Beverage innovation driven by demand for niche and green
the growth of American niche beverages, according to analysts.
The sale of flagships products has stagnated, forcing beverage companies to broaden their portfolios, said Stephen Rannekleiv, vice president for Rabobank's beverage, food and agribusiness research and advisory division. The niche demand is a significant new trend in the beverage industry, he said, speaking in a company podcast. Another new trend is the desire for products that are better for the environment. Meanwhile, three old trends continue to drive beverage innovation and sales in 2008. These are health and wellness, convenience, and a preference for premium products. However, the changing economy could alter trends that have been firmly established across the industry in recent years. "It is hard to know how deep seeded these changes are. A lot of it depends on the economy's health in the next year," said Rannekleiv. Emerging trends A lot of companies are investing in innovative products "that are not very high-selling items but have a strong growth rate" to add to the portfolio of already established products, said Rannekleiv. He named Budweiser and Coca Cola of examples, as these companies have "virtually doubled" the number of products they provide between 1997 and 2007. Similarly, the number of drinks products carrying the word "green" or "eco" doubled between 2006 and 2007, according to Rannekliev, as consumers become more concerned about the impact their lifestyles have on the environment. Companies are responding to consumer demands by providing more ethically sound products, with particular focus on packaging. For example, Coca Cola has made a pledge to make all its packaging 100 per cent recyclable or reusable. These two areas could be affected by the changing economy however, said Rannekliev. As food prices continue to increase and start digging into consumer pockets more, it remains to be seen whether consumers will stand by such priorities or opt for saving costs. Health and wellness As is the case in most sectors across the industry, increasing awareness on the health benefits and risks associated to the food and drink we consume has led to a drive towards buying healthier, more nutritious, products. Manufacturers have been strongly responding to this increasing demand, as well as the pressures from governments and regulators to reduce sugar, salt and calorie content through reformulation. Rannekliev said there has been a big push towards including antioxidants in beverages, launching new products such as "green tea, blue tea, black tea, iced tea". Additionally, superfruits, such as acai berry and goji berry have become increasingly popular. He also said the doubling of wine sales in past 10 years, from $16bn in 1997 to $30bn in 2007, is a result of increased media attention on the positive effects of the moderate consumption of red wine. Again, such a trend could suffer as economic pressures set in. Premier and convenience Most of the growth experienced in wine and spirits sales has been at the high end of the market, with low cost wine sales declining, according to Rabobank's anaylsis. While sales of high-end spirits were up by 11.3 percent last year, low-end spirits were only up by 0.2 percent. Similarly, energy drinks that sell for around three times as much as regular soft drinks have experienced a high level double digit growth. Meanwhile, the ongoing preference for convenience has led to changes in packaging. Sales of the three liter bag-in-a-box increased by about 200 per cent from 2003 to 2006, for example. Popularity has also increased for screw cap wine bottles "These used to be associated with lower quality wines, but now you see them proliferate to high quality wines as people have become more used to it," said Rannekliev. At the same time, Coca Cola is running trials on resealable cans, for added consumer convenience.
