Vegetable Beverages Hitting Mainstream

Gatorade Lime CucumberWould you drink a cucumber lime-flavored Gatorade?  How about blueberry mint-flavored water?  An article on Beverage Industry on emerging beverage trends claim that vegetable-flavored beverages are increasingly popular because of their “healthy halo” (article link here).  With everyone focusing on healthier options, it makes sense that vegetable flavors reach mainstream status and consumers seek to take in more vegetables.  After all, berry and other fruit-flavored beverages can only deliver so much momentum.  That said, the article describes that consuming a vegetable-only flavor is still in uncommon and many beverage options are a combination of both vegetables and fruits.  How will this particular flavor trend impact beverage makers?  Will these drinks ever reach a level of popularity to take down mainstream colas, juices, or waters?

Beverage manufacturers constantly monitor flavor trends and Pepsi has locked into this trend since 2011, when they launched a Cucumber Lime flavor under the Gatorade franchise.  Pepsi Japan’s limited-time releases of Pepsi Shiso and Pepsi Ice Cucumber also proves this point.  Since most (if not all) beverage organizations monitor consumption trends, it would not be surprising to see manufacturers build momentum and launch more vegetable-infused variants over the next few years.  It just needs to make its way into the North American market.  And this is beginning to catch on more in the U.S.; research firm Mintel tracked over 100 U.S. beverage innovations with vegetable or vegetable-fruit flavors launching in the past year, representing a 20% increase from 2013.  It still stands to be seen whether these vegetable-flavors will launch under the most popular and mainstream beverage lines like Gatorade, Coke, and Pepsi or launch under emerging beverage brands.  No matter the case, any approved product launch puts sales pressure on other items to perform or risk losing the shelf space.  This flavor trend may not have been successful replacing other products’ sales to justify shelf space though it looks that will soon change.

On the topic of reaching critical mass to take down mainstream product categories, it doesn’t look promising.  This isn’t to say that vegetable-flavored beverages will not reach mainstream status themselves, just that it will not overtake other mainstream categories.  For one, this is a flavor trend that integrates the product under a specific beverage segment; it is not a standalone beverage category in itself.  Consider these vegetable-flavored products to pattern after  Campbell’s V8 juices or Bolthouse Farm smoothies, where they represent a growing portion of a drink category (juices and smoothies, respectively) but are not large enough to overtake juices as a whole or smoothies as a whole.  Regardless, these healthier options will compete aggressively for retail shelf space alongside other beverage options.

Image courtesy of foodbusinessnews.net
Image courtesy of foodbusinessnews.net

The Beverage Industry article also describes other beverage flavor trends, include a growing preference toward sweet and spicy combinations.  Consumers increasingly look for flavors that will satisfy multi-sensory experiences.  Some examples include chocolate gojuchang tea (gochujang is a Korean spicy sauce),  spicy ginger mango juice, and mango jalapeno water.  So be on the lookout, soon enough you’ll see more cross-flavored beverages on store shelves.  Be in sweet and spicy or vegetable-fruit flavored, it will sound exotic but your taste buds and your body will thank you for choosing that over another drink.

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Three More Canadian Beverage Trends For 2014

Many experts had created their own lists for food & beverage trends for 2014, how do you make sense of all of these?  Some are more macro-level and includes a generic view toward food & beverage (like this Innova report) while another taps into consumer needs that drive changing beverage preferences (like this CSP publication).  Euromonitor International’s white paper has also listed five beverage trends pertinent to the Canadian landscape (link here, must process credentials before report can be accessed).  These five trends are fairly on point, but may have missed out on some other additional activity that will change the beverage landscape this year.  Here’s some additional points BevWire has noticed and would like you to consider:

Improved Natural Sweeteners To Grow Zero/Low/Mid-Calorie Sodas

Pepsi Next - courtesy of rft3.wordpress.comDr Pepper & Pepsi had both launched mid-calorie sodas with combination sweeteners in the past two years, while Coca-Cola finally took the plunge last year with Coca-Cola Life.  Although Coca-Cola Life has yet to make its entry into the North America, this is a strong sign that everyone believes calorie segmentation for sodas is a step in the right direction.  Coca-Cola also has received FDA approval for Reb-X – their stevia sweetener developed in conjunction with Pure Circle.  In addition, Zevia & Steaz are also among a host of naturally-sweetened soda manufacturers that are gaining broader exposure and shelf space within grocery retailers.

These factors indicate that natural sweeteners are receiving just as much as attention as their regular calorie counterparts – if not more.  Optimizing a soda formula that removes the bitter aftertaste will go a long way toward restoring sales to this segment.

Aspartame Fears Continue to Depress Diet Sodas

The fear over safety of consuming aspartame came to a climax in mid-2013 as Coca-Cola ran an advertisement to dispel fears over this ingredient (link here).  With a greater focus toward ingredient consumption, consumers are leaving diet sodas for other beverage products.  The soda segment as a whole is facing scrutiny for contributing to obesity, but having extra attention on ingredients within diet soda has led to more consumers choosing alternative beverages such as juice, tea, and water.

With a continued rise in competition from adjacent segments and beverage categories, diet sodas will continue their rapid decline relative to the other soda segments.

Small Home Appliances Crowd the Consumer’s Kitchen Counter Space

Courtesy of sodastream.ca

SodaStream’s controversial in the 2013 Super Bowl ad really put them on the map, as well as put other carbonated soft drink manufacturers on notice.  Consumers also noticed this and SodaStream was rewarded with sales as well as increased availability across Canadian retailers.  SodaStream has also benefited with licensing agreements and partnerships to carry branded syrups like Kraft’s Kool-Aid and Country Time.  Starbucks is making inroads to get on your kitchen counter as well, trademarking “Fizzio” in 2013.  From trademark documents, Fizzio is their at-home carbonation unit that will carbonate water into soda flavors.

Outside of at-home carbonation units, coffee & espresso makers are also seeing a bump in sales.  Keurig, Nespresso, Tassimo and other coffee pod makers offering deep discounts on the coffee machine, attracting your initial purchase in order to have you buy exclusive coffee or tea pods from them in the future.

While BevWire doesn’t have an official list where these trends are being ranked, the rise of natural sweeteners certainly seems to be the most likely to take place in early 2014.  That said, we are only 13 days into 2014 and many things can still happen to change up the trends.  Let’s see how this plays out over the next 352 days.

Retailers Update Stores Targeting Today’s Shoppers

It’s been quite apparent that Millenials (people born between 1980s to early 2000s) shop very differently than those born before them.  This demographic have also been loosely called the “Connected Consumer” since they grew up with technology that gives them information readily available at their fingertips.  They are constantly on social networks, talking to their friends and family about what they should be buying.  They compare prices, looking for the best deal available by price-matching and leveraging digital coupons.  They are less afraid to shop online, sometimes even going in to retail outlets just to touch and feel the product before going home to order the product.  These are but three examples of how Millenials have been noticed to shop differently.

Following the economic downturn, other consumer demographics (Generation X, Baby Boomers, etc) have also changed the way they shop for daily consumables.  The focus on price has never been greater.  Retailers and manufacturers alike are all trying hard to find a way to keep shoppers loyal to them while stealing other retailer’s loyal shoppers.  They have closely monitored these behavioral changes the past few years and have started to respond.  Here’s a few examples of retailer response and how the trend that the retailer picked up on.

7-Eleven Rebrands To Target Health-Conscious Millennials

Courtesy of underconsideration.com.  The new 7-Eleven concept store in New York.
Courtesy of underconsideration.com. The new 7-Eleven concept store in New York.

What is the world’s largest convenience chain most known for?  It’s Big Gulp Slurpees?  It’s Big Bite hot dogs?  It’s coffee?  No matter what it is known for, there has been minimal association with “health”.  Seen in parts of the United States, the world’s largest convenience store chain is now re-branding and re-positioning itself.  While Slurpees and Big Bites are still very important parts of their business, branching out to emphasize healthier snacks such as fruits and bread shows their change to target Millenials, females, and the generally health-oriented shopper.  They have also started to integrate free Wi-Fi (who doesn’t nowadays) in an attempt to create a welcome atmosphere that permits you to hang around even longer.  A smart move since their core positioning of convenience has not changed; it is only re-purposed to communicate to a broader set of consumers.

Loblaws No Frills Tests Small Discount Stores

Courtesy of 680news.com.  The Box by No Frills (Loblaws).
Courtesy of 680news.com. The Box by No Frills (Loblaws).

Have you noticed all the retail changes this past year?  Recently we have noticed continued attempts at consolidation: Sobeys buying Safeway, Target entering Canada, and Loblaws buying Shoppers Drug Mart.  The retailer’s dilemma shifts from getting the shopper to buy more, to simply getting the shopper to come through their doors.  Most retailers are now trying to get “back to the basics” and open smaller stores to compete within the urban market.  No Frills – Loblaw’s discount banner – is experimenting with a smaller (10,000 sq ft) retail concept store called The Box.  Catering to the urban community, The Box offers discounts on food and general merchandise similar to the regular No Frills.  Urban communities typically do not have access to these discount stores given the space these stores typically need to operate.  Loblaw’s is certainly not the first retailer to try a smaller format of its stores, as Walmart (Walmart Express) and Target (CityTarget) also have smaller stores to provide convenience to the urban community.

Amazon.ca Starts Selling Groceries Online

Amazon.ca logo, courtesy of Amazon.ca
Amazon.ca logo, courtesy of Amazon.ca

Despite the current list of websites offering groceries online (grocerygateway.com, well.ca, skyrisefoods.com, e-zgrocer.com, etc) there does not appear to be one name that can offer groceries online across Canada.  That changed with Amazon.ca’s recent entry into the Canadian landscape.  While their product offerings still does not provide fresh food, increasing the type of products available allows them to expand their reach and puts them on the list of approved price-match retailers for Walmart, Loblaws, and the like.  Since consumers are less afraid to compare & contrast prices, shop & buy online, and read & write product reviews, Amazaon.ca’s entry into the retail landscape is significant.

While there are many ways retailers are changing to match up with today’s consumers, these are but three examples of what they are doing.  It all starts with understanding what the shopper’s preferences are.  Is it convenience that matters most, or price?  7-Eleven re-positions and re-brands itself.  Loblaws is opening smaller stores.  As we see from the above examples, it’s a little bit of both.  What changes have you noticed?

Canadian Grocer re-post: Partnering to Win in Energy Drinks

Despite media coverage that has focused on the adverse effects of energy drinks over the past year, the category has continued to gain value and deliver profits for retailers and manufacturers alike.  Part of this can be attributed to consumers wanting what they’ve been told is off-limits to them.  The other part is a result of smart category management by retailers and manufacturers.

Retailers are no longer listing any and all energy drink innovation brought to them by manufacturers to capitalize on the energy drink wave.  Instead, they are looking for products that play defined category roles to complement their retail selling strategy.  They are searching for a total category solution that will help drive sales for both the category and the retailer.  They may also be looking for a manufacturer to partner with to drive the strategy specifically for energy drink products.  As such, the previous shelf sets that were littered with fewer facings and broader selection has now been somewhat streamlined to increase product facings of a narrower product assortment.  Carefully defining their specific category strategies has helped retailers decide on how much and what to carry.  For example, Loblaw has a wider product selection compared to Walmart.  While both retailers carry the top products, that is where the similarities end.  Walmart only has the top sellers within those specific brands while Loblaws carries more variety within those energy drink brands and some additional products.  Walmart’s category strategy for energy drinks may be more indicative of a routine purchase, while Loblaws strategy exhibits more of a destination focus.

Manufacturers are also bringing deeper insights to the table to showcase the strength of their beverage brands and how they align with the retailer’s go-to-market strategies.  With key discoveries on consumption habits and similarities with a retailer’s core shopper, the manufacturer is showing the buyers that they have a strong understanding of where category growth is coming from and how to target the most profitable demographics.  A key example may be the energy shot segment’s growth fueled by 5-Hour Energy.  Expanding on their marketing platform of alertness without the caffeine crash, the product has recently been marketed toward seniors that require an energy boost.  Understanding the insight that seniors are not ready to slow down and also crave energy boosts has led to distribution gains within pharmacy centers and shelf space next to winkle cream and nutritional beverages.

The 5-Hour Energy line-up.  Some targeted toward women, others toward seniors.
The 5-Hour Energy line-up. Some targeted toward women, others toward seniors.

As the Canadian retail landscape continues to change, profitability is top of mind for everyone – not just beverage manufacturers.  Collaboration between the manufacturer and retailer becomes progressively important to ensure that the product categories are effectively managed.  If a retailer has not partnered with their core categories’ manufacturers, now is the time to start!

Nestea Enters Crowded Liquid Enhancers Space

Nestea's Liquid Water Enhancer - image courtesy of bevnet.com
Nestea’s Liquid Water Enhancer – image courtesy of bevnet.com

It seems that Nestea is primed to enter the liquid enhancers space soon (link here).  In a segment that grows increasingly crowded with strong brand names like Kraft MiO, Crystal Light Liquid, Dasani Drops, Powerade Zero Drops, is this the right decision by Nestea to enter with their own liquid enhancer?  Aside from the well-known branded players, a host of grocery retailers already have their own store brand (per this BevReview article, Walmart, Supervalu and Winn-Dixie all have their own versions).  Can this beverage segment sustain another branded player?  With various offerings available and finite space in the grocery aisle, will this launch actually be beneficial?  It depends on who you talk to.

First, let’s take a look at what Nestea is introducing to the marketplace.  Nestea Liquid Water Enhancer will arrive exclusively to Target in three flavors:  Iced Tea with Lemon, Iced Tea with Peach and Half & Half Iced Tea.  Another flavor will hit the rest of the market afterwards: Green Tea Citrus.  The Nestea Liquid Water Enhancers will be available in 26-serving bottles.  Because there is no other tea-based liquid enhancer in the marketplace, the Nestea product is unique and certainly adds value to the grocery aisle.  The consumer will now be able to find their Nestea drink mixes in both powder and liquid formats.  So Nestea benefits from this product launch, giving themselves a broader consumer reach.  Now that Nestea has a unique product, they just need to go and “sell” it to the grocery retailer that their product is beneficial for them too.

Retailers, however, may interpret this as more of a headache than anything.  With liquid enhancers expanding so rapidly, it looks like manufacturers just want to launch a product and get in on the gold rush.  With another product added to the overall consideration set, the retailers must decide which ones to carry and help them grow their business.  Do they maintain the same space in the grocery aisle for these products?  Or should they rationalize some other products?  The retailer may simply pass the problem on to manufacturers, and have them create the most compelling sell story to gain retailer distribution.  What may ensue should certainly benefit consumers and retailers: manufacturers will undoubtedly be offering some form of pricing and promotional support to get them to take their product in-store.

Coca-Cola's Powerade Zero Drops - image courtesy of coca-colacompany.com
Coca-Cola’s Powerade Zero Drops – image courtesy of coca-colacompany.com

For liquid enhancers and the consumer, Nestea’s entry is a positive addition.  Nestea’s entry carves out a niche for tea-based liquid enhancers, similar to how Powerade Zero Drops and MiO Fit created the sports niche.  Despite further fragmenting liquid enhancers into more beverage segments, this launch will be beneficial to the category.  As more marketing dollars get behind liquid enhancers, this may spell opportunity for even more product launches.  If consumers are willing to mix water with enhancers for caffeine, electrolytes, and tea, what else may they be interested in?  How about juices?  Or carbonated soda?  In due time, consumers may be able to find liquid enhancers for any beverage that is currently available in can or bottle format.

While the Nestea launch further crowds the liquid enhancer market, it still benefits everyone.  Consumers get another liquid enhancer choice.  Nestea improve their consumer reach.  And retailers linking these two groups together will be rewarded with more profits.

“Freestyle” Flight Beverage, and a Thought Starter

On my latest flight trip, I decided to step away from my regular drinks.  Normally, I opt for Cranberry Cocktail, Orange Juice or Sprite.  But the flight crew was really comical and interactive, and even made a comment about mixing drinks together.  I decided, “Why not?” and opted to mix the Orange Juice with Sprite.  To which he replied that that mix is fairly common and told me to “Live on the Wild Side.”  So I asked for his suggestion on what would dial up the “wild” factor he was alluding to.

Given that there are finite options on an airplane and I wasn’t interested in paying for alcohol, he came up with the following: Coke Zero and Cranberry Cocktail.  In addition to the Orange Juice and Sprite.  I guess this really turned it into a Cranberry “Cocktail”.  Taste-wise it wasn’t bad because of the mix ratios (about 70% OJ), but it was nice to have a quick Coca-Cola Freestyle moment on the flight.  Here’s my drink on the flight.

Freestyle Flight Beverage - can you guess what's in this? Even though it looks like Orange Juice.
Freestyle Flight Beverage – can you guess what’s in this? Even though it looks like Orange Juice.

So my thought starter as a result of this interaction?

Would there come a day when flights are equipped with more than just the regular assortment of fast-selling canned beverages – like Coke, Pepsi, Club Soda, and Cranberry juice?  How likely is it to get Coca-Cola Freestyle (with over 100 different customizable beverage options) on a flight?  What would it take to make this happen?  Are we currently moving to this state already?

The simple answer to those questions: No.  Based on my observations & understanding, an airline’s beverage assortment is geared toward the top-selling and popular options.  For example, if a Vanilla Coke alternative existed, would it be “turn” fast enough to beat the expiration date?  Despite it having a cult following, this just isn’t a regular beverage option.  Keeping in mind that flight guests typically don’t know what the airline’s beverage assortment consists of.  This means that suggestive selling or flight-attendant input is heavily needed in order to move through slow-turning beverage options.

Operating a Coke Freestyle machine would involve many complicated moving pieces.  For example, how would the syrup be best stored to be protected from denaturing during different altitudes?  Which beverage options should the airline carry on board the plane?  Will they need more syrup cartridges of the popular flavors and less of the more niche offerings?  This also does not solve the problem of slow-turning alternatives.  And let’s not forget the most obvious problem: carbonated tanks.  Forgetting about all the various beverage options and the obvious hazards of carrying carbonated tanks through different air pressure, there is still too much equipment store needed to make this work.  And we haven’t even gotten to the financial part of this alternative.  Ultimately, my thought starter would end up being a non-starter.  Fountain units are not meant for air travel.

Another interesting observation: I never knew that planes had lemon and lime substitutes, but apparently they exist like sugar packets.  Feast your eyes on an image taken in flight (and posted later to BevWire upon arrival) of crystalized lemon and lime packets.  Now that would have been a party if I had added this into my new Cranberry Cocktail!

LemonLimeCrystalized