Tropical flavors and functional ingredients continue to drive beverage development, according to participants in Beverage Industry’s ingredient supplier roundtable. Like many of us, these ingredient specialists have observed the trend toward low-carb as well as all manner of products designed to make the consumer healthier and live longer. In addition to mid-calorie offerings, ready-to-drink teas are making a comeback, meal replacement beverages could soon become a viable category, and bottled water will continue its climb to the top of the beverage consumption charts.

Participating in the discussion are: June Montanari, beverage flavor marketer at International Flavors & Fragrances Inc., Dayton, N.J.; Victoria de la Huerga, vice president, beverage business unit at Wild Flavors, Erlanger, Ky.; Steve Wilbur, vice president of marketing at David Michael & Co., Philadelphia; Emmanuel Laroche, marketing manager, Symrise, Teterboro, N.J.; and Suzanne Niekrasz, director marketing communications, Robertet Flavors, Piscataway, N.J.

Steve Wilbur: One of the major macro trends running throughout the food industry today is health and wellness. The consumer's desire for healthy products certainly reaches into the beverage category, and we've seen a real trend this year for low-carb beverages. We've also seen a good deal of interest in ethnic influenced beverages particularly in the Hispanic marketplace, along with energy drinks, and nutritional or functional beverages.

June Montanari: Healthy features and benefits are very important to consumers. There was an explosion of low-sugar, low-carb soda, juice, and nutritional drinks this year. Also, more products were designed for the needs of specific consumers such as women, kids or athletes. Health trends are influencing flavor trends, too. Pomegranate, was rediscovered because of its antioxidant properties, and now it's popular in various new age juice drinks. Green tea is no longer niche as a beverage, it's also a flavor in juices in addition to being a featured ingredient in dish and body products. Exotic tropical flavors such as mango, guava and passionfruit are more mainstream.

Emmanuel Laroche: Some of those trends are beverages geared to Hispanics; low-carbohydrate products in soft drinks, coffee drinks and fruit juices; sour tastes; exotic flavors in the tea segment; tea and fruit juice in RTD products; and launches of flavored gin and rum.

Victoria de la Huerga: First, I would say, are functional beverages. These range from energy drinks, which are growing extremely fast, to sports drinks, yogurt drinks, soy beverages and teas. RTD tea growth has slowed over the past few years, however this trend seems to be reversing in 2004.

Secondly, low-carb products have hit every beverage category, including alcoholic beverages. Replacing some or all of the nutritive sweetener with high-intensity sweeteners such as Splenda is seen across the board.

Third is bottled water. This category has been growing so strongly over the past decade without an end in sight. The success of bottled water has led to enhanced water products.

Fourth are flavored carbonated beverages. This is a key tactic that the major beverage companies are taking to keep consumers in their franchise.

Fifth are flavored spirits. This is important in that this category of beverages has been flat for so long. Numerous flavor, color and drink innovations such as martinis have helped bring new consumers into the category.

Suzanne Niekrasz: The ‘you are what you eat’ movement in this country has driven a huge number of new product launches, most recently addressing the low-carbohydrate phenomenon. As consumers move away from high-fat, high-carb, high-calorie products, marketers look to new technologies and ingredients to formulate products that consumers want. For instance, many beverage marketers are exploring new alternative sweeteners and sweetener blends, which opens up new avenues of research into flavor interactions. The end result of all this activity will be beverages that are better for you and that deliver delicious taste as well. This trend will continue to blur the line between beverages and food, which is great news for everyone in the beverage industry, as it opens up opportunities outside of beverage’s traditional arena.

No discussion of this year’s beverage trends is complete without mentioning limited-edition, “in and out,” seasonal launches.  Products such as Mountain Dew Pitch Black (Hal-loween) and LiveWire (summer), Pepsi Holiday Spice (fall and winter holidays), Sprite Berryclear Remix (summer), and Starbuck’s Gingerbread Latte Frappuccino (in-store, winter holidays) delivers excitement and buzz to existing brands.

A similar strategy was successfully implemented by alcohol spirits marketers over the past few years, where launches of single-serve malt beverages featuring prominent spirits brand names helped create a buzz around the parent brand. While many of these products didn’t have long-term staying power, they played a role in brand marketing and awareness, and in that light were very successful.

There is a lot of activity in various food categories that use a familiar flavor profile, mainly indulgent dessert types, in an unusual way.  Examples include products like strawberry cheesecake-flavored yogurt or a S’mores-flavored energy bar. Driving this trend is the little excitement such products give consumers in their daily lives. It’s a trend that bears watching in the beverage category, with particular relevance for dairy beverages, syrups and coffee, where flavors such as cookies ‘n cream, crème brulee and chocolate mint have already been launched.

Victoria de la Huerga: Product developers are facing a host of challenges. Many of the companies they work for have select supplier lists, which limit their ability to leverage new technologies. They are being asked to get products to market more quickly with fewer resources, while managing risk. Additionally, they are being asked to bring innovation to the numerous beverage categories. And lastly, they are also being asked to look at outsourcing some or all of product development. This gives them more to manage but it also gives them access to technology that could take years to develop internally.

Product developers are also always challenged with ingredient costs. This year, the industry has seen milk prices shoot way up. Additionally, certain juices have also increased significantly. Gum Arabic, a common ingredient used in emulsions, has also been scarce, causing availability and costing challenges.

Steve Wilbur: This year, several issues of concern for developers in the nutritional or functional beverage area centered around increased competition, processing costs and stability. These issues resulted in the reformulation of many of these type of products to taste better at a more economical price. This becomes a huge challenge for the developer.

June Montanari: IFF designs flavors to help endure price increases in raw materials caused by fluctuations in agricultural crop yields in products such as grapefruit oil, coffee, cocoa and vanilla. Other challenges include how to make low-sugar taste like full-calorie and mask artificial sweetener off-notes. Masking and stabilizing soy is another challenge.

Emmanuel Laroche: I would say much shorter speed to market; more sensory testing required on project submissions; validation of proactive concepts before submission; flavors required to solve “sensation” issues; and regulatory issues (GMO-free, organic, etc.).

Suzanne Niekrasz: Flavored RTD tea continues to create excitement in the tea category, due in no small part to widespread media focus on the naturally healthy properties of tea. Added to that is a "wow" factor in the form of varietal-type teas, which in a single-serve RTD beverage invites easy culinary exploration. Not too many years ago, green tea was a relatively unknown beverage here in the United States, but today there are numerous examples of green and other varietal teas making a splash in the category, such as white, rooibos (a.k.a. red), honeybush, chai, and other varietal types. The ability to formulate teas with unique fruit, herb, or spice combinations or with various sweetener blends provides marketers with many opportunities to differentiate their beverage offerings and capture today's fickle,  impulse-driven consumers.

Hybrid beverages came into their own this year, most notably juice-plus type beverages such as tea and juice and dairy and juice, as well as sparkling/carbonated juices and drinkable yogurts. Another very hot category has been “ades” such as lemonade, limeade, and grapeade, offered “straight up” or in combination with well-loved flavors such as strawberry. Ades dovetail neatly with long-standing trends such as “old-time goodness” and authenticity, while delivering “summer in a bottle.”

June Montanari: Carbonated soft drink flavors are quickly expanding beyond cola and lemon-lime with berry, tropical, and citrus blends. Both Mountain Dew and Sprite Remix have limited-edition flavors.

Victoria de la Huerga: I would say beverages that fit into the wellness subcategory of functional beverages. These beverages are levering the latest in scientific research on efficacy. For instance, there have been a number of beverages launched based on white tea. While white tea comes from the same plant as black and green tea, it has a higher level of polyphenols in the tea. Polyphenols are antioxidants.

Another example would be the addition of phytosterols to juice. And lastly, taking drinkable yogurt with live active cultures and adding the required nutrients for use as a meal replacement beverage.

June Montanari: Developing great-tasting and nutritious products will be necessary to meet the needs of more health-aware consumers. Capitalizing on consumers unquenchable thirst for water will also continue to present challenge/ opportunity for beverage companies.

Emmanuel Laroche: I see health and wellness across the board; continued assault on carbonated beverages; sports drinks becoming more flavorful; fewer products coming to market from the Big 3; expansion of new distribution channels; continued development of fruit juice and dairy-based drinks geared to Hispanics and men; development of nutritional beverages for kids; and development of specific beverages for seniors.

Steve Wilbur: I think you will see more product introductions geared toward specific ethnic groups. The low-carb market will continue to expand and existing products will be reformulated to meet low-carb claims, such as Coca Cola C2 and Pepsi Edge. New nutritional beverages, electrolyte beverages, polyphenol beverages, energy stimulant beverages such as Red Bull, and various flavored green tea and white tea beverages will be introduced. In terms of flavor, I feel we'll see more tropical flavors in the marketplace such as mango, guava, and passionfruit.

Suzanne Niekrasz: Flavors that delve deeper into fruit profiles are trending up. When faced with a choice between apple vs. green apple, orange vs. mandarin orange or tangerine, or tea vs. green tea, consumers today are more likely to be intrigued by the more complex varietal type over generic flavor profiles. And even when the named flavor type isn’t labeled, such authentic flavor profiles can offer a point of flavor differentiation from competing products.

In the same vein, more geographic type flavor profiles, such as Naartjie Tangerine, Guavadilla, and Honey-bush Tea offer flavor differentiation. Provenance is a growing trend, and consumer awareness of our planet’s rich fruit diversity will grow once "country-of-origin" produce labels are introduced to American supermarkets. And while there are certainly many other factors influencing American consumers’ support of farmers markets and roadside stands, the idea of global provenance will build on that concept and resonate with consumers.

One flavor to keep an eye on in 2005 is blueberry, which has benefited from widespread reporting of the fruit’s high antioxidant values. It’s also a well-loved berry that has not until recently been very well represented in the beverage category. While already in mixed berry combinations and a contributing factor in all things “blue,” I think we’ll begin to see blueberry get top billing in more new beverage launches.

On the tropical front, Mango and “Tropical” are now mainstream, while our growing Hispanic population – and their flavor preferences – continues to build awareness of more exotic flavors such as papaya, guava, and passionfruit. Meanwhile pomegranate is now reaching mainstream awareness as more products featuring that flavor profile hit store shelves. Like blueberry, it too, benefits from reported healthy associations.  

The health and wellness mega-trend will continue to impact the beverage industry and our applications work for decades to come. Reducing the negatives in America's diet requires sophisticated knowledge of the interactions between flavor formulas and functional ingredients. As history shows, mainstream Americans will not drink something just because it's good for them — it must first and foremost taste great.

Victoria de la Huerga: As far as trends, we will continue to see functional and wellness products continue to grow. Linked with this is organic beverages as well as weight-management products. These are all on target with the consumer's desire to manage their health. Addition-ally, I don't see bottled water or energy drinks slowing down anytime soon.

As for concerns, obesity/overweight issues will continue to be at the forefront of the industry. Food companies are fighting back with healthier products, lowering calories and portion sizing to address consumers’ concerns. BI

World demand for nutraceutical chemicals will increase 6.1 percent annually to $9.6 billion in 2008, supplying the $173 billion nutritional products industry, reports The Freedonia Group Inc., a Cleveland-based industrial market research firm. The strongest growth opportunities will remain in herbal and non-herbal extracts. Functional additives, particularly probiotics, omega-3 fatty acids, soy isoflavones and lycopene are among other nutraceuticals projected to generate above-average gains. Through 2008, the developing regions of Asia/Pacific, Latin America, Eastern Europe and Africa/Mideast will provide the fastest growth for nutraceuticals. For more information on the World Nutraceuticals study, call 440/684-9600.

WORLD NUTRACEUTICAL DEMAND (million U.S. dollars)
Country/Region	1998	2003	2008	% change 03/98	% change 08/03
United States	1,802	2,365	3,028	5.6	5.1
Canada & Mexico	165	229	307	6.8	6.0
Western Europe	1,267	1,692	2,200	6.0	5.4
China	320	557	935	11.7	10.9
Japan	661	826	1,017	4.6	4.2
Other	1,011	1,434	2,078	7.2	7.7
Nutraceuticals Demand	5226	7103	9565	6.3	6.1
Source: The Freedonia Group, Cleveland, Ohio