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Beverage Industry

Beverage Industry

Beverage IndustryThe beverage industry is a shifting landscape as volume leading categories such as soft drinks continue to lose volume versus prior year (-3.5% in 2009, according to A.C. Nielsen) while functional and health & wellness oriented categories enjoy strong volume growth. Functional beverages continue to be the hottest segment in beverage.

Market research firm Zenith International estimates global per capita consumption of functional beverages will increase 25% from 2010 to 2013, roughly from 5.5 liters per person to 6.9 liters.  Industry giants Coca Cola (www.coke.com) and Pepsi (www.pepsico.com) continue to diversify their portfolios, as evidenced with Coke’s acquisitions involving Glaceau’s vitaminwater (www.glaceau.com), Fuze (www.drinkfuze.com), and its recent investment in Zico Coconut Water (www.zico.com). 

Similarly, Pepsi Cola acquired Izze Natural Soda (www.izze.com), Naked Juice (www.nakedjuice.com), and Amacoco, the largest coconut water supplier in Brazil.  In the U.S., functional beverage growth has been driven by energy drinks and shots (+8% growth in 2009).  Red Bull (www.redbull.com) continues to lead the category in dollar sales, but Hansen’s Monster Energy Drink (www.monsterenergy.com) is now the U.S. energy drink volume leader. 

Energy shots have helped drive “energy” growth, led by first-to-market 5-Hour Energy (www.5hourenergy.com) and now most leading brands feature a 2 oz. to 4 oz. “shot” version of their brand. New brands continue to enter the enhanced water category, led by Glaceau’s vitaminwater, including:  Metromint (www.metromint.com), Hint (www.drinkhint.com), Propel Fitness Water (www.propelwater.com), SoBe Lifewater (www.sobelifewater.com), Aquafina Alive (www.aquafina.com), among many others. 

Brands are finding success with ingredient-driven functional benefits which address key health and wellness issues such as immunity, digestion, mental acuity, and longevity. Consumers continue to enjoy the health benefits associated with ready-to-drink tea, driven by consumers growing awareness of antioxidants and the role they play in boosting immunity.  Arizona (www.arizonabev.com) leads the category, followed by Lipton (www.lipton.com) and Snapple (www.snapple.com) brands. Organic RTD tea brands are a growing market niche led by Honest Tea (www.honesttea.com) and Republic of Tea (www.republicoftea.com).

The “super-fruits” continue to capture the attention of health and wellness enthusiasts, offering significant doses of antioxidants and other elements that address myriad health concerns.  Pom Wonderful (www.pomwonderful.com) led the super-fruit movement with its pomegranate blends and unique packaging and merchandising.  Bossa Nova (www.bossausa.com) and Sambazon (www.sambazon.com) feature the powerful Acai berry from South American rain forests.  Relaxation beverages are perhaps the newest industry trend, led by brands such as Drank (www.drankbeverage.com) and RelaxZen (www.relaxzenshots.com).  These beverages and shots utilize ingredients such as valerian root, L-theanine and GABA to help consumers relax and combat stress. Innovation continues to drive the beverage industry. 

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