September 11-15, 2017

Healthy & Functional Beverage Report

Giving beverages a health and wellness proposition is the single overriding factor driving research and development in the liquid refreshment market today. And under the healthy umbrella are two themes that emerge most frequently: “natural” and “functional. The next several pages explore the dynamics of key segments and ingredients wearing the health halo, highlighting brands that have been generating a fair amount of buzz in the “better-for-you” space.



Wellness-Conscious Carbonates
it may raise some eyebrows to include carbonated soft drinks in a report on health & wellness-oriented beverages, but many artisanal soda makers are opting for ingredients that lean more toward the natural side of the market. Take a brand like Oogave, for instance, whose very name plays up the fact that it’s sweetened with agave. A disproportionate number of other brands, at the very least, tout the cane sugar content of their sodas.

On the low- and no-calorie side, an increasing number are opting for zero-calorie sweeteners with a natural proposition: Stevia has become the most popular, while options like monk fruit extract (such as Tate & Lyle’s Purefruit) and erythritol—an alcohol-derived sweetener are gaining traction.

Just as agave has a soda named after it, stevia, too, has at least one in the Zevia line of zero-calorie CSDs.
Beyond sweeteners, some brands are taking soft drinks into flavor territory where they previously hadn’t ventured. Take Joia, for instance. The brand, which was one of two Best in Show winners in this year’s BevStar Awards, features a line of sodas with novel combinations like grapefruit, chamomile and cardamom; lime, hibiscus and clove and blackberry, pomegranate and ginger.

“I think consumers are definitely wanting something that’s real, artisanal, natural and local,” says Jim Tonkin, president of consultancy HealthyBrandBuilders. “If you look around at some of the brands that have been around for a long time, like Stewart’s, they say they’re kind of national, but they’re really not. It still is a regional play or a local play with most of these companies.

As there are really no universally defined parameters for the segment, measuring its performance depends on how inclusive one’s particular definition is. Beverage Marketing Corporation, which offers figures on a relatively broad segment it identifies as “premium soda,” estimates that total wholesale dollars in 2012 were about $570 million.

“I think the growth is still potentially there, even thought CSDs have been declining for seven or eight years,” says Tonkin. “I don’t think CSDs are ever going away. I do see opportunity for these [natural] brands to pick up steam.”


HotLips Real Fruit Soda
The HotLips brand combines the naturalness of fresh fruit with the appeal of the local movement. For instance its Marionberry Soda uses the berry indigenous to the brand’s home state of Oregon. It’s brewed and bottled at Berry Noir, a family-owned and operated fruit processing plant in Newberg, Ore. The company also features Apple, Raspberry, Black Raspberry, Pear, Cranberry, Cherry, and Blackberry varieties. The sodas contain real fruit pulp, so there’s little doubt about its natural proposition.

Zevia Zero-Calorie Soda
The folks behind Zevia realized the potential for stevia extract fairly early on, before it became so widely used among low- and no-calorie beverages. Launched in Seattle in 2007 with Cola, Lemon Lime Twist and Orange varieties, the line has since grown to include 15 flavors. In addition to the initial three, Zevia offers Ginger Ale, Grapefruit Citrus, Grape, Strawberry, Ginger Root Beer, Caffeine Free Cola, Cherry Cola, Black Cherry, Cream Soda, Lime Cola, Dr. Zevia (a riff on Dr Pepper) and Mountain Zevia (similar to Mountain Dew).

Grown Up Soda
They grow up so fast! GuS, which bills itself as “the first soda made truly for adult palates,” this year celebrates 10 years of offering less-sweet CSDs—each 12-ounce bottle has between 90 and 98 calories. They’re all sweetened with cane sugar and contain natural flavors. Its Dry Cranberry Lime, Dry Meyer Lemon, Star Ruby Grapefruit and Dry Pomegranate are made with real juice. Its Dry Cola contains real cola nut extract and its Extra Dry Ginger Ale features real ginger root. Its most recent offering, Dry Root Beer, includes birch oil and vanilla.



Leafing Through
as the ready-to-drink tea segment matures, it appears to have reached a point of steady, moderate growth in the mid-single digits. Black teas make up the vast majority of the ready-to-drink category, but green tea continues to move into the mainstream as consumers learn more about its high antioxidant content. Green tea increasingly is being used as a natural source of energy, as well. And then there are more obscure forms, like white tea, that have some niche consumers but are quite far from being considered mainstream.

“Green tea,” says Jim Tonkin, president of consultancy HealthyBrandBuilders, “has definitely arrived.  White tea was rising to some prominence, but I think the issue has been with supply and people aren’t really understanding white tea…Certainly the Walmart consumer isn’t buying white tea. It’s hard enough to get them from black to green.”

And then there even more niche segments like rooibos (aka “red bush”), which technically isn’t even a tea. “The problem is, Americans like to put things in categories,” Tonkin notes. “Rooibios is not a tea, it’s an herb.” Herb it may be, but it’s got a high antioxidant content and can be an appealing tea alternative for some for its lack of caffeine.

Then, when you get beyond even rooibos, things get very obscure. Yerba mate is another product that’s not technically a tea, but is pretty much drunk like a tea. “I think [yerba mate] is very esoteric….It’s only going to get so big,” Tonkin says.

Celebri-tea is a certified-organic line of ready-to-drink teas that encompass the three major tea areas: black, green and white. Varieties include Half Cranberry & Half Tea (black), Blueberry Açai (white), Half & Half (black), Mangosteen (green), Açai Lemonade (white), Pomegranate Blueberry (green), Blueberry (white), Asian Pear (green) and Peach Ginger (green).

Chai Elixir
This is one of those products that can be filed under “hybrid.” It’s carbonated, so that somewhat makes it a soda, but it’s actually carbonated tea. The product was launched at June’s World Tea Expo and Healthy Beverage Expo. It’s available in three varieties: Essence, white tea sweetened with cane sugar and white peach nectar and blended with spices; Fusion, an oolong tea with natural flavors, spices and a hint of vanilla and Vivid, a green tea with a mix of spices from around the world.

On the unsweetened side, there’s TeJava, marketed by Crystal Geyser. It’s a black tea with a visually and tactilely dynamic PET bottle. The proprietary 18-ounce bottle is sculpted to look like tea leaves are wrapping around the package from top to bottom. It won the top spot in the unflavored/unsweetened black iced tea category in the 2013 North American Tea Championship




Ancient Healer
aloe-based beverages compose one of the smallest of the emerging functional/health and wellness segments, but there’s still plenty of potential for growth. Estimates are that aloe is about a $20 million beverage segment in the U.S.

Drinks can deliver aloe in a number of forms: aloe vera pulp, juice or powder.

“I believe the pulp is the best delivery vehicle because it’s more natural and raw,” offers Jim Tonkin, president of the consultancy HealthyBrandBuilders. “I don’t have a lot of excitement about the powder itself; it’s probably the least “natural’ because it has to be milled to get into that granular position.”

Aloe vera is known for its high concentration of vitamins, minerals and amino acids, aiding in digestion and is believed to boost immunity. There have been some studies, however, that have refuted some of those claims.

“Articles about the negative benefits haven’t helped,” says, Tonkin, “but I’m not sure if people got too excited about those.”
The consensus has been that the jury’s still out on whether the negative studies hold any water.

ALO is the best known of the brands, packaged in box-shaped PET, similar to the bottles in which one would find Asian green tea, such as Ito En’s Teas’ Tea line.

Tonkin adds that he’s not sure how big the segment is going to get, since there are still a large number of brands out there trying to secure distribution.

The most significant player in the market, Alo, a past Beverage World Breakout Brand, offers a diversity of products for consumers. Its Alo original line features Exposed, which combines its original aloe vera juice with honey; Escape, with pineapple, guava and seabuckthorn berry; Awaken with wheatgrass; Enrich with pomegranate and cranberry; Comfort with watermelon and peach; Appeal, with pomelo, pink grapefruit and lemon; Enliven, with 12 fruits and vegetables; Allure, with mangosteen and mango and Elated with green tea and olive leaf tea. The company also offers three light offerings with reduced sugar, and Coco Exposed with coconut water.

TeAloe brings hybridization to the aloe vera beverage space, putting “juicy aloe bits” in brewed green tea. It’s available in Original, Peach, Passion Fruit and Mint flavors. All are organic and Fair Trade certified. The brand this year won first place in the North American Tea Championship.

Salutti YogoAlo & Aloevine
Aloevine is the best known brand in the Salutti portfolio, on the market for about a dozen years with a few different product lines. It’s available in original Aloe, Kiwi, Guava, Mango, Peach, Grape, Strawberry, Pineapple and Pomegranate. The company also offers YogoAlo, which adds skim milk into the aloe mix, with flavors like coconut, strawberry and mango and has a pulp-free line, Salutti Freedom, geared motoward U.S. palates.




A Kick Can Be Good For You
the energy drink category is among the leading liquid refreshment beverage categories when it comes to volume growth—for the past two years, the category has seen double-digit acceleration, according to Beverage Marketing Corporation—and as consumers looking for natural alternatives, energy drinks are answering the call.

Plant extracts and fruit flavors in beverage, for example, are forecast to grow strongly in the United States, according to Euromonitor International, particularly within the energy drink category. Over the past five years, the use of plant extracts in energy drinks has grown by nearly 80 percent.

Capitalizing on the health and wellness trend, energy drink manufacturers are using fruit flavors to add a natural element to drinks, including fruit concentrates providing color as well as flavor elements.

Among the most popular flavors for energy and sports drinks are lemon and lime, followed by orange and mixed fruits, according to Euromonitor, but data suggest that exotic flavors are also being used, as a majority of the pie is comprised of “other flavors.”

While energy drinks have been typically targeting young adults, Euromonitor International figures suggest that by 2020 there will be an additional 5 million consumers aged 30 to 39 in the U.S. It’s this group of consumers who are looking for more natural ingredients in their energy drinks.

Starbucks Refreshers
Starbucks Refreshers gets its energy boost from green coffee extract, which sources the natural caffeine from the coffee bean before it’s roasted, giving consumers all the kick coffee has but without the coffee taste. This sparkling drink is low in calories and doesn’t use artificial sweeteners. It’s available in fruit flavors including Orange Melon, Strawberry Lemonade and Raspberry Pomegranate.

Killer Buzz
Killer Buzz Energy (aka KLR BZ) has a number of products that would fit more under the “indulgent” umbrella, such as its Mocha Madness (infused with dark chocolate) and Luscious Latte (with creamy vanilla) varieties. But it does also play in more health-and-wellness territory with its Hybrid variety, which it describes as “a mongrel mix of beneficial berries.”

Venga Functional Infusions is a line of non-carbonated tea/fruit juice blended drinks made with natural ingredients, plant-based supplements and bioactive extracts. Among its functional beverages is Energize made with mate tea, fruit acids, natural plant extracts with high mineral content, according to the brand, and natural caffeine from green coffee beans and guarana. Venga drinks don’t contain artificial flavors, coloring or additives and its Energize drink has a flavor profile of red apple, dragonfruit, sea buckthorn and yerba mate tea.



Cracking the Coconut Code
though coconut water is still a young segment of the beverage marketplace, it has shown impressive growth, according to a recent Mintel report. The number of product introductions has more than quintupled—that’s an uptick of 540 percent—in the past five years from 2008-2012.

This is partially because coconut water has also found its way into other beverage categories as functional and good-for-you drinks look to capitalize on coconut water’s health properties, such as potassium, calcium and electrolytes. Energy drinks, fruit drinks and sports drinks have all fused its products with coconut water.

The report relays that the most product introductions have been in North America (35 percent), followed by Europe (34 percent), and Asia Pacific (14 percent)—all showing an increase from 2008. On the other hand, however, Latin America saw a decline in product introductions with just 16 percent in 2012 compared with 61 percent in 2008. 

Cocofina is an isotonic coconut water made with 100 percent coconut water that is sourced from young, green coconuts. On the market for about six years, this brand has a lineup of products that have natural milk-based preservatives, according to Fina Brands Ltd., including 100 percent coconut water packaged in PET, Tetra Pak, cans and flavored products—mango and guava, apple and blueberry, tea and passion fruit in 500 ml PET.  Because the product is all natural, the company relays that color and sweetness varies per season.

C2O Pure Coconut Water is packed in cans and boasts that it differs from other coconut waters on the market because of where it sources its coconuts. The brand relays that its coconuts are grown on the inland soils of Thailand meaning that they are fresh water coconuts that don’t have the traditionally salty taste of coastal coconuts. Each batch is taste-tested, the brand says, to ensure consistent quality and taste for its consumers.

PowerCoco targets athletes looking for natural hydration. First introduced into the market in 2010 by founder Tyler Beuerlein, a New York Mets player, PowerCoco has caught the attention of professional athletes including NBA star Carmelo Anthony, who also serves as the executive vice president, Peter Bourjos, who was named Pacific Coast League Rookie of the year, MLB star Jerry Hairston, and Marcus Hendren, CrossFit Games contender. PowerCoco comes in five flavors: Orange, Grape, Lemon Lime, Blue Raspberry and Fruit Punch, and has 25 calories per serving, 180 mg of potassium and uses natural sweeteners (cane sugar and stevia).



Functional Saviors
while super hydration or rehab-marketed drinks don’t specifically market themselves as anti-hangover drinks, there is a cross-over with products like Monster Energy’s Rehab and Rockstar Recovery offering the same end result that anti-hangover shots promise.

According to Datamonitor, Monster Rehab, the non-carbonated, tea-infused drink from Monster Energy that promotes rehydration, has seen significant success in the U.S. and the U.K.

Jonas Feliciano of Euromonitor says that while drinks like Monster Rehab and Rockstar Recovery might serve the same purpose as an anti-hangover drink, the marketing behind the brands give them broader appeal. “I think the flavor factor is what really led to this big surge that we are seeing with energy drinks as a whole in terms of different flavor offerings,” he says.

Another challenge for anti-hangover shots is the competition they face at the point of purchase—at the register where an established segment, energy shots, are also located, Feliciano adds.

What’s next for anti-hangover drinks? It remains to be seen, as the segment remains in its infancy and is still too small to truly measure its trajectory. The market could start seeing more hybridization of such products, combining such functional attributes as relaxation or digestive enhancement with hangover-easing properties.   


Gogee Shot
Touting superfruit properties, Gogge is a brand that offers a shot that is formulated with ingredients that can also be consumed as an anti-hangover remedy. Gogee is made with goji berry, found in the Himalayan mountains, and is believed to promote kidney and liver function among other things. The product doesn’t contain preservatives or added sugar and has 100 percent natural juice, nothing artificial, according to the company. Gogee Shot comes in three varieties: Goji Berries, Green Tea and Dark Chocolate.

Hangover Resqwater
Hangover Resqwater is an anti-hangover drink described as an “all-natural dietary supplement.” The product is formulated with organic prickly pear cactus, organic sugar, fruit extract, B vitamins, n-acetyl l-cystein and milk thistle. The brand claims these ingredients help metabolize acetaldehyde, which is what results in a hangover. Consumption of the brand is recommended during and after drinking, typically one 8-ounce bottle for every two to four drinks.

Hangover Joe’s
Hangover Joe’s is a recovery shot officially licensed for “The Hangover” movies. It is formulated for consumption the morning after a night of drinking. The shot contains picamilon, a dietary supplement formed by combining niacin with GABA, kudzu, a plant that has been shown to ease nausea, aches and cool the body temperature, taurine, caffeine, green tea leaf extract, black pepper extract, goji berry concentrate and vitamins and amino acids. Hangover Joe’s Get Up & Go, the manufacturer, relocated its production facility to the former 5-hour Energy co-packing plant in Ann Arbor, Mich. to meet demand.




Looking Good and Feeling Good
along with health and wellness, some consumers also are looking for a fountain of youth in their beverage choices. Seeking out ingredients that can slow or even reverse the aging process is top of many consumers’ minds.  According to Datamonitor, 34 percent of consumers globally would “definitely” buy a food or drink product that improves appearance using functional ingredients (for example collagen, vitamins), while 47 percent of consumers would “maybe” buy it.

The target consumer for this segment is 18 to 44. This age group is most likely to say they will “definitely” buy drinks, which improve appearance while older consumers are more skeptical, with just 18 percent of 65-plus year-olds saying they would definitely buy such a product, Datamonitor reports.

Late last year, Coca-Cola and French company Sanofi entered in a 50-50 partnership to introduce a line of good-for-you and beauty drinks called Beautific Oenobiol, named after Sanofi’s beauty nutrition brand. The beverages were launched as a pilot project in France in the fall with the possibility of an extension to other countries in Europe. Coca-Cola will be responsible for the drinks formulation and Sanofi for the distribution in pharmacies and drugstores.

As soft drinks continue to come under fire, this investment demonstrates Coca-Cola’s efforts to expand its drinks portfolio and it’s ongoing commitment to health and wellness.


Applied Nutrition’s Liquid Collagen Skin Revitalization  
This concentrated drink mix is packaged in a style which replicates make-up rather than a traditional drink. Available in the U.S., it is strawberry and kiwi flavored, and contains collagen, biotin, silica and vitamins A and C, a blend of antioxidants including green tea extract, and is “specially designed to fight the effects of aging,” in skin, hair and nails.

Fountain, The Beauty Molecule
This recent launch in the U.K. claims to offer the first water-soluble resveratrol. Fountain is marketed as a supplement and has a recommended dosage of one teaspoon daily for best results. It can be consumed on its own or mixed with water or juice. Each serving has 40 mg of Trans-Resveratrol from Japanese Knotweed (Polygonum cuspidatum). Resveratrol is found in the skin of red grapes and other fruits and is believed to promote heart health, radiant skin and slow aging among other benefits like relief for rheumatoid arthritis and osteoarthritis. Fountain is pomegranate flavored.

Celsius is marketed as a negative calorie drink that helps consumers burn calories. Recommended before exercise, Celsius studies show that the drink can raise metabolism while providing sustained energy. Studies also show that Celsius can reduce body fat, provide greater resistance to fatigue and increase endurance. The company relays that in Q2 is has increased revenue by 66 percent and in the U.S. the brand is seeing double- and triple-digit growth where retail accounts are up 38 percent over the previous year. Health and fitness accounts are up 178 percent.

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