Smaller sectors growing for juice drinks
Although consumers still are reaching for a glass of orange juice as their favored juice beverage, new product releases and market analysts forecast consumers’ preferences are turning to more blended juice flavors. Whether those blends include exotic flavors, such as maqui berry, or more traditional flavors, such as blueberry, juice manufacturers are responding to the request for more flavor offerings.
Orange juice maintained its position as the No. 1 refrigerated juice and juice drink, but saw a decline in sales of 4.2 percent in supermarkets, drug stores and mass market retailers excluding Wal-Mart for the 52-week period ending Oct. 31, 2010, according to SymphonyIRI Group, a Chicago-based market research firm. Even with the decline, orange juice makes up 56.8 percent of the market share with $2.7 billion in sales.
Garima Goel Lal, senior consumer analyst with Mintel International, Chicago, says that a number of factors have contributed to a decline in orange juice including price increases and consumers’ desire for more flavor options.
“Initially [the decline] started with an increase in the price [of orange juice], but consumers are just looking for variety,” she says. “There has been proliferation of flavors including superfruits and blends, and especially during the depressed economy consumers are just looking for some excitement in flavors.”
Although the overall orange juice category saw a decline, some premium brands saw improvement such as Coca-Cola-owned Simply Orange, which posted an 11.4 percent increase helping the brand to achieve more than $442.5 million in sales through October. Fellow Coca-Cola brand Minute Maid Premium posted a 6.8 percent sales increase for its Premium Kids variety. The Simply brand has seen an increase in sales for its lemonade, grapefruit juice, blended fruit juice, and apple juice products , according to SymphonyIRI data through Oct. 31, 2010.
Tropicana Products Inc., a division of PepsiCo Inc., introduced its Tropicana Juicy Rewards program in February 2010 in response a survey that showed that many Americans are looking for more value from the things they buy, the company says.
Consumers who purchase Tropicana Pure Premium or Trop50 juices can enter codes online at Tropicana.com to redeem points for savings on family fun items. The rewards program offers a chance for consumers to save on fun, healthy pursuits the whole family can enjoy, the company says. Examples of savings include Adidas fitness gear and discounts on activities and lodging in Yosemite National Park. The rewards program was extended through February 2011, but the extension will exclude Trop50.
Even though juice drinkers seemed to have decreased their orange juice consumption, numbers suggest they might have found new juices to turn to as the refrigerated juice and juice drink category saw minimal gains with a 0.4 percent sales increase, according SymphonyIRI, and more than $4.7 billion in sales.
Ross Colbert, managing director of Mergers & Acquisitions Americas for Zenith International, says numerous factors cause this stability.
“The numbers I’ve seen, recent SymphonyIRI data, shows there’s been a little bit of improvement even from second quarter to third quarter of this year,” he says. “I think in 2010 we’ve seen a little bit of an improvement in the economy. I think that combined with a really hot summer across most parts of the U.S. really drove a bit of a rebound in the non-carbonated beverage category.”
Colbert notes that even though juice and juice drinks have fared well in this economic rebound, they still lagged behind other non-carbonates, such as sports beverages and enhanced waters, which rebounded a bit faster. However, multiple juice segments will have a positive impact on the category, he says.
“I think we’re likely to see the segment continue to grow at the high-end with smoothies and all natural juice drinks and blends and also at the value level where you’re seeing a lot more innovation in private label, so I think those will be the two positives within the juice category,” Colbert says.
When it comes to new products and ideas, juice manufacturers are finding new ways to appeal to consumers with flavor innovations achieved by fruit juice blends.
Lakewood Organic, a division of Florida Bottling Co., introduced a line of 100 percent juices featuring blends with dragon fruit juice. The line launched last year and is available in Black Dragon, a blend of black currant, dragon fruit and acai juice; Red Dragon, a blend of pomegranate, dragon fruit and goji juice; and Blue Dragon, which blends blueberry, dragon fruit and lychee juice.
Goel Lal says that because superfruit juices are premium juices they can be expensive. To offset consumers’ reservations about the price of superfruits, she suggests looking into blend flavors.
“New flavors are the blends [and] are the key if you want growth out of superfruits,” she says. “The newest flavor is acai, of course that has seen growth, but sales are still very small. ... Basically people associate [superfruits] with antioxidants and health, but they’re also very expensive. So in terms of future, the blend would probably be a more profitable draw than superfruit juices.”
SymphonyIRI reports that blended fruit juice, which ranks fifth in the top 10 refrigerated juices and juice drinks, experienced an 11.8 percent decrease, accounting for $312.4 million in sales. However, the all other fruit juice segment, which includes superfruit brands Pom Wonderful, Bolthouse Bom Dia and Sunny Delight’s Bossa Nova, also saw a decrease in sales at 8.9 percent, accounting for more than $49.2 million in sales through Oct. 31, 2010, SymphonyIRI says.
Juice manufacturers also blended juices to boost healthful options, such as Guayaki’s Pure Body Peach Immune Support blend, which is a U.S. Department of Agriculture certified organic and Fair Trade certified beverage. The blended beverage includes a combination of yerba mate and peach juice fortified with immunity boosting herbs schisandra berry, astragalus and echinacea, the company says.
Although superfruits and organic-based beverages are considered premium juices, an increase in sales for juices that are labeled as premium is a trend that has fared well in this economy, according to Zenith International’s Colbert.
“We’ve seen better performance at the high-end and at the value end,” he says. “At the high-end I’m thinking in terms of premium juices, natural and organic, and within that segment I think the consumers become a little bit confused by the distinction between organic and natural. I think the trend will be toward natural versus organic.”
While premium products received attention from consumers, the private label segment also is an area that shoppers have turned to. Mintel’s Goel Lal credits this to the economy, which prompted some changes in the juice market.
“First is, consumers start moving from fruit juice to juice drinks, which are cheaper than fruit juice,” she says. “The other is consumers have been moving to private labels where they find low differentiation between a branded and a private label product.”
Private labels experienced mixed results, according to SymphonyIRI data. For orange juice, private label decreased 3.1 percent, but was still No. 2 in the category accounting for more than $476.9 million in sales through Oct. 31, 2010. However, private label was the top selling juice for cider and even posted an 8.8 percent increase in sales. Private label cider brands account for 31.4 percent of the market share, and cider is the No. 7 juice in the top 10 refrigerated juice and juice drinks, according to SymphonyIRI through October. For fruit drinks, which are the No. 2 selling refrigerated juice segment, private label drinks saw a decrease in sales of 7.2 percent, but still rank as the No. 7 selling fruit drink.
Private labels also are releasing flavors associated with the blend trend. Retailer Roundy’s released Berry Blend Splash, a flavored beverage of carrot, apple, cherry and three berry juices from concentrate, under its label in 2010. The beverage contains 25 percent juice and provides 100 percent of daily value of vitamins A and C per serving, according to the package’s labeling.
Store brands also made innovations with regard to packaging offerings. Private labels have made developments in their packaging to appeal to consumers, such as offering single serve options and family sizes along with easy, convenient handles and closures, Colbert says.
“Juice has a very high percentage of private label, more so than most of the other beverage segments and traditionally private label has been pretty boring in terms of package offerings,” Colbert says. “It’s been pretty conventional and standardized. In just in the last year you’ve seen the big private label juice players like Clement Pappas and Cliffstar [Corp.] really further develop their packaging initiatives.”
But packaging is not the only interesting thing going on with private label juice and juice drinks.
“One of more interesting angles on juice and juice drinks this year has been private label,” Colbert says. “Cott [Corp.] acquired Cliffstar, Cliffstar being the largest private label juice manufacturer in the U.S. … and that is very telling. I think it suggests to me you’re going to see a lot more innovation, a lot more product offerings at the lower-end, at the value where private label is.”
With the juice and juice drink market experiencing flat to minimal growth, some segments such as lemonade and smoothies experienced notable growth. Lemonade reported a 26.2 percent sales increase, and juice and juice drink smoothies posted a 25.7 percent sales increase, according to SymphonyIRI data through Oct. 31, 2010.
“We’ve seen some increase in lemonade,” Colbert says. “I think that’s sort of an evolution of the iced tea business. Historically, lemonade has been like iced tea [and] was thought of as a seasonal offering where increasingly consumers are drinking ready-to-drink tea and lemonade cold year round.”
The increase in consumer interest for smoothies, Colbert says, can be linked to the segment’s health benefits.
“On the smoothie side, consumers’ interest in protein and higher nutritional value smoothies as either a meal replacement or a snack, I think that’s really what’s driving the interest in smoothies today,” he says.
Naked Juice, which is owned by PepsiCo, experienced measurable success as its brand accounts for four of the top 10 refrigerated juice and juice drink smoothies. The Naked Juice brand accounts for 29.6 percent of the market share and its Superfood varieties account for 27.2 percent of the market share.
“We are continuously expanding our flavor and product innovations to keep fans happy, and inspiring new consumers to take a sip,” says Chris Malnar, who is with marketing at Naked Juice. “In addition to our popular fruit juices and fruit juice smoothies like Mighty Mango, Green Machine and Protein Zone that our fans know us for, we’ve recently introduced two new categories: Fruit & Veg Smoothies … [and] Reduced Calorie Smoothies.”
Naked Juice’s Fruit & Veg Smoothies are vitamin-packed beverages that allow you to drink your veggies, Malnar says. The variety is available in Veggie Machine and Orange Carrot varieties. The Reduced Calories Smoothies are made with coconut water in Peach Guava and Tropical smoothie varieties that offer 35 percent fewer calories without sacrificing taste or the company’s commitment to use only 100 percent juice, Malnar adds.
Even with its recent growth, Malnar forecasts more things to come from Naked Juice.
“Exciting innovations are on the horizon at Naked Juice – we’re expanding our flavor offerings for both Reduced Calorie and Fruit & Veg Juice Smoothies in March 2011,” he says. “And, we are always on the lookout for the next interesting fruit or veggie to introduce to our artful blends.” BI
Sidebar: Packaging the difference
Flavor and price is a factor that consumers might consider when deciding purchases, but sometimes what’s on the outside can be the difference.
Garima Goel Lal, senior consumer analyst with Mintel International, says that packaging is an avenue that allows juice manufacturers to communicate with the consumer. The packaging can display what vitamins are included along with the nutritional benefits in the beverage, which can impact consumers’ purchase decisions, she says.
“Packaging can play a great role in communication and communicating the brand … because 64 percent of juice and juice drink drinkers say that they’re more likely to purchase a good-for-you functional juice if the packaging gives information about it,” Goel Lal says.
NBI Juiceworks uses its packaging to not only display the benefits of each beverage, but also explains how the vitamins and antioxidants in each flavor and type benefit the body, says Alesia New, president and co-founder of NBI Juiceworks.
NBI Juiceworks offers a complete line of Super Juice beverages with benefits, including endurance, heart healthy, immunity and restore, New says. Its Sun Shower line includes Superfood Smoothies that include benefits of defense, revitalize, heart healthy and stamina.
“Basically packaging is very, very important when it comes to purchase behavior,” Goel Lal says in regard to the purchasing a new product that is functional or good-for-you and communicating those attributes.
But packaging is more than just communicating product benefits on the label. Companies such as Odwalla and Naked Juice redesigned their packages to meet more eco-friendly standards.
Last year, Odwalla Inc., a wholly owned subsidiary of The Coca-Cola Co., announced that the company plans to transition all the brand’s single-serve bottles to Plant-Bottle packaging by March 2011. Plant-Bottle packaging is made of high-density polyethylene consisting of 100 percent plant-based materials and is completely recyclable, the company says.
“I think it’s essential today, whether it’s private label or branded that the consumer really wants to feel good about the purchases they make,” says Ross Colbert, managing director of Mergers & Acquisitions Americas for Zenith International. “Good in the sense that it’s good for them, but also good for the environment, socially responsible and they’re choosing brands that can serve as role models for their kids and their family.”
PepsiCo’s Naked Juice brand announced in November that it began packaging its juice and juice smoothies in bottles made from 100-percent post-consumer recycled plastic, which will reduce virgin plastic consumption by 7.4 million pounds each year, says Chris Malnar, who is with marketing at Naked Juice. The brand has called the new package its reNEWbottle.
“Consumers are looking for brands that are authentic and hold the same values that they do,” Malnar says. “We know this because we talk to them – on Facebook … and Twitter … as well as through street marketing efforts and focus groups. In talking with consumers, we know our efforts in sustainability are important to our fans so beyond transitioning to the reNEWabottle, we are also taking additional steps to improve our carbon footprint.” BI