservatives.
Cadbury Schweppes, Plano, TX
Functional Beverage Brands: 7Up Plus, Snapple, Motts
One thing Cadbury Schweppes did was bring functionality to traditional carbonated soft drinks with its 7Up Plus line, and it was able to do this relatively successfully by building on an existing brand.
Now it is all about being "natural" for 7Up. By decreasing sodium content and taking out one of the soft drink's artificial preservatives, 7Up decided to become one of the first mainstream soft drinks to clean up its image with a natural positioning. After contending with some strong protests from groups like the Center for Science in the Public Interest (CSPI), Washington, D.C., about its new natural makeover, sales started to re-bound after a two-year decline, according to a recent article in USA Today.
"A top-10 soft drink brand in sales as recently as 2003, its fortunes had declined. Sales dropped 9.3% for 2004 and 6.5% for 2005 (Beverage Digest)," the article said. "Since the all-natural campaign began in May, that sales trend has reversed. For the 15 weeks ended August 26, sales rose 18% vs. the same period a year ago. In the highly competitive, $70 billion soft drink business, that's an impressive sales turnaround."
Rye Brook, NY-based Mott's, a Cadbury Schweppes Americas Beverages (CSAB) brand, introduced Mott's Plus-a new line of juices and drinks specifically fortified with the entire family's health needs in mind-earlier this year. Mott's Plus for Kids' Health, available in Apple Grape and Apple Punch, is 100% juice and is fortified with 100% of the recommended daily allowance of vitamin C, 10% vitamin A and 10% calcium. It contains no added sugar and is naturally fat-free, cholesterol-free and low in sodium.
Glaceau, Whitestone, NY
Functional Beverage Brands: Vitaminwater, Smartwater
As rumors swirled around the possibility of Glaceau, Whitestone, NY, going public or being acquired this year, Tata, owners of Tetley Tea since 2000, decided to step up to the plate and buy a 30% ($677 million) stake in the company in late August.
Tata, Mumbai, India, had revenues of $22 billion in 2005-6, and it is intent on building its North American beverage business. "Tata is a visionary company," said Carol Dollard, PhD, COO, Glaceau. "They recognize that the world is in the midst of a health and wellness revolution and they see Vitaminwater as the icon of this revolution. They also see it as a great way for the company to tap the health and wellness market in the U.S."
Glaceau is privately held, so its figures are not public. But Ms. Dollard did say with confidence that the company has grown 100% every year for the last several years and it is looking to do the same in 2007.
This phenomenal growth, according to Ms. Dollard, is a reflection of the possibilities in the health and wellness sector. "I think we've just scratched the surface in functional beverages, as there's still a huge amount of opportunity. If you look at the growth potential in the context of health and wellness, there are a lot of beverages that still need revamping in this respect. We are just getting started," she said.
To put its "healthy" reputation to the test, the company recently conducted an independent clinical study to show that its Vitaminwater brand is a superior source of nutrients, particularly vitamins. The Vitaminwater study was conducted by Miami Research Associates, Miami, FL, to determine if vitamins C, B6 and B12 differed in their absorption when compared to an equivalent amount of vitamins in food in a carefully controlled meal. To test this, 12 subjects were asked to participate in an overnight fast and were then given a meal of steak, potatoes and an orange, while others were given a 20-oz. bottle of Vitaminwater's Power-C. After a few hours, the participants' blood was tested for vitamin content.
According to the results, Power-C delivered more usable vitamin C to the body at a faster rate compared to the meal. Further, it was found that over 500 calories were required for the mixed meal of steak, potatoes and an orange in order to deliver the equivalent amount of vitamins that was contained in one 20-oz. bottle of Vitaminwater at 120 calories. These findings were presented at the American College of Nutrition conference, which was held in the beginning of October.
For the future, Ms. Dollard pointed out, "Our brand and the functional beverage market will continue to grow as people continue to have a desire to live a healthier lifestyle and seek out healthier options whether it's food or beverages."
Asked whether or not the company would someday branch out into functional foods, Ms. Dollard replied, "I think there is great potential to do that because of the extendibility of the brand. However, right now we are really focused on Vitaminwater and we need to get into a lot more consumers' hands."
Naked Juice, Azusa, CA
Functional Beverage Brands: (Divided into Families)-Antioxidant, Energy, Just Juice, Protein, Superfood, Well-Being
Naked Juice is part of the super premium juice category, which grew 42% last year and is currently on a path to hit $1.4 billion by 2008, according to Rachel Kenney, public relations and education manager. "I think consumers are really starting to see the correlation between what they consume and it having a benefit on their body or well-being," she said. "As a result, companies are really clamoring to meet this need."
Naked Juice most recently added four nutrition-packed smoothies to its line-up-Gold Machine, Purple Machine, Chocolate Banana Protein and Black Currant. "We're excited to offer these innovative fruit and boost combinations to the growing family of Naked Juice consumers," says Naked Juice CEO Monty Sharma. "From boosting immunity to promoting skin health and maintaining healthy aging and sound memory, consumers increasingly want foods and beverages that help them look and feel good."
Gold Machine contains 11 vitamins and minerals, including green tea, vitamin E and grape seed extract for a cosmeceutical benefit to improve skin health and boost cellular renewal. It combines golden kiwi, pineapple, yellow passion fruit and banana.
Purple Machine is "supercharged" with purple fruits like purple plum, concord grapes and the antioxidant-packed aai berry. It is also enhanced with essential vitamins and minerals like vitamins A, B5, C, E and selenium, choline and grape seed extract.
Its Black Currant beverage is fortified with vitamin C, echinacea, rose hips and acerola cherry for immunity. It features a "collision" of sweet black currant, blackberries, bananas and pineapple. In addition, it packs in more than two times the daily value of vitamin C per serving.
On the protein front, the company has added Chocolate Banana Protein to help provide energy, support muscles and maintain the healthy look and feel of skin, hair and nails. It is positioned as an all-natural whey and soy protein smoothie that features a healthy indulgence of chocolate and bananas, with a hint of coconut. It provides 38 grams of protein in each serving.
Breaking the tradition of launching energy beverages in petite aluminum cans, Naked unveiled Orange Mango Motion and Strawberry-Kiwi Kick in May. Now, just a few months after introducing the Energy Family of smoothies, the company has expanded the line to include two new all-natural varieties-Black & Blueberry Rush and Cherry Pomegranate Power. Packed with a pound of fruit in every 15.2-oz. bottle, every smoothie in the Naked Juice Energy Family provides a smooth, even energy boost (43 mg of caffeine per serving) powered by green tea extract and guarana, 100% of the RDI of niacin, riboflavin, and vitamins B5, B6, B12 and C per serving. According to Ms. Kenney, these new energy beverages are performing very well. In fact, she says the newest beverages have made it into Naked's top 10 flavors. Overall, she said the company has grown nearly 96% and is considered the fastest growing brand in the premium juice category right now. "As long as we continue to match consumers' needs and wants to what they find palatable, I think there will be continued success in the premium juice category," she said.
Hansen Beverage Company, Corona, CA
Functional Beverage Brands: Rumba, Energade, Energy Formula, Energy Water, Natural Soda, Natural Green Tea Soda, Diet Green Tea Sodas, Fizzit, Blue Sky, plus a variety of juices
Talk about phenomenal growth, Hansen has been far outpacing most companies in the functional beverage sector for the last several years. In fact, a May 5th Boston Globe article noted that just a year ago Hansen's shares traded at a little over $30. As of this May, however, the stock had hit a high of $139.25.
Most recently, Hansen was number two on Fortune's 2006 list of the 100 Fastest-Growing Companies. According to Fortune, Hansen returned a whopping 344% a year to shareholders on average for the past three years. It was ranked 37 on the 2005 list. Hansen has a reputation of being a leader in "natural" beverages; it has also become exceedingly popular with the energy drink crowd.
Gregg Arends, vice president of marketing, Hansen's Carbonated Division, and manager of the Blue Sky brand, said "The energy drink sector is really driving the growth in functional beverages. This is because they have really created an image with which a lot of consumers want to be associated and the colas haven't really kept up in this respect."
In other developments, Mr. Arends said companies are avidly searching for other fortifications and nutrient combinations that consumers will find compelling enough to drink. "The next functional beverage category beyond energy drinks hasn't quite been defined yet," he said, adding, "So there is still some room for exploration."
As far as recent product developments go, the company has launched a line of Green Tea Sodas that combine the benefits and taste of green tea with several unique natural flavors. The sodas do not contain any artificial colors, preservatives, caffeine or sodium. Diet Hansen's Green Tea Sodas have no sugar, no carbohydrates, no aspartame, no calories and are sweetened with Splenda. Flavors include Lemon Mint, Tangerine, Pomegranate and Ginger, with diet versions available in Lemon Mint, Tangerine and Ginger. "Each can of soda contains 35 mg of epigallocatechin gallate (EGCG), which has 100 times the antioxidant properties of vitamin E," according to the company.
Over at Blue Sky, a new product called Blue Sport has been unveiled. This all natural sports drink contains a variety of B vitamins as well as electrolytes. In addition, there are no artificial flavors, colors, preservatives, caffeine, sodium, or high fructose corn syrup. It is also Kosher certified. This sports drink is available in Orange, Lemon Lime and Fruit Punch flavors.
Fuze Beverage, Englewood Cliffs, NJ
Functional Beverage Brands: Slenderize, Refresh, Tea, Vitalize
Fuze Beverage has added three new vitamin-rich refreshing flavors to two of its beverage lines. Dragonfruit Lime and Blueberry Raspberry, added to the Slenderize line, deliver L-carnitine, Super Citrimax, chromium and vitamin C to boost energy levels and help users get slender. This low calorie, low-carb beverage only contains 10 calories per serving, plus 5% real juice, contains no aspartame, and comes in an 18-oz. glass bottle. Strawberry Banana, added to the Refresh line, is fortified with seven significant vitamins, including A, C, E, B3, B5, B6 and B12, as well as calcium to nourish the body.
Fuze Vitalize was unveiled by the company earlier this year. This new line of non-carbonated beverages comes in three flavors, Blackberry Grape, Orange Mango and Fruit Punch. Vitalize is fortified with electrolytes to defend against dehydration and antioxidant-rich vitamins to help the body recover from cell damage. Vitalize contains 100% of the RDA of vitamins A, C and E, plus bone-building calcium.
8th Continent, Minneapolis, MN
Functional Beverage Brands: 8th Continent Soymilk, 8th Continent Refreshers
On the soy front, 8th Continent Soymilk, Minneapolis, MN, has added 8th Continent Refreshers, a refrigerated juice and soy protein blended beverage, to its product arsenal. Each 8-oz. serving of the heart healthy drink contains real fruit juice, 20% of the daily value of calcium, 100% of the daily value of vitamin C and 6.25 grams of Solae brand soy protein. 8th Continent Strawberry-Banana and Orange-Pineapple-Banana Refreshers are also available in 48-oz. bottles.
Pure Fruit Technologies, American Fork, UT
Functional Beverage Brands: Mangoxan, Seabuck7, GojiZen, GacChi
Banking on the rising interest in exotic fruits, Pure Fruit Technologies has unveiled three new juice supplements to join its flagship product Mangoxan Antioxidant Recovery Formula, a mangosteen fruit-based supplement. Seabuck7 Rejuvenation Formula is a potent blend of seabuckthorn berries and other pure fruit juices and purees; GojiZen Longevity Formula is made from a puree of whole goji berries and other pure fruit juices; and GacChi Heart & Vision Formula combines gac fruit and other pure fruit juices.
The Health Company, Reno, NV
Functional Beverage Brands: Logic Nutrition
The Health Company has launched an all-natural, ready-to-drink glucosamine and chondroitin sulfate liquid dietary supplement. Logic Nutrition Just4Joints is a natural 24% fruit juice-based liquid dietary supplement fortified with 1250 mg of glucosamine, 250 mg of chondroitin and 100% of the RDI of vitamin C in each 8.4-oz. can. Just4Joints is made with purified water and contains no added sugar, preservatives or additives and is non-carbonated. Just4Joints uses a U.S. "vegetable fermented" glucosamine that is a non-shellfish derivative for optimum benefit and GRAS (generally recognized as safe) chondroitin sulfate. The beverage is available in two flavors: Orange/Mandarin and Cranberry/Apple.
Rudy Beverage, St. Louis, MO
Functional Beverage Brands: Rudy! Rudy! Flying Colors, Rudy Revolution
Rudy Beverage, Inc., St. Louis, MO, has introduced Rudy! Rudy! Flying Colors beverages. These drinks feature eight vitamins and minerals, and have only 10 grams of sugar per 8-oz. serving. They also contain xylitol, a natural sweetener with a low glycemic index. Varieties include Blue Raz (blueberry), Black Cherry, Citrus Storm (lemon/lime), Glacial Grape and Red Berry (strawberry).
The company has also introduced Rudy Revolution. With only 8 grams of sugar per 8-oz. serving, Rudy Revolution contains half the sugar of leading sports drinks, as well as high levels of electrolytes, sea salts and natural vitamins and minerals to keep drinkers constantly energized and hydrated. Rudy Revolution also features EON Water, a purified, structured water that is easily absorbed by the body and sustains natural energy longer. Rudy Revolution comes in four flavors, including Blue Fuel, Citrus Slam, Fruit Punch Blast and Orange Lift.
Leading Brands, Vancouver, British Columbia, Canada
Functional Beverage Brands: TrueBlue, LiteBlue, TREK Natural Sports Drinks, NITRO Energy Drinks
Canadian functional beverage company Leading Brands, Inc. has launched Infinity Health Water in select North American markets. The new line combines a unique and healthful blend of vitamins C and E, B vitamins, calcium and soy extracts in four flavors: Blueberry Pomegranate, Strawberry Acai, Orange Cranberry and Lemon Green Tea. With 50 calories per 8-oz. serving, Infinity is available in 20-oz. PET bottles. Infinity Health Water will initially be released this winter in several select North American markets in advance of a broader roll-out next spring.
Le Nature's, Latrobe, PA
Functional Beverage Brands: Vitamin Dazzler's, Kettle Brewed Teas, AquaAde AquaEXTRA
Le Nature's recently entered the nutraceutical beverage market with its line of AquaAde fitness waters. These vitamin-enhanced beverages contain seven essential vitamins and minerals, with a splash of flavors and sweetness provided by Splenda. These zero calorie, zero carbohydrate beverages come in Wild Cherry, Peach Mango, Kiwi Strawberry and Mixed Berry flavors.
The company also said in mid-August that it was getting ready to launch a line of nutraceutical beverages in single serve recloseable PET Packaging. The company claims it will provide FDA approved nutraceutical levels in the following areas: joint/arthritis pain, mental clarity/antioxidants, digestion and swallowing, and lycopene/vitamin/protein meal replacements. The beverages are available in great tasting all natural fruit juice, tea or chocolate and coffee flavors.
Ritorna, Princeton, NJ
Functional Beverage Brands: LIV Natural
Looking to capture the attention of school athletes, a company called Ritorna Natural, Princeton, NJ, recently launched LIV, an all-natural sports drink that offers parents a way to give their children a healthy beverage during sports or other after school activities. The beverage is only one of few of its kind in the sports beverage arena due to the fact that it is all-natural. LIV contains no artificial dyes, flavors or sugars, and uses agave nectar instead of high fructose corn syrup for sweetening. In addition to being a healthy refreshment, LIV helps consumers recover more quickly from exercise due to the fact that it also functions as a carbohydrate-based electrolyte drink-it features an ideal mix of potassium and sodium to replace minerals lost during exertion. The drink is available in Lemon and Berry flavors.NW
