Beverage R&D: Organic, natural ingredients grow
Whether for environmental, health, safety or other reasons, increased consumer purchases are driving natural and organic beverage growth. Mintel International, Chicago, forecasts total U.S. sales of organic beverages to increase at an inflation-adjusted annual rate of 7.8 percent through 2012.
To keep up with consumer demand for natural and organic beverages, beverage companies released 772 new beverages that contained organic and natural ingredients in 2007, according to Mintel’s Global New Product Database. The juice, tea and ready-to-drink tea categories led the new product introductions.
Consumers generally perceive organic and natural products as healthier, which is helping to contribute to the growth. The move toward perceived better-for-you products is a trend driving the growth of certain other beverage categories too. But organic and natural products in every beverage category are seeing the benefit of being associated with health and wellness.
“The advantage of using natural and organic ingredients to the product formulator is that they are of higher value and more desirable to the consumers they are directed towards,” says Tony Moore, chief flavorist, director of product development for A.M. Todd Botanical Therapeutics, Hamilton, Ohio. “The advantage for the consumer is that they address many of their concerns currently being expressed with the use of synthetic and genetically modified ingredients, and products not manufactured with environmentally responsible and sustainable practices.”
The growing organic and natural beverage category also coincides with other health and wellness trends benefiting beverage categories. Tea is a growing beverage category overall and especially for organic, says Jason Crandall, director of operations at Amelia Bay, Alpharetta, Ga. The custom extraction house and formulator buys teas from around the globe and create organic extracts from organic tea leaves. “Tea with fruit juice is a subcategory for organic that is growing a great deal,” Crandall says. “Lightly sweetened organic tea is another fast-growing category.”
Continuing its link to the health and wellness category, “there’s a tendency in the organic industry to cut down on the sugars and promote a healthier product,” says Jim Mitchell, sweetener specialist at Ciranda, Hudson, Wis.
BI Nutraceuticals, Long Beach, Calif., provides a line of natural and organic superfruit extracts, including acai, acerola, blueberry, eleuthero root, ginkgo, goji berry, grapeseed, guarana seed and yerba maté.
“From our chair, we’re seeing the consumer view as very big on the antioxidant side,” says George Pontiakos, BI Nutraceuticals’ president and chief executive officer.
“They are looking to anything that they ingest to have a benefit beyond just satisfaction of flavor,” he says.
Because of the growing number and increased demand for natural and organic beverages, the ingredient supply is feeling a crunch.
“The rules of supply and demand are always at play, and the availability of natural and organic ingredients can also be affected by environmental and agricultural issues,” A.M. Todd’s Moore says. “It is wise to become familiar with the harvest and production schedules of natural and organic ingredients being used in your products and plan accordingly.”
Many organic ingredients are harvested once a year, says Julie Nagy, key account manager, beverage applications at Wild Flavors Inc., Erlanger, Ky. “Once it runs out of the crop, that’s all they have for the year,” she explains. “If you don’t have your bid in for these ingredients, you may have to wait until next year to place the bid.”
In addition, if a natural disaster, such as flooding or drought occurs, it could ruin the entire crop for the year, and the formulator is out of luck, Nagy says. And from harvest to harvest, natural and organic ingredients can vary in size, color and taste because of the weather conditions.
Similar to the conventional ingredient market, natural and organic ingredient suppliers are feeling the squeeze of higher energy costs in production and harvesting, and the higher price of energy crops such as corn, oil and starch, Mitchell says. Additionally, “it takes a while to convert over to organic, so it should be tight for a while,” he says. Currently less than 1 percent of U.S. farmland is under organic certification.
“But, of course, as long as there is a need, there will always be somebody there to fill it,” Mitchell says.
Supply challenges tend to mean that most organic beverages are not mass marketed, says John Sweeney, technical manager, Cargill Beverage Category. “Some larger companies, however, have started new organic introductions,” he says.
Additionally, 100 percent certified organic flavors can only be produced with natural extracts, and these extracts can have sourcing issues, Wild Flavor’s Nagy says. Currently natural and organic beverages are driving demand for fruit and berry ingredients, making it more challenging to source organic acai, mangosteen and currant for the superfruits flavor trend, A.M. Todd’s Moore says. Supplies of guarana are also tight right now, due to the increased demand, but growers are working to catch up, BI Nutraceuticals’ Pontiakos says.
“We’ve certainly been able to keep up with demand, including guarana,” Pontiakos says. “It’s just that we really have the challenge of making sure our sourcing partners have good forecasts. There are no sourcing problems if you have a forecast that is workable. When you don’t have a forecast, that’s when you run into sourcing issues.”
Another aspect of sourcing organic and natural ingredients is the growing demand for ingredients produced using ethical and socially responsible methods, such as Fair Trade certified ingredients. Princeton, Mass.-based X Café LLC offers natural coffee extracts, such as Colombian, Sumatra Blend, 100 percent Sumatra and single origin, and also provides organic and Fair Trade extracts. This year, for the first time, X Café was asked to produce Rainforest Alliance coffee extract, says Cathy Kalenian, chief operating officer and chief financial officer for X Café.
“Organic, Fair Trade and Rainforest Alliance coffees are inherently more expensive than our typical specialty grade coffee that we purchase,” Kalenian explains. “It can also be hard to source in good quality and in a repeatable taste profile. That is one of the reasons that we stress the importance of solid forecasting with our customers so that we can purchase the proper quantity of the same lot.”
The growing demand for tea hasn’t caused its supply to be hampered, Amelia Bay’s Crandall says. Because organic whole leaf tea also falls into the higher priced ingredient range, “a tea plantation makes a lot more money on its organic leaf compared to conventional leaf,” he says. “This helps bolster supply.”
Because of the more complicated supply of organic ingredients, organic and natural ingredients are more expensive than their conventional counterparts. This can make it quite costly for a beverage company to create an all-natural or 100 percent organic beverage.
While the availability of organic ingredients is blossoming, organic beverages are still somewhat restricted in formulation. Organic beverages need either organic or organic-compliant (95 percent organic) ingredients. If the ingredient doesn’t fall into one of these two categories, it can’t be used. Developers also have to be cognizant of the type of organic certification they are seeking, for example 100 percent, 95 percent or 70 percent organic.
The quality of the organic or natural ingredient also needs to be monitored, Pontiakos says. Formulators need to make sure what they are spec'ing is truly what they are looking for, he says. “The guys with the cool graphics and can designs do a good job, but really it’s what is in your product and how you are making sure that your label claim is consistent with what you are advertising,” Pontiakos says.
Because of the lack of preservatives, storage conditions are also a consideration. Organic and natural ingredients must be refrigerated or frozen until time of use. If the formulator uses a co-packer, the co-packer’s storage conditions also need to be taken into account. “Refrigerated is somewhat common,” Nagy says. “Frozen is not as common and can be a challenge.”
Since preservatives are not desired by natural product formulators and prohibited for organic products, for the most part, the shelf life of a natural or organic ingredient is shorter than its synthetic counterpart. Beverage manufacturers are left to solve this issue with physical processing and packaging solutions, Moore says.
“Natural and organic colors are much more susceptible to ultraviolet light degradation than synthetic colors, so more care must be taken in both the formulation and packaging of the product,” he explains.
While many natural colors are available, they can often have more stability issues, depending on the type of package, Cargill’s Sweeney says. “For example, beet juice or strawberry juice may give a nice red color, but that can often fade after processing or storage to brown,” he says.
The organic or natural beverage’s stability also depends on its formula. “Stability considerations and ingredient interaction pose challenges when using natural colors,” says Jason Armao, Wild Flavors’ director of colors. “Careful consideration must go into choosing the correct natural color for a particular beverage. Natural colors are unique in that a particular color may work well in one beverage and the same color fail in another. For example, an anthoycanin red color may work great in a beverage without vitamin C, but fade rapidly in a beverage containing high levels of vitamin C.”
PET, glass, cans, bag-in-box all have different effects on the light and heat stability of a beverage, and depending on the processing conditions the beverage undergoes, such as hot-fill, aseptic, retort and tunnel pasteurization, both packaging and processing can help overcome the lack of preservatives in the product. Each option, thus, affects shelf life and flavor, color and vitamin stability differently, Nagy says.
Organic beverage offerings are expanding into every beverage category, which also requires a number of ingredient suspension agents to keep the ingredients in suspension. “Before, it was OK if it were organic and everything settled to the bottom of the bottle and you just shook it up,” Ciranda’s Mitchell says. “But, of course, that doesn’t work if you’re doing a soda. At that point, you’re looking at organic gums.”
While the number of organic and natural ingredients has dramatically expanded during the past 10 years, formulators are just starting to explore the new organic and natural beverage possibilities.