Natural Sweeteners for Beverages – Stevia

With the growing health-conscious trend, both consumers and organizations are placing an increased emphasis on limiting the calorie content in a beverage.  First it was using cane sugar and high-fructose corn syrup (HFCS) to replace sucrose, and now it’s using natural sweeteners to replace cane sugar and HFCS.  Since stevia is the main natural sweetener used for beverages, BevWire is writing a short piece on the stevia natural sweetener.

First of all, what is stevia and why are we using it?  Stevia is a plant-based sweetener and is 200-300 times sweeter than sugar.  Extracted from plant leaves, stevia in its original form is found in the western parts of North and South America.  In addition to being sweeter, stevia also contains less calories (practically zero calories) making it a great alternative to replace cane sugar, HFCS, and sucrose.   With product commercialization and increased approvals from countries, stevia is now widely used in many countries as natural sweeteners, food additives and dietary supplements.  In North America,  stevia has been approved for use by Canada (Health Canada) and the US (FDA) in consumer goods.  Some notable names consumers may have heard are Truvia, PureVia, and SweetLeaf.  Truvia is the stevia brand that Coca-Cola uses in vitaminwater 10.  PureVia is the consumer brand of stevia found in Pepsi’s Aquafina Plus 10.

With all the health benefits related to stevia, why is it not being used by more companies and products?  One reason is cost.  It is not as widely cultivated as cane sugar or HFCS, and the product is still in the early acceptance stage, therefore making it more expensive to use compared to the other products.  Also, despite the health-conscious trend, consumers are still slow to accept natural sweeteners in replacement of their current beverage options.  The Sprite Green stevia-sweetened drink is a hit and miss depending on who you ask because the taste is different from what consumers are used to.  BevWire’s readers also commented that vitaminwater zero tasted vastly different from vitaminwater10.  Once consumers accept stevia as the healthy, low calorie sweetener for their beverages, the products manufactured with stevia will grow in number quickly.

Re-Energizing the Lemon-Lime Category

Advertising Age published an article last week detailing the marketing investments of Coca-Cola, Pepsi, and Dr. Pepper Snapple Group (DPSG) in the lemon-line soda category (link here).  Until this was mentioned, I actually had not noticed that there really wasn’t much advertising around Sprite, Sierra Mist, and 7up in Canada.  Sprite always appeared to be advertising because of their partnership with the National Basketball Association, so it doesn’t seem like they had not advertised at all in the past few years.  No Sierra Mist advertising in Canada because of DPSG’s agreement with Pepsi, but 7up itself has not done any advertising in the last few years.  The article reports that marketing dollars for this beverage category had shrunk 80% and the money was being reallocated to other beverage categories such as enhanced waters, energy drinks, and sports drinks.

However, all this is about to change (or in Sprite’s case, has changed already).  Driven by consumer insight that clear sodas are a healthier alternative than colored sodas (untrue, by the way), all three major beverage companies are reinvesting marketing dollars into the category.  In terms of product innovation, Sprite launched Sprite Green in 2009, while Sierra Mist will introduce Sierra Mist Natural later this year for the US.  Both drinks are naturally sweetened beverages (Sprite with Truvia and Sierra Mist Natural with sugar) to keep in line with the consumer trends searching for healthier alternatives.  7up had already reformulated to contain 100% all natural flavors, removing artificial flavors and preservatives in 2006.

Sprite has also launched a global integrated marketing campaign titled “The Spark” which began with Drake’s commercial seen above.  Sprite’s marketing campaign includes a music project as well as a film project, and will be marketed through TV, out-of-home, online, and mobile media placements.  The music project gives teens the ability to mix their own music and save it as ringtones or send to their friends, while the film project encourages teens to create their own mini-film through choosing the setting, plot, characters, and ending.  All these efforts tie in with their theme to “spark” creativity and sharing it with others.

What about 7up?  Since Sierra Mist cannot be sold in Canada, consumers’ lemon-lime soda options are limited to Sprite, 7up, or private label brands.  Are there any product or package innovations coming from 7up?  Advertising Age indicated that 7up will be stepping up their marketing and will be spending $25 million in these last four months, but no idea if that translates over into the Canadian market.  I’m curious to see what 7up will do because there may not be a lot of leverage to build upon these remaining 4 months.  Holidays are normally a ramp-up for beverages, but Christmas usually sees Coca-Cola and Pepsi promoting their own core brands.  And with 8 months of the year past already without much brand exposure, what will 7up be spending their $25 million on the remainder of the year?  According to Nielsen market share data, 7up held nearly 6% market share in 2009, while Sprite held less than 4% during the same time period.  Despite the US market being larger, shouldn’t 7up invest more advertising into Canada to protect and increase their market share points since there is less competition here?  If nothing is done, 7up stands to not only lose market share to Sprite, but possibly its market leader status.

BevWire On Vacation Until Labor Day

Apologies for skipping a post last week – BevWire is away on vacation with the family and won’t return until Labor Day (September 6th).  The vacation post was supposed to have come out last week but I was tied down by work deadlines and could not put something out in time.

In the meantime, feel free to check out the following links for some news on beverages:

Beverage World: Andrew Kaplan writes about packaging technologies for bottles and cans here.

Beverage World: Jennifer Cirillo discusses product plant flexibility as product variations increase here.

BevNet: Jeffrey Klineman reports on New Leaef Tea’s company restructuring to remain competitive and grow in key marketing areas here.

Popular Trends For Beverage Flavors

BeverageWorld has published an article about this year’s top beverage flavor trends (link here).  It focuses mainly on the U.S. beverage market, but since Canada is just north of the United States these trends likely apply to us as well.  Every year companies analyze beverage trends to determine the flavor trends and to see which fruits may become popular with consumers.  In years past, fruits like yumberry, pomegranate, goji berry, pomegranate, and passion fruit have resonated well with consumers’ taste palates and become mainstream.

This year, fruits and flowers from different parts of the world are predicted to make an impact.  Sensient Flavors – one of the companies that follow these beverage trends – provides some insight into where some of these fruits are sourced and which fruits are going to be big sellers. South America will offer fruits such as the cape gooseberry, lulo,  maqui, mora berry, umbu, and caja. The mora berry (see left) might become popular because of its similarities to the blackberry and raspberry with its dual taste of sweet and tart.  Africa offers the baobab and marula fruits, with the former offering high levels of vitamins and anti-oxidants.  China will see the kumquat gain in popularity with its broad taste profile – offering salty, sour, and sweet flavors.

It appears that most of these fruits are coming out of the southern hemisphere and eastern hemisphere.  This might be because American consumers (and Canadian consumers too) are more daring in their food and beverage options.  Always curious to try new flavors, products, and spices, companies are eager to satisfy these demands through finding the next big product.  And the southern and eastern hemispheres appear to offer more exotic fruits, or at the very least fruits that were previously unknown to westerners.

While not all the above mentioned fruits are going to be popular depending on consumers’ taste preferences, all or some of them are likely to be a hit at one point or another given the interest to try new and exotic flavors.  So the next time you pick up a new product, be sure to check out the ingredients section on the label and see if any of the fruits mentioned above are part of your drink!

Beverage Category Growth and Decline for 2010

Just scouring through some newsfeeds these past few weeks, and came across a BevNet article (link here) sourcing Beverage Digest on the beverage industry’s growth and decline.  The article is general and talks about the North American landscape, which normally focuses more on the United States than Canada.  The main point of the article hints at consumers shifting their interests away from CSDs (Carbonated Soft Drinks), where there has been decline in the past two years.  The only growth seen is within the diet CSD beverages.  After seeing that post, BevWire found some Nielsen statistics relating to the Canadian beverage industry and compares how Canadian consumers fare to the rest of North America.

Carbonated Soft Drinks (CSD) as a category saw decline in overall volume, but diet beverages grew.  In the last year, regular CSDs sold 1.6 billion cases less than the previous year while diet CSDs sold 4.4 billion cases more during the same time frame.  These numbers represent a 0.2% decline in regular soft drinks, and a 1.1% increase for diet products.  It’s also interesting to note that while regular cola beverages shrank 1.6 billion cases, the dollar value did grow.  Regular CSDs saw total dollars increase over 5%, while diet total dollars increased 7%.

So what does this mean?  This means that even though less soft drinks were being sold, prices were increased to soften the losses.  1.6 billion less regular soft drink cases were sold, yet total dollars increased 5%.  And diet products are becoming more of a popular choice for consumers, where diet soft drinks now represent over 37% of the total CSD market (compared to the United States where it is 30%) .

If beverages are not growing for CSDs, where have all the growth gone?  After all, people do have to drink something, right?  Well, the numbers seem to indicate that healthier options are the preferred choices now.  Juices and juice drinks demands (ie. Minute Maid, Tropicana and Dole juices) have increased dramatically this past year, where sales have increased dramatically.  Think this has anything to do with Sobe re-launching their juice drinks, or Fuze releasing a few more new flavors?

Surprisingly enough, the diet trend extends across to other beverage options.  While energy drinks are now on a slower increasing rate (and some other reports have it actually shrinking in the market), diet energy drinks did grow.  So no matter what the consumer is looking for – energy drinks, soft drinks, juices – they are looking for more healthier alternatives that have less calories.

Energy drinks now a maturing market

BevWire recently came across a news briefing article on BevNet saying that Hiball is launching a sparkling energy juice (article available here).  The article also claims that Hiball is a pioneer for clear sparkling energy waters.  While BevWire doesn’t doubt that Hiball is a pioneer in that field, there doesn’t seem to be any other companies competing with this niche.  This just serves as a clear signal that the energy drinks market is maturing.

Energy drinks have quietly entered into Canada in the last 5 years, and already a great variety of products surround the category.  From regular energy drinks (ie. Red Bull) to niche drinks such as natural health drinks, anti-energy drinks, and even to energy shots, pills and gum.  Product placements and event sponsorships definitely helped the public recognize these products and propel them into mainstream media.

So what stays and what goes?  Once a product hits the maturity level, only a few key players remain in the market.  Others that entered hoping to make some quick profit now exit realizing that there is too much competition and the category is no longer profitable for them.  Goodbye copycat and private label energy drinks, energy gum and a host of energy shots.  BevWire’s guess is the main three energy beverages will stay (Red Bull, Monster, and Rockstar), while niche energy drinks may stick around to compete for the remaining market share.  The energy shots market will see Living Essentials (5-Hour Energy) as the dominant market leader, while other brands vie for the remaining dollars. Consumers having been exposed to so many choices have already picked the brands they choose to purchase, and will likely show loyalty to these brands.  That’s why only a few brands will be successful.

So now that energy drinks has matured, what will become the new beverage trend?