Summer Fancy Food Show

Functional beverages must balance consumer, environmental benefits with price

By Elizabeth Crawford

- Last updated on GMT

Related tags functional beverages kombucha alkaline water Summer fancy food

The functional beverage category is growing at a rapid clip as consumers look for fast, easy ways to support their on-the-go lifestyles and their health, but not all ingredients, products and platforms are created equally and the segment faces significant challenges, including increased price sensitivity and expanding beyond niche consumer bases to reach mainstream shoppers.

At the Summer Fancy Food Show in New York City late last month, a beverage pavilion showcased the diversity of benefits, flavors and experiences that consumers are looking for in drinks – including everything from pre and probiotics for gut and immunity support to shots promising an energy boost or hangover relief to mood enhancing beverages. The assortment also underscored shoppers enhanced sophistication when it comes to evaluating claims, ingredients and the impact of products not only on their health but that of the planet as well.

“Consumers are really, really asking, ‘Okay, what does this do for my body?’ They’re really examining everything that they put into their bodies. Whereas before, I think people were looking for maybe an escape or just pure taste and refreshment. And they really want to make sure from an efficacy standpoint that the brands really stand up to the promises that they deliver,”​ Louisa Lawless, chief strategy officer at Stratus Group, told FoodNavigator-USA.

Reflecting on the Stratus Group’s experience in two parts of the functional beverage category where it plays with its alkaline water Perfect Hydration and its organic Koe Kombucha, Lawless shared what benefits consumers are looking from for functional beverages, where they are and are not willing to compromise and strategies for standing out in an increasingly competitive set.

Consumers extend demand for health benefits to the planet

For example, she said, in the fast-growing alkaline beverage segment, the company’s brand Perfect Hydration targets health and fitness focused consumers who are very selective about what they put in their bodies and scrutinize the impact of their purchases on the environment.

“They are not only looking at what is in the products, the liquid, they’re also looking at the packaging or the vessel that it comes in, and I think it’s equally important. We have people that are just as concerned about how this fits their active lifestyle, the ingredients, the minerals, the electrolytes, how is the product made, but also how is this bottle being produced,”​ she said.

Perfect Hydration meets these needs by offering water that has a soft palate feel, is free from any sort of metallic aftertaste and is sourced from local municipal water sources, “which also keeps our footprint as light as possible from an environmental standpoint,”​ Lawless said.

In addition, the water is packed in an eye-catching bright blue bottle and can, both of which are 100% recyclable and recycled.

“We went into a 100% recycled PET package very, very quickly … because we knew the consumer trends were changing very, very quickly,”​ and they were unwilling to compromise on their health or that of the planet, Lawless explained.

Gut health, immunity benefits are still top priorities – but so is taste

Similarly, in the competitive kombucha set, the company’s Koe Kombucha meets ongoing consumer demand for gut health and immunity support and a desire for a less abrasive taste profile – a quality that can be divisive when it comes to kombucha.

Joking that Koe Kombucha doesn’t taste like a "dirty sock," Lawless said even staunch kombucha-haters are drawn to Koe because it has a lighter, refreshing taste profile and a line-up of approachable flavors that can be enjoyed as a mocktail, in a cocktail or by themselves.

“We’ve actually seen a lot of people, which is kind of fun, looking at different culinary ways to consume the products … so many people, celebrity chefs, people coming by saying, ‘Well, I’m really cooking with these products now,’”​ which shows how people are becoming more adventurous and looking for new experiences, Lawless said.

To help spread the word that Koe is different from other kombuchas, Lawless said the brand has engaged far-reaching campaigns, including one that talks about “resting bouch-face,” or the pucker that some people make when they first taste the sour, vinegar profile of competitors, but don’t experience with Koe.

Between the gentle flavor profile and the 360 campaign, Lawless said that Koe is selling fast in channels where kombucha doesn’t normally perform well, including c-stores and in regions of the country where kombucha is less recognized and accepted.

For Perfect Hydration, the company is raising the profile of its alkaline water through a partnership with CrossFit, participants in which Lawless said are very product loyal.

Balancing benefits and price

While consumers want added benefits from products, they don’t want to pay significantly higher prices – particularly in the current economic environment.

Lawless said that both brands keep their prices as low as possible – and at least for Koe lower than many of the original players in the kombucha category – by increasing the efficiency of its production and by offering products that are shelf stable and do not require cold chain or constant temperature control.

The brands also leverage price-pack architecture to offer products at price points for consumers with different budgets, such as singles, packs and even a new gallon-size container for Perfect Hydration.

And finally, the company tries to offer its products wherever consumers are, recognizing that many shoppers continue to consolidate their trips and visit fewer stores than pre-pandemic in part to save time and to save money on transportation.

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