RTD Coffee, Tea Create a Buzz

February 1, 2005
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RTD Coffee, Tea Create a Buzz
By SARAH THEODORE
The trendiest drinks in the beverage industry today are some of its oldest flavors — coffee and tea. Iced tea sales grew 10 percent through supermarket, drug store and mass merchandise channels last year, according to Information Resources Inc. And after years of trying to get off the ground, iced coffee is a bona-fide category, with 16 percent category growth in 2004, and sales increases for each of the Top 10 brands.
With the No. 1 spot in the category, Ferolito Vultaggio & Sons’ Arizona brand is the king of the ready-to-drink tea segment, boasting nearly 45 percent growth last year. Vice President of Communications Francie Patton attributes the growth to an aggressive sales effort, as well as a strong performance from its green tea line-up and Splenda-sweetened diet varieties.
Snapple and Diet Snapple also made a strong showing last year, with diets growing nearly 10 percent. Category newcomer Ocean Spray made it into the Top 10 brands with Ocean Spray Juice & Tea, after less than a year on the market. With two varieties — White Cranberry Peach and Wildberry — the blended products were a departure for the traditional juice company and brought in $13.6 million in sales through the measured channels.
Top brands — ready-to-drink tea
Brand DOLLAR SALES% change vs.prior year Market Share % change vs.prior year
ARIZONA$147,230,57644.8%23.35.6
SNAPPLE$91,347,9685.3%14.5-0.7
LIPTON BRISK TEA$85,062,360-11.3%13.5-3.3
DIET SNAPPLE$76,354,0649.9%12.1-0.0
NESTEA COOL$63,125,044-10.4%10.0-2.3
LIPTON ICED TEA$40,286,152-0.7%6.4-0.7
PRIVATE LABEL$23,632,23823.9%3.70.4
LIPTON$17,812,21819.1%2.80.2
NESTEA$17,091,0987.2%2.7-0.1
OCEAN SPRAY
JUICE AND TEA$13,641,007NA2.2NA
CATEGORY TOTAL$631,352,51210.1%100.00.0
Source: Information Resources Inc. Total Food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending Dec. 26, 2004.
Top brands — ready-to-drink coffee/cappuccino
Brand DOLLAR
SALES
% change vs.prior yearMarketShare % change vs.prior year
FRAPPUCCINO$131,031,32815.4%86.4-0.5
DOUBLESHOT$16,975,70227.8%11.21.0
KAHLUA$785,37853.2%0.50.1
WOLFGANG PUCK$767,0791,064.7%0.50.5
STARBUCKS$684,171NA0.5NA
HAVANA$444,6405.6%0.3-0.0
ROYAL KONA$242,108572.2%0.20.1
CAFFE D VITA$182,287356.6%0.10.1
CATEGORY TOTAL$151,689,74416.0%100.00.0
Source: Information Resources Inc. Total Food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending Dec. 26, 2004.
While all varieties of tea are popular right now, white and green have captured the imagination of product developers. Revolution Tea, Inko’s, Origins and Fuze all rolled out ready-to-drink white teas last year. White tea is believed to have naturally low caffeine levels and strong antioxidant properties. While Origins went with a straight tea flavor, the rest chose fruit-flavor infusions. Fuze chose one of the year’s most popular flavors for Diet Pomegranate White Tea, Inko’s added Peach White Tea to the line-up, and Revolution introduced its line in Key Lime, Raspberry, Blackberry and Tangerine varieties.
Skae Beverage International chose both white and green tea for its New Leaf teas in White Tea Grapefruit, White Tea Honeydew Melon, White Tea Ginseng & Honey; and Green Tea Ginseng and Green Tea Plum products. The company greeted 2005 with sleek, new 16.9-ounce glass packaging.
Tradewinds Beverage Co. took green to the extreme with its Greenergy Double Brew green teas. The line is part tea, part energy drink and boasts higher levels of caffeine and a stronger tea flavor than other ready-to-drink products. Available in flavors such as Pomegranate, Concord Grape, Cranberry and Blueberry, each variety also contains 10 to 20 percent juice.
Coffee craze
When most people think coffee these days, they think Starbucks, and RTD coffees are no exception. Frappuccino, produced by the Pepsi/Starbucks joint venture, is the category’s runaway bestseller, with more than 86 percent market share. And the team’s DoubleShot follows, with more than 11 percent.
That leaves each of the other products in the category with less than 1 percent share each in the measured channels, but they are making the most of it. Ferolito Vultaggio’s Kahlua posted more than 53 percent sales gains last year, according to IRI.
“Coffee is one of the most broadly accepted flavor profiles in the beverage industry,” Patton says, explaining the invigoration of the coffee category.
“There is a huge maturing baby boom generation that has increasingly sophisticated tastes,” adds John Imbesi president of North American Beverage, maker of Havana iced coffees. “These mature tastes have led to the explosion of the gourmet hot coffee segment, that in turn has created the demand for the convenience of RTD coffee.”
Havana enjoyed 5.6 percent growth through IRI’s measured channels, and Imbesi says last year’s low-carb entries have maintained growth, despite a shakeout in the low-carb market.
Energy Brands, maker of Glaceau Vitaminwater, is hoping to be as much of an innovator in the coffee market as it was for flavored waters. It has a new offering in America’s Best Brew, a canned coffee product.
Carol Dollard, chief operating officer at Energy Brands, describes America’s Best as “refreshing and drinkable, rather than heavy and dessert-like.”
The product features shrinkwrapped 16-ounce cans with retro-inspired photographic labels. “The brand and the cans are bringing personality to the category,” Dollard says. “The four characters are representative of the time when coffee was coffee. They bring the product to life.”
RTD coffee is still a small market — the category’s $152 million is only slightly higher than sales of Arizona’s tea brands alone — but it is becoming more mainstream, and perhaps the best proof is the rumored rollout of The Coca-Cola Co.’s Blak. The product is said to be a coffee-flavored carbonated beverage, and packaging possibilities include an aluminum bottle. The company dropped its previous Planet Java ready-to-drink coffee offering, but has the new concept in test market. BI

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