With retailers looking to cash in on hot growth beverage categories, 2008 is forecasted to be a year where high demand beverages are expected to perform well across perhaps more retail channels than ever before.

“Every retailer across the country wants the hot growth category,” says Bump Williams, executive vice president, general manager global consulting, beer, wine & spirits/Wall Street division, Information Resources Inc. (IRI). Recent IRI studies have shown that while 84 percent of the households in the United States shop at Wal-Mart and 99.9 percent of the households shop at supermarkets, consumers are making multiple trips to multiple retail channels—73 percent of consumers are now shopping at five or more retail channels to meet their consumer packaged goods (CPG) needs. As a result, a variety of different kinds of retailers are beginning to respond by carrying more of these high-growth beverages.

On the Rise
Among the beverage categories becoming more ubiquitous in different retail channels are craft beer, energy drinks, enhanced waters, wine and sports beverages. All of these categories are expected to show strong growth in 2008, notes Williams.

Craft beer is expected to perform best in supermarkets where retailers are making more shelf space for the high-end beers that have had a strong track record in the past with the segment outpacing the beer category as a whole, up 17.3 percent in dollar sales in supermarkets as of Sept. 9, 2007, according to IRI. Williams points out Molson Coors’ Blue Moon Belgian White Ale in particular saying, “Retailers enjoy the dollar sales and margin as well as the excitement it brings to the beer category. Molson Coors has done a great job securing distribution, retail support and marketing this beer.”

Julia Herz, director of craft beer marketing, Brewers Association (Boulder, Colo.) adds, “Supermarkets are expanding their beer that is offered. The thing with craft beers is that they are regional most of the time…and that ‘buy local’ concept that we are seeing across the US completely applies to what craft beer is all about. The sustainability movement is huge and people are buying local.”

Energy drinks also are expected to show strong US growth between 20 to 25 percent in annual sales over the next five years, according to Beverage Marketing Corporation (BMC), continuing to gain the most distribution in c-stores, which represented 35.7 percent of the market share in 2006. “It’s the single biggest retail channel for distribution,” says Gary Hemphill, managing director and COO, Information Services, BMC. “As the category grows, you will see distribution broaden into a greater number of channels.” Including, he says, mass merchandisers or club stores.

The channels that demonstrated the most volume growth when it comes to beverages are supermarkets, foodservice and convenience stores/gas in 2006, according to BMC. By 2011, mass merchandisers or large-scale discount stores (i.e. Wal-Mart), are projected to replace c-stores/gas and move into the No. 2 spot behind supermarkets with 5.3 billion gallons sold annually, a 13.9 percent share of volume.

Making a Splash
Of all the beverage categories, it’s the bottled water segment that is expected to continue to grow at the quickest rate, reports BMC, with US volume projected to reach 12.3 billion gallons in 2011 from 8.3 billion gallons in 2006.

Just as traditional bottled water has made a splash (specifically in grocery channels) so will flavored and enhanced waters. According to Mintel, bottled water is expected to see the most growth in c-stores. The Chicago-based market research firm says that convenience during travel is the leading reason to buy bottled water.

“Drug and convenience stores will see the most growth because they only recently became a player in the premium water category,” notes Laura Ringhofer, senior key account manager, national retail sales, of one such premium water, Borba Skin Balance Waters, which is now distributed by Anheuser-Busch, Inc. Borba is a functional beverage line that includes clarifying, age defying, firming and replenishing varieties. A-B began distributing the beverage in November 2007.

Emerging Markets
Aside from the traditional retail outlets, what’s next in terms of where beverages can perform well? Sports arenas, movie theaters, casinos, airlines—been there, done that. But that doesn’t mean we’ve seen it all.

Ringhofer offers, “…‘non-traditional’ retail outlets, such as high-end beauty stores, health clubs and spas in hotels and cruise ships, allows our target consumer to discover and learn about the product in an environment they trust…it also helps consumers maintain a feeling of prestige.”

In other words, being seen with that “hot” new beverage in hand.

From Beverage World January 15, 2008