A. Elizabeth Sloan

Pepsi is going “low carb,” while Coca-Cola and Cadbury Schweppes are marketing milk. Fast-food giants—led by Wendy’s and McDonald’s—are encouraging substitution of flavored milks for soda in kids’ “Happy Meals.” Stonyfield Farm is subsidizing schools with its new organic vending machines. And extreme energy beverages, fluoridated bottled waters, and alcohol/juice/soda combinations—some with sexual enhancers—are finding a welcome market. It’s a whole new world of beverages.

With the $63-billion carbonated soft drink industry increasing by only 0.8% last year, per-capita soda consumption continuing to decline, and challenges being made regarding soda’s role in obesity and ill-health, beverage giants are looking for alternative product options.

Not surprisingly, a new generation of carbonated beverages are appearing. They range from sparkling fruit juices like Nantucket Beverages’ NectarFizz™ to elegant adult carbonated flavored waters and nonalcoholic “ades” to fizzy milks like Coke’s Swerve and milk/juice blends like Sparkling Milk Co.’s Sparkling Cow beverages with vitamins A, C, and D.

Flavored milks characterized by cool flavors and trendy characters, yogurt drinks, and dairy smoothies continue to show great promise. Last year, whole milk consumption increased among children, teenage boys, young men, and Hispanics. Organic milk sales grew by 40–50%, while a Milk Processor Education Program found that menuing milk in restaurants to keep it “top of mind” resulted in a 42% spike in sales.

With sales approaching $8 billion, bottled water is expected to become the second-most-consumed beverage in America this year, and according to Beverage Marketing Corp., will likely overtake carbonated soft drinks by the end of the decade. Pepsi’s Aquafina and Coke’s Dasani, as well as low-calorie enhanced waters like Quaker’s Propel continue to show strong sales. Watch for a new wave of health-directed waters characterized by natural fortification, country-of-origin labeling, natural purification techniques, more bioavailable fortification, high levels of bicarbonates as a digestive aid, and high-mineral-content waters such as Perrier’s Contrex diuretic “slimness partner” waters.

With “tiredness” topping the list of health problems shoppers say they have, it’s not surprising that energy beverages grew 50% last year to reach nearly $500 million in sales. Extreme entries like Xtrme Exquisite energy drink and customized options like EAS Results for Women Thermogenic Energy Drink are two strong trends. Caffeine, taurine, guarana, and inositol are driving new energy beverage innovation (see www.win-food.com).

The $2.5-billion liquid meal-replacement category continues to enjoy double-digit growth. New products such as Snapple-A-Day and Yoplait’s Nouriche have given weight-directed products such as Slim-Fast shakes unprecedented competition. Kashi’s Golean ready-to-drink meal is another novel diet option in the $700-million soy drink segment. With one-third skipping breakfast regularly, expect liquid breakfast and very-low-calorie weight-loss meal-replacement drinks to be two fast-emerging segments. Almond, rice, and oat milks, such as Finland’s Bioferme oat milks, will help fill the milk and cereal void.

Nostalgic products like egg crèmes, egg nog, and old-fashioned sodas continue to gain in popularity, as do ethnic items like Dole’s Aguas Frescas juice drinks and authentic ethnic drinks like Mexico’s hibiscus and tamarind beverages. Whey, cane sugar, and old-fashioned flavors like root beer and cherry are popular differentiators.

Next to single-serve, health has been the most dramatic factor influencing beverage sales in the past few years. PepsiCo announced that half of its portfolio will be focused on “better-for-you” products and that it would add low-carb positioning to new and/or existing products. Nestlé said that health will be the focus of future acquisitions.

Functional beverages reached $10.35 billion in sales in 2002, up 10.7%, and are projected to reach $15.9 billion by 2010, according to Nutrition Business Journal. According to the Hartmann Group, artificial colorings top the list of ingredients consumers don’t want in their healthy beverages, closely followed by artificial flavorings, saccharin, artificial sweeteners, and caffeine. Just over one-third feel that a healthy beverage should not be carbonated.

If worldwide activity is any indication, the functional food market is about to heat up. In the United States, Coca-Cola’s Minute Maid brand rolled out its cholesterol-lowering juice, Heart Wise. Low-carb beverages such as Ocean Spray’s Cravin’ Less Sugar juice drinks are mainstreaming into the market. Internationally, New Zealand Dairy Foods’ Anchor brand offers Heart Wise low-cholesterol fresh milk “down under,” joining the ranks of Parmalat Plus Omega-3 milk in Europe and South America and Puleva’s in Spain. Nestlé introduced Aquarel natural-spring, low-calorie water with ginseng and herbal essences to “refresh and revitalize” to the mass market in Europe.

Contributing Editor
President, Sloan Trends & Solutions, Inc.
Escondido, Calif.
[email protected]