On the cutting edge of hip and healthful
By ELIZABETH FUHRMAN
Concerns over food safety, greater
standardized USDA labeling have made organics more
appealing to consumers and generated
a slew of new organic
For 2006, the U.S. organic beverage category totaled
$1.3 billion (sales tracked in food, drug, mass merchandisers and natural
supermarkets), which marked an increase of 97 percent from 2001, according
to SPINS/Mintel. With an even higher approximation of sales, the Organic
Trade Association estimates sales of organic beverages through all channels
at $1.94 billion in 2005, representing year-over-year growth of 13.2
percent. The entire organic market grew at the same pace, according to OTA,
from $6.1 billion in 2001 to $13.8 billion in 2006.
Healthful living stands as the organic market’s
foundation, according to a Mintel International consumer survey in
Mintel’s October 2006 Organic Beverages report. Fifty-eight percent
of respondents say organic products are healthier for their bodies than
non-organic products, and 56 percent feel that they are healthier for the
environment than non-organic products. But only 26 percent say that organic
products taste better than conventional products.
Niche and segmentation
While consumers are buying more organic beverages, the
growth only contributes about 2 percent to total beverage sales in food,
drug and mass retailers, according to Mintel. Organic non-dairy beverages,
including soymilk, fruit juice, tea and coffee, generated $757 million in
sales and 58.1 percent of the category in 2006, while organic dairy
beverages, mainly milk, accounted for $546 million and 41.9 percent of the
Sales of organic non-dairy beverages increased 69
percent between 2001 and 2006, Mintel says. Lower sales growth in 2004 and
2006 point to a number of issues inherent in the organic industry,
primarily limited supply of organic-certified ingredients, as well as a
decline in sales of soy beverages.
Sales of organic dairy beverages (milk, half and half
and drinkable yogurt/kefir) increased 156 percent between 2001 and 2006.
This substantial increase is attributed to consumers’ desire for milk
from cows that did not receive bovine growth hormones (BGH) or antibiotics,
Organic beverage sales through food, drug and mass
merchandisers made up 70.8 percent of the total market, compared with the
29.2 percent allocated to the natural channel, Mintel says. Sales through
food, drug and mass retailers increased 31 percent between 2004 and 2006,
clearly showing that consumers have begun to rely on mainstream channels
for their organic products. Still, sales through the natural channel
increased 23 percent during the same period.
By 2011, Mintel estimates that sales of organic
beverages will reach $2.01 billion, an increase of 55 percent in current
prices. Mintel notes that its forecast conservatively addresses the
potential impact of Wal-Mart’s decision to offer more organics.
‘Everyday low prices’
Nothing says mainstream more than Wal-Mart, and the
retail giant stated early this year that it plans to sell organic food on a
much broader scale and to make these products more affordable. Its goal is
to roll out more than 400 organic items with a price target only 10 percent
above conventionally produced items.
But Wal-Mart’s further entry into the organic
realm has left some upset. The Cornucopia Institute, Cornucopia, Wis.,
filed a complaint with the U.S. Depart-ment of Agriculture accusing
Wal-Mart of misleading consumers by labeling nonorganic food as organic.
The group filed the complaint after finding problems, such as dairy coolers
stocked with regular yogurt by brands that also make organic varieties near
signs that say “organic.” Wal-Mart says it is committed to
organic products. The company is currently the No. 1 seller of organic
milk, which includes Dean Foods’ Horizon brand, and now its own
organic milk sold under the Great Value label.
Not to be left out, Target Corp., Minneapolis, is
launching a full collection of organic products via its Archer Farms brand
at Target and SuperTarget stores. The Archer Farms organic collection will
include items such as dairy and juice, and expand with new products on a
With increased retail availability, organic beverages
also are seeing an increase in new products, even in national brands. In
2006, Cadbury Schweppes launched Mott’s Organics Organic Apple Juice.
Also this year, Unilever released Lipton Organic Green Tea, a 100
percent natural green tea that is USDA Organic certified, and available in
a 1.2-ounce pack of 18 tea bags.
In October, PepsiCo began to roll out Tropicana
Organic Orange Juice and Orange Mango Juice, which is available in 64-ounce
bottles and sold primarily in club stores. The company also released
Tropicana Organic 100 percent Juice Boxes in Apple, Orange and Mango Orange
Juice. For 2007, PepsiCo plans to bring Tropicana Pure Premium Organics to
Even Anheuser-Busch is entering the organic market
with the national on- and off-premise launch in September of Stone Mill
Organic Pale Ale and Organic Wild Hop Lager. Marketed under the Green
Valley Brewing Co., Stone Mill’s cascade hops come from the
Willamette Valley in Oregon, and Wild Hop Lager is made with 100 percent
organic barely malt, also from Oregon.
Why would the leading domestic beer company decide to
move into the niche market of organics?
“We see an increase in the number of consumers
who want anything and everything organic,” says Angie Minges,
innovations manager at Anheuser-Busch. “With the demand, we decided
to create these products to compete in that category.”
Organic beers are appealing to the growing number of
consumers looking for product with organic ingredients and the craft
specialty drinker who wants to try different styles, Minges says.
“We’ve also found that it’s the female shopper in the
supermarkets that is actually picking up the organic products,” she
The products appear in mainstream and natural
supermarkets and on draft at locations that carry craft specialty products.
The beer is marketed as a specialty product first because it is more of a
craft specialty beer, but it is also marketed as organic. “We try to
communicate the ingredients and what we’re making the products with,
and we’re trying to communicate the taste,” Minges says.
All major ingredient trends and booming categories
have seen organic beverage introductions as well. Expanding its line of
ready-to-drink organic teas and touting the popular benefits of
antioxidants, Honest Tea, Bethesda, Md., released Pomegranate White Tea
with Acai. Three antioxidant-rich ingredients — pomegranate, white
tea and the acai berry — are combined with organic cane sugar to
create a tea for the tea-lover as well as the health-conscious consumer.
For 2007, the company will expand its Organic Fruit Quenchers with the
addition of Orange Mango, a tropical tasting drink that features mango,
mangosteen and orange.
With increased entries into the organic beverage
category, beverages need to differentiate themselves. “As we see the
growth of organic private label offerings, it’s not enough just to be
organic,” says Seth Goldman, “TeaEO” of Honest Tea.
“We need to create authentic brands, accessible packages and
delicious tastes that are competitive with all comers.”
The spread of organics is great for consumers,
retailers, people who produce the ingredients and of course the planet,
Goldman says. “By selling Honest Tea in mainstream stores, we help
make organics more accessible to more people,” he adds.
Another company increasing access to organics, Sweet
Leaf Tea Co., Austin, Texas, expanded its line to nine products with the
addition of the USDA organic Sweet Leaf Half & Half Lemonade Tea. By
the first quarter of 2007, Sweet Leaf Tea will be switching its entire
line, minus its two diet flavors, to organic. The move to organic came from
the tea source.
“We like the organic tea that we have identified
for the products,” says Michelle Weisblatt, director of operations at
Sweet Leaf Tea.
The company’s headquarters in Austin, near Whole
Foods Market’s headquarters, also makes organics very much a part of
the area’s culture, Weisblatt says.
“Everyone in this town seems to be very focused
on sustainable agriculture and organics,” she says.
For the first quarter of 2007, Sweet Leaf Tea also
will launch a line of three new organic beverages not in the tea category.
Even spirits are seeing new organic introductions.
Square One Organic Spirits LLC, San Francisco, this summer released Square
One Organic Vodka, certified organic by the Oregon Tilth.
Square One Organic Vodka is made from North
Dakota-grown organic rye and water from the Teton Mountains of Wyoming. The
40 percent alcohol by volume undergoes an organic fermentation technique
that combines with a classic four-column distillation and filtration
Square One is marketed as a new paradigm of
sustainable, organic luxury products. The company also is going beyond
what’s inside the bottle by making “green” choices in its
packaging and marketing materials.
In the enhanced bottled water category, Healthy
Hydration LLC, Englewood Cliffs, N.J., introduced WaterPlus Organic, a line
of enhanced flavored-waters. Each flavor — Fruit Punch Electrolytes,
Orange Tangerine Extra-C, Acai Berry Antioxidants, Dragon Kiwi Vitamins and
Passionfruit Citrus Energy — are assigned combinations of
electrolytes, vitamins and antioxidants.
“Healthy Hydration’s WaterPlus Organic
line is designed for everyday hydration and active thirst,” says
Kevin Vesey, brand manager for WaterPlus. WaterPlus plans to stand out in
the enhanced water category as one of the only waters in this category with
USDA Organic certification.
Entering into a category that has doubled in size many
times over, The Healthy Beverage Co., Newtown, Pa., maker of Steaz Green
Tea Soda, released Steaz Energy: Organic Fuel for the Mind, Body and Soul.
Launching in January at Whole Foods Markets, the energy drink is organic
and Fair Trade certified.
“The whole reason for our being is because there
aren’t any organic and Fair Trade certified energy drinks on the
market right now in the United States,” says Eric Schnell, co-founder
of The Healthy Beverage Co. “That’s our whole point of
Steaz Energy aims to appeal to the higher end, active
consumer looking for premium ingredients or more natural ingredients, and
may want to drink an energy drink but doesn’t want the artificial
sweeteners, colors or flavors. “We basically took a mainstream energy
drink profile with 80 mg. of caffeine, but we used all natural plant-based
ingredients to get to the caffeine, flavors and sweeteners,” Schnell
Steaz Energy’s caffeine source is derived from
Fair Trade certified green tea from Sri Lanka, organic Guayaki yerba mate
from trees native to the South American rainforest and organic guarana.
Boosting Steaz Energy’s antioxidant profile is Sambazon acai, which
also adds amino acids, omega fatty acids, fiber, flavonoids and trace
minerals to the light berry-flavored energy drink.
Not only is Steaz Energy Fair Trade certified, but the
tea in Steaz Green Tea Soda is Fair Trade certified as well. The Healthy
Beverage Co. believes ensuring that farmers and farm workers in developing
countries receive a fair price for their products reflects the
company’s commitment to social responsibility.
“The Fair Trade logo is going to mean as much to
the consumer as the USDA organic logo means today,” Schnell says.
“…Fair Trade is a real emotional tie-in to today’s
consumer that they not only feel good about it being an organic product,
but that it’s Fair Trade as well and that the farmers who helped
create this product were treated fairly.”
Also entering the energy drink category with the use
of yerba mate, the Sol Maté Beverage Group Ltd., Waterloo, Ontario,
launched Sol Maté, an organic sparkling yerba mate energy beverage.
The lightly carbonated beverage plans to challenge sodas, coffees, teas and
other energy drinks as a “no jitters” alternative for health
conscious consumers. The new all-natural energy beverage is formulated from
yerba mate, an herb celebrated for its healthy and stimulating properties.
Dairy to be different
Stonyfield Farm, Londonderry, N.H., consistently posts
double-digit growth in organics, one of dairy’s strongest segments.
The company was named Beverage
Industry sister publication Dairy Field’s 2006
Processor of the year, and Carter Elenz, senior vice president of sales
commented: “We’re thrilled that there’s demand for
natural and organic products and the Stonyfield brand across all the
channels. It wasn’t too long ago that we really had to work hard to
persuade customers there was a consumer need out there. Today, though,
across all channels — whether it’s natural food, which is at
our core; the grocery channel; the mass-merchandise channel; the club
channel; the foodservice channel — there’s an organic demand in
each of those now. We enjoy distribution in each of those channels and have
distribution coast to coast.”
Beyond what may be driving demand for organics,
what’s helping to drive demand for Stonyfield is a constant stream of
new products designed for consumers’ specific needs: active adults,
developing infants, anyone seeking a boost of fiber or other wellness
benefits. One new launch for 2007 pushes the diary giant into the energy
drink market. Stoneyfield Farm Shift Organic Energy Drink provides a
sustainable energy source with a combination of protein, vitamins, acai and
ginseng, and is geared toward teens and young adults. The cultured dairy
drink is certified organic, and contains no starches, gelatin,
preservatives or artificial colors or flavors. Available in Berry Boost,
Power Punch and Strawberry Banana, Shift contains calcium, vitamins D, C,
B3 and B6, which the company says supports mental and physical performance.
Carving out another niche in organic dairy-based
beverages, Lifeway Foods, Morton Grove, Ill., released ProBugs made with
organic whole milk kefir for kids age two to nine. ProBugs contain 10 live
and active kefir cultures that give a boost to the digestive and immune
systems, the company says. ProBugs, a reference to probiotics and
“friendly” bacteria found in kefir, help inhibit the growth of
harmful bacteria in a child’s digestive system.
Private label penetration
Mainstream channels have expanded organic offerings
and created private-label organics (e.g. Kroger’s Naturally
Preferred, Giant Eagle’s Market District and Safeway’s O
Organic line). Natural food stores also have created their own private
label organic lines, for example, Whole Foods Market’s 365 Organic
line, which includes beverages such as milk and ready-to-drink teas, and
continues to expand into more juices, teas, cocoas, coffees and sodas.
This year, Trader Joe released Organic sparkling
juices, teas, coffee and cocoa mixes, all under its brand name. Safeway
expanded its private label line this year with ready-to-drink O Organics
Organic Iced Tea in White Tea with Spearmint and Oolong Tea with Peach
varieties and additional fruit juices.
Grocery store Giant Eagle, Pittsburgh, launched its
private label organic line Market District in the fall of 2005 and this
year released Market District Organic
ready-to-drink teas. The ready-to-drink tea line, which includes five
varieties, were included in the award Market District won from Beverage Industry’s sister
publication PL Buyer in its 4th Annual Private Label Packaging Awards. Void of any
product photography, which contrasts with other private label products
submitted in the contest, the Giant Eagle Market District line of products
are dressed in brown craft paper. The judges felt the line spoke
simplicity, premium and “deliciousness.”
Consumers talk organics
While growth has been
impressive, organic beverages only contribute about 2 percent of the
overall beverage sales in food, drug and mass markets, according to Mintel.
Moreover, only 5 percent of respondents to Mintel’s consumer survey
reported buying organic beverages in the past year. Mintel’s survey
Some 55 percent of respondents who purchased organic
drinks in the past year bought orange juice. Other beverages purchased by a
third or more of these respondents include: other juice or juice drinks (47
percent), soymilk (46 percent), tea (43 percent) and dairy milk (37
The major motivation for trying a new organic beverage
is the availability of a sample or free trial offer (60 percent), while 57
percent of respondents who purchase organic beverages look for nutritional
or health benefits.
54 percent of respondents who buy organic soy or dairy
milk do so because they believe that it is healthier than non-organic milk.
More than half of respondents who purchased organic
beverages in the past year do not commit to store-brand or branded products:
58 percent normally purchase whatever organic beverage is available, while
only 29 percent are loyal to name brands and just 13 percent normally
purchase store-brand organic drinks.
Regarding shopping habits, Mintel’s consumer
survey reports that 62 percent would buy more organic food if it were less
expensive. Almost half of respondents wish that a wider selection of
organics were available where they shop.
Source: Mintel’s custom consumer survey
According to The Natural Marketing Institute’s
(NMI) Health and Wellness Trends Database, finding the balance of price and
perceived benefits will be the determining factor in the future of organic
“American household penetration of organic
products is currently at 56 percent of households, and is projected to grow
from $13 billion in 2005 to $20 billion in 2009,” says Maryellen
Molyneaux, NMI’s president. NMI estimates that 500 new organic
products were introduced into the marketplace during 2005, and in order to
succeed, “marketers will need to understand the trade-offs consumers
make in their purchase decisions of natural vs. organic.”
NMI says consumers are more likely to desire the
benefits of organically grown foods and beverages, such as “contains
no chemical pesticides,” than they are to make the connection between
those benefits and the classification “organically grown.”
The data also indicates a need for consumer education,
NMI says. Finding the optimal balance of price, benefit, branding and
levels of understanding will determine how consumers choose between natural
and organic products — and will provide the edge over conventional
products, NMI states.
“With consumers showing an 88 percent increase
from 2002 to 2005 in their willingness to pay a premium price for organic
food and beverages, converting understanding of the features of organic
should translate into increased sales and continued double-digit market
growth,” Molyneaux says.