Cola Makes a Comeback
By CATHERINE PENN
Beverage Industry’s 2005 Flavor Survey shows that
beverage processors are in an excellent position for buying flavors. Three
of four will increase the volume of flavors they use in a market where
suppliers have not increased prices during the past six months and are not
expected to increase them during the next six months.
The research shows flavor usage, expectations and
bestsellers for the year ahead through seven beverage categories —
soft drinks, juices, dairy beverages, flavored water, energy and sports
drinks, coffee and tea.
Flavors at a glance: 2005 vs. 2004
Processors have been busy adding fruit punch, cola,
grapefruit, orange and grape flavors to drinks during the past 12 months.
For the year ahead, fruit punch and grape usage will remain at current
levels. Although last year was good for grapefruit, the data suggest
interest in this tart fruit will decline this year. Orange and cola usage
will increase in the months ahead; moreover, orange and cola are
anticipated to be the two best-selling flavors
for 2005 in the beverage industry overall.
Processors are highly dependent on strawberry, lime,
cherry and tea flavors. In terms of usage, these have made impressive gains
during the past 12 months and will continue to impress during the next 12
months. Most processors add lemon, raspberry, peach and apple flavors to
drinks; however, while love for raspberry will increase this year, lemon,
peach and apple will remain constant.
Cranberry, passion fruit, blueberry, blackberry, kiwi,
root beer and banana flavors are used by at least two of five beverage
processors. Blueberry and passion fruit will increase in popularity this
year. The purchase of banana, kiwi, root beer and blackberry flavors will
remain stable this year, and cranberry purchasing may decrease.
One in three processors bought melon, ginger, guava,
cinnamon, ginseng, pear, papaya and apricot flavors last year. Processors
will continue to buy apricot, ginseng, papaya, pear, cinnamon and ginger at
the same rate. However, the data suggest that guava and melon flavors were
pretty successful additions to drinks last year and processors plan to add
more this year.
Coconut, eggnog and boysenberry are used by 20 percent
of processors. In the months ahead, boysenberry and coconut will remain
constant, while eggnog will likely decline.
Vanilla, mango, pineapple, tangerine, chocolate and
coffee flavor purchasing has been stagnant during the past 12 months. This
year, vanilla and coffee will fare better. Mango, pineapple, tangerine and
chocolate will remain at current levels.
When processors were asked if there were any new
flavors they were using, the data suggest pomegranate flavor might be a new
taste for 2005.
Juice picks up the pace
Almost all juice
processors will be buying more flavors this year, most likely from a
national flavor supplier. “One needs strong flavors and aromas to
mask undesirable notes of health beverages/supplements,” explains one
processor’s increased usage.
Although most juice processors are prepared to wait a
week for delivery of flavors, the price needs to be right because 59
percent are price shoppers. During the past six months, 54 percent report
flavor prices as stable and most expect prices to hold steady in the first
half of 2005.
Orange, grape, raspberry, apple, strawberry, lemon and
peach flavors are the most heavily used flavors in juices. Most processors
plan to increase their use of strawberry, raspberry, orange, peach and
lemon in 2005. Use of apple and grape will remain at current levels in the
|BEVERAGE FLAVOR USEFOR OVERALL INDUSTRY|
(% of respondents purchasing)
Three of four juice processors bought cherry, fruit
punch, mango, lime and blueberry flavors last year. Most are planning to
increase their use of blueberry, lime and mango this year, whereas use of
cherry and fruit punch will remain at 2004 levels. Two of three processors
purchased grapefruit, cranberry, passion fruit, kiwi, tangerine, pineapple
and banana flavor in 2005. Only cranberry purchasing for juices will grow
in 2005. Usage of grapefruit flavor in juices will nosedive in the coming
months and passion fruit will also fall from favor. Banana, pineapple, kiwi
and tangerine will remain at 2004 levels.
Melon, papaya and guava flavors in juices are out for
2005. On the other hand, tea and blackberry will grow, while pear flavor
will be added in the same quantity it was last year.
According to respondents, juice processors sell
single-flavor juice drinks 54 percent of the time, and range, apple and
cranberry will be the top-selling juice drinks this year.
Flavor blends are used in 46 percent of juices. Fruit
punch, orange-pineapple, tropical, berry-blend, cranberry-raspberry and strawberry- banana
will be the top-selling combinations for juices in the months ahead.
Overall, 64 percent of juice drinks have natural
flavors and 5 percent use organic flavors. “Natural/ organic is the
way to go,” confirms one processor. However, organic still represents
a small portion of the juice category; 67 percent of processors not
planning to increase their use of organic flavors in juices at this time.
And one of three juice drinks is processed using artificial flavors.
|POPULAR JUICE FLAVORS|
The return of a classic
This time last year, most soft drink manufacturers
were buying cola flavors at the same rate they did in 2003. That’s
all changed: this year, most manufacturers will be buying more cola.
Two of three manufacturers will be buying more flavors
in 2005, and the rest will keep flavor usage at least year’s level.
Most report that flavor prices stayed the same during the past six months;
however, 50 percent anticipate a 3 percent price increase over the next six
months, which will be passed on to consumers. Fifty-eight percent of soft
drink manufacturers say they regularly price shop for flavors.
In terms of delivery, 43 percent of soft drink
manufacturers expect flavors to arrive in three days or less; 43 percent
are prepared to wait a week. Larger manufacturers prefer to use national
suppliers; most manufacturers with less than $10 million in annual revenue
prefer a local supplier.
While cola is making a comeback, other the flavor
proliferation in soft drinks is expected to continue. “Look at the
growth in diets —led by flavors,” says a manufacturer
confirming the importance of flavors. Orange and cola should be considered
ubiquitous flavors for soft drinks — all manufacturers use them. Also
popular are grape, lemon, lime, vanilla, cherry, root beer, strawberry and
fruit punch flavors. Usage levels for grape, fruit punch, strawberry and
root beer will remain at 2004 levels. Vanilla usage in soft drinks will
decline in the months ahead. One supplier said “vanilla pricing was
up 500 percent,” which might help explain the decline. Use of lime, cherry and lemon will grow
Two of three soft drink manufacturers bought
raspberry, tea, grapefruit, cranberry and peach flavors last year. Use of
raspberry is expected to increase this year, while grapefruit will decline.
In the middle — tea, peach and cranberry flavor purchasing will
remain at last year’s levels throughout 2005.
Most soft drink manufacturers bought pineapple, apple,
mango and ginger flavors last year, but no movement, up or down, is
expected in the months ahead. Use of blackberry, passion fruit, kiwi, melon
and tangerine flavors in soft drinks will also remain stable, being
purchased by about 40 percent of manufacturers.
Manufactures report 63 percent of soft drinks are
single flavors. The top-selling single-flavored soft drink this year
— surprise, surprise — is predicted to be cola. Thirty-four
percent of manufactures stand behind the assertion that cola will be the
top seller, compared with year when only 18 percent had faith in cola.
Other top-selling soft drink flavors this year include orange, lime,
strawberry, root beer, cherry and lemon.
Flavor blends account for 37 percent of soft drinks.
The top-selling blend for 2005 is expected to be strawberry-kiwi — 20
percent of manufacturers stand behind this combination. Other expected
top-selling blends for the year include orange-pineapple, lime-cola and
Soft drink manufacturers use artificial flavors 62
percent of the time. One in three adds natural flavors and 4 percent use
Dairy prices rise
Half of dairy respondents
report an average 12 percent price hike in flavors during the past six
months, which was passed on to customers. During the next six months, a
time when 67 percent of dairies plan to buy more flavors, most hope that
suppliers will keep flavor prices in check. Dairies could do more than just
hope because despite the recent higher price, only 41 percent of dairies
regularly price shop for flavors.
Two of three dairies are prepared to wait a week or
more for suppliers to deliver flavors, and 53
percent prefer to use national flavor suppliers.
Traditional strawberry, vanilla and chocolate flavors
can expect to move over; dairies are buying fruit flavors. Last year, three
of four dairies bought orange and lemon flavors making them the most
purchased flavors at dairies. Also popular are strawberry and fruit punch.
While strawberry usage will increase this year, enthusiasm about fruit
punch will likely decline.
|POPULAR SOFT DRINK FLAVORS|
Raspberry, vanilla, chocolate and eggnog flavors were
used by 61 percent of dairies last year. Raspberry and vanilla purchasing
will remain at current levels in the coming months, but chocolate and
eggnog will increase in popularity.
Dairies report 68 percent of drinks are single
flavors. As expected, chocolate, vanilla and strawberry will be top sellers
this year, but this does not discount the fact that three of four dairies
bought orange and lemon flavors last year. Strawberry-banana is expected to
be the top-selling blend.
Dairies add natural flavors 42 percent of the time,
and 4 percent add organic flavors. This year, 18 percent of dairies are
planning to increase their use of organics. Artificial flavors are added to
dairy drinks 55 percent of the time.
Flavored water continues to gain
“Flavor trends should hold their small share of
market, but regular bottled water will always be king,” says one
processor. This is true; however, all the bottled water manufacturers
responding to Beverage Industry’s survey report they will use flavors in some of their
This year, all respondents said they will increase
their purchase of flavors compared with last year. The data show that
prices for flavors have been stable during the past six months and this
stability is expected to continue through the first half of this year.
If a consumer selects a bottle of flavored water, it
is most likely to be one of the following — orange, strawberry, lemon
or lime. The data suggest that raspberry was successful in 2004, and 73
percent of facilities using raspberry are planning to increase the amount
they buy this year.
|POPULAR FLAVORS FOR DAIRY
Two of three water bottling facilities bought fruit
punch last year and use of this flavor will remain at the same level this
year. Most bought grape, cherry and peach in 2004. Grape and peach
purchasing will increase during the coming months, but cherry will probably
remain at current levels.
Water facilities add a single flavor to water 69
percent of the time. Top-selling single flavors for 2005 are lemon, grape,
lime and strawberry. For water containing flavor blends, strawberry-kiwi
and mango-peach are expected to be top sellers in the months ahead.
Water bottlers add natural flavors 63 percent and only
1 percent add organic flavors. The rest, 29 percent, use artificial
Traditional flavors for energy/sports drinks
Two of three energy and sports drink manufacturers
report they will buy more flavors in 2005. Almost all found flavor prices
stable during the past six months and expect prices to hold steady during
the first half of 2005. Most of these manufacturers do not price shop for
|POPULAR FLAVORS OF BOTTLED WATER
Four of five energy and sports drinks manufacturers
will wait a week or more for flavors to be delivered, and three of four use
Lemon and orange are, and will continue to be, the
most popular flavors for energy and sports drinks. Other popular flavors
include fruit punch, which must have been pretty successful because nine of
10 processors are planning to buy more this year. Grape and lime are also
used by most energy and sports drinks manufacturers. The data show that
lime usage will increase during the coming months — grape will also
increase, but not as much as lime.
Three of four energy and sports drinks contain flavor
blends. Manufacturers hope that consumers will select berry-citrus,
cherry-lemon, fruit punch and strawberry-orange to meet their energy and
sports needs this year.
Energy and sports drinks contain natural flavors 52
percent of the time, and 15 percent are organic flavors, which is the
highest use of organic flavors in the industry. Also, one in four
processors plans to increase their use of organic flavors. Artificial
flavors are added to 33 percent of energy and sports drinks.
Coffee-makers go for decadence
Mocha (chocolate) is the hottest coffee drink,
according to survey respondents. It is also popular to add vanilla or
cinnamon to coffee. In the months ahead, coffee-makers will buy more
vanilla, but use of cinnamon will hold steady at last year’s levels.
|FLAVORS FOR ENERGY AND SPORTS DRINKS
The data show that adding raspberry flavor proved
successful for 67 percent of coffee manufacturers. In addition, most bought
strawberry, peach and orange flavors last year; however, use of these
flavors will likely remain at or slightly below last year’s levels.
Coffee-makers were asked if there were any other flavors they bought last year, and reported
that caramel, hazelnut and Irish cream were delicious additions to coffee.
|FLAVORS FOR COFFEE
Coffee manufacturers add single flavors to their
products 70 percent of the time. Top-selling single flavors for coffee this
year are predicted to be vanilla, chocolate and hazelnut. Fifty-eight
percent of respondents believe vanilla will be their No. 1 flavor.
One in four coffee-makers add flavor blends to coffee.
Chocolate-mint, chocolate-cinnamon, cinnamon-hazelnut and vanilla-hazelnut
are the popular blends for the months ahead.
Coffee-makers use natural flavors 56 percent of the
time and 7 percent add organic flavors. Interest in organics is likely to
increase this year because 40 percent of coffee manufacturers are planning
to increase their use of organic flavors. One in three coffee-makers add
Three of four coffee manufacturers regularly price
shop for flavors. Prices for flavors have been stable during the past six
months. This price stability is expected to continue, or as one in five
expect, decrease during the next six months. Coffee-makers use both
national and local flavor suppliers in equal proportion.
Tea is steeped in fruit flavors
Raspberry is the most popular tea flavor and will
continue to be this year, according to survey respondents. Other popular
flavors for tea are orange, lemon and peach, and use of these flavors will
continue to grow this year.
Three of four tea-makers bought vanilla and cinnamon
last year. Vanilla will greatly increase in popularity this year while
cinnamon will stay at last year’s levels or slightly decrease in use.
Ginger and ginseng were each purchased by 67 percent of tea-makers last
year, and this year ginger looks to be a winner. Ginseng, on the other
hand, will decline. Many manufacturers added pineapple and blackberry
flavors to tea, with blackberry proving more popular than pineapple.
Half the flavored teas include single flavors and the
other half are blends. Top-selling single flavors in tea this year are
predicted to be lemon, passion fruit, peach, raspberry and vanilla.
Cinnamon-citrus, cinnamon-lemon-orange, ginseng-berry, mango-passion fruit,
orange-pineapple and raspberry-blueberry are some of the tea blends that
might appear on store shelves in the coming months.
Tea-makers are all about natural and organic flavors.
“Specifying GMO status is important; we need GMO-free flavors
only,” explains one tea-maker. Organics is the general sentiment for
tea-makers and almost all are increasing their use of organic flavors this
year. Currently 10 percent add organic flavors to tea and 69 percent add
natural ones. “Natural and organics are definitely on the increase
and customers are demanding these more and more,” confirms another
During the past six months, half experienced a 6
percent price increase, which was not passed on to their customers.
Although most hope that flavor prices remain stable during the next six
months, tea-makers are not applying too much pressure on suppliers for
pricing: one of three regularly price shops for flavors. Half these
processors use national flavor suppliers and the other half buys locally.
Flavor Survey was conducted by Penn and Associates
Inc. Twenty-one percent of respondents report annual sales revenue more
than $500 million, and employ an average of 7,600 employees where 33 are
involved with the purchase of flavors. Twenty percent have revenue in the
$100 million to $500 million range, and report an average of 1,012
employees where 22 are involved in the purchase of flavors. Twenty-eight
percent work where annual revenue is $10 million to $100 million, and the
average number of employees is 935. One in three report annual revenue less
than $10 million, and an average of 306 employees.
In terms of job function, 42 percent are in sales and
marketing, 20 percent are from research and development, and 13 percent
are presidents/owners. Ten percent are general managers. Other job
functions include production, quality control, purchasing, engineering,
administration, and logistics. BI