Beverage Industry’s 2005 Flavor Survey shows that beverage processors are in an excellent position for buying flavors. Three of four will increase the volume of flavors they use in a market where suppliers have not increased prices during the past six months and are not expected to increase them during the next six months.

The research shows flavor usage, expectations and bestsellers for the year ahead through seven beverage categories — soft drinks, juices, dairy beverages, flavored water, energy and sports drinks, coffee and tea.

Processors have been busy adding fruit punch, cola, grapefruit, orange and grape flavors to drinks during the past 12 months. For the year ahead, fruit punch and grape usage will remain at current levels. Although last year was good for grapefruit, the data suggest interest in this tart fruit will decline this year. Orange and cola usage will increase in the months ahead; moreover, orange and cola are anticipated to be the two best-selling flavors for 2005 in the beverage industry overall.

Processors are highly dependent on strawberry, lime, cherry and tea flavors. In terms of usage, these have made impressive gains during the past 12 months and will continue to impress during the next 12 months. Most processors add lemon, raspberry, peach and apple flavors to drinks; however, while love for raspberry will increase this year, lemon, peach and apple will remain constant.

Cranberry, passion fruit, blueberry, blackberry, kiwi, root beer and banana flavors are used by at least two of five beverage processors. Blueberry and passion fruit will increase in popularity this year. The purchase of banana, kiwi, root beer and blackberry flavors will remain stable this year, and cranberry purchasing may decrease.

One in three processors bought melon, ginger, guava, cinnamon, ginseng, pear, papaya and apricot flavors last year. Processors will continue to buy apricot, ginseng, papaya, pear, cinnamon and ginger at the same rate. However, the data suggest that guava and melon flavors were pretty successful additions to drinks last year and processors plan to add more this year.

Coconut, eggnog and boysenberry are used by 20 percent of processors. In the months ahead, boysenberry and coconut will remain constant, while eggnog will likely decline.

Vanilla, mango, pineapple, tangerine, chocolate and coffee flavor purchasing has been stagnant during the past 12 months. This year, vanilla and coffee will fare better. Mango, pineapple, tangerine and chocolate will remain at current levels.  

When processors were asked if there were any new flavors they were using, the data suggest pomegranate flavor might be a new taste for 2005.

Almost all juice processors will be buying more flavors this year, most likely from a national flavor supplier. “One needs strong flavors and aromas to mask undesirable notes of health beverages/supplements,” explains one processor’s increased usage.

Although most juice processors are prepared to wait a week for delivery of flavors, the price needs to be right because 59 percent are price shoppers. During the past six months, 54 percent report flavor prices as stable and most expect prices to hold steady in the first half of 2005.

Orange, grape, raspberry, apple, strawberry, lemon and peach flavors are the most heavily used flavors in juices. Most processors plan to increase their use of strawberry, raspberry, orange, peach and lemon in 2005. Use of apple and grape will remain at current levels in the months ahead.

Three of four juice processors bought cherry, fruit punch, mango, lime and blueberry flavors last year. Most are planning to increase their use of blueberry, lime and mango this year, whereas use of cherry and fruit punch will remain at 2004 levels. Two of three processors purchased grapefruit, cranberry, passion fruit, kiwi, tangerine, pineapple and banana flavor in 2005. Only cranberry purchasing for juices will grow in 2005. Usage of grapefruit flavor in juices will nosedive in the coming months and passion fruit will also fall from favor. Banana, pineapple, kiwi and tangerine will remain at 2004 levels.

Melon, papaya and guava flavors in juices are out for 2005. On the other hand, tea and blackberry will grow, while pear flavor will be added in the same quantity it was last year.  

According to respondents, juice processors sell single-flavor juice drinks 54 percent of the time, and range, apple and cranberry will be the top-selling juice drinks this year.

Flavor blends are used in 46 percent of juices. Fruit punch, orange-pineapple, tropical, berry-blend, cranberry-raspberry and strawberry- banana will be the top-selling combinations for juices in the months ahead.

Overall, 64 percent of juice drinks have natural flavors and 5 percent use organic flavors. “Natural/ organic is the way to go,” confirms one processor. However, organic still represents a small portion of the juice category; 67 percent of processors not planning to increase their use of organic flavors in juices at this time. And one of three juice drinks is processed using artificial flavors.

POPULAR JUICE FLAVORS
	% planning
Flavor	% currently using	more usage in 2005	Same usage	Less usage
Orange	89%	51%	43%	6%
Grape	87%	37%	48%	15%
Raspberry	83%	52%	41%	7%
Apple	83%	36%	50%	14%
Strawberry	81%	58%	35%	7%
Lemon	81%	47%	42%	9%
Peach	79%	48%	40%	12%
Cherry	76%	33%	57%	10%
Fruit punch	74%	46%	49%	5%
Mango	74%	49%	41%	10%
Lime	70%	49%	38%	13%
Blueberry	70%	54%	32%	14%
Grapefruit	66%	34%	26%	40%
Cranberry	64%	50%	35%	15%
Passion Fruit	64%	44%	35%	21%
Kiwi	62%	39%	49%	12%
Tangerine	62%	39%	46%	15%
Pineapple	60%	31%	50%	19%
Banana	60%	28%	53%	19%
Tea	57%	63%	27%	10%
Guava	57%	37%	43%	20%
Blackberry	53%	50%	36%	14%
Pear	49%	35%	50%	15%
Papaya	43%	26%	48%	26%
Melon	42%	41%	27%	32%

This time last year, most soft drink manufacturers were buying cola flavors at the same rate they did in 2003. That’s all changed: this year, most manufacturers will be buying more cola.

Two of three manufacturers will be buying more flavors in 2005, and the rest will keep flavor usage at least year’s level. Most report that flavor prices stayed the same during the past six months; however, 50 percent anticipate a 3 percent price increase over the next six months, which will be passed on to consumers. Fifty-eight percent of soft drink manufacturers say they regularly price shop for flavors.

In terms of delivery, 43 percent of soft drink manufacturers expect flavors to arrive in three days or less; 43 percent are prepared to wait a week. Larger manufacturers prefer to use national suppliers; most manufacturers with less than $10 million in annual revenue prefer a local supplier.

While cola is making a comeback, other the flavor proliferation in soft drinks is expected to continue. “Look at the growth in diets —led by flavors,” says a manufacturer confirming the importance of flavors. Orange and cola should be considered ubiquitous flavors for soft drinks — all manufacturers use them. Also popular are grape, lemon, lime, vanilla, cherry, root beer, strawberry and fruit punch flavors. Usage levels for grape, fruit punch, strawberry and root beer will remain at 2004 levels. Vanilla usage in soft drinks will decline in the months ahead. One supplier said “vanilla pricing was up 500 percent,” which might help explain the decline. Use of lime, cherry and lemon will grow this year.

Two of three soft drink manufacturers bought raspberry, tea, grapefruit, cranberry and peach flavors last year. Use of raspberry is expected to increase this year, while grapefruit will decline. In the middle — tea, peach and cranberry flavor purchasing will remain at last year’s levels throughout 2005.

Most soft drink manufacturers bought pineapple, apple, mango and ginger flavors last year, but no movement, up or down, is expected in the months ahead. Use of blackberry, passion fruit, kiwi, melon and tangerine flavors in soft drinks will also remain stable, being purchased by about 40 percent of manufacturers.

Manufactures report 63 percent of soft drinks are single flavors. The top-selling single-flavored soft drink this year — surprise, surprise — is predicted to be cola. Thirty-four percent of manufactures stand behind the assertion that cola will be the top seller, compared with year when only 18 percent had faith in cola. Other top-selling soft drink flavors this year include orange, lime, strawberry, root beer, cherry and lemon.

Flavor blends account for 37 percent of soft drinks. The top-selling blend for 2005 is expected to be strawberry-kiwi — 20 percent of manufacturers stand behind this combination. Other expected top-selling blends for the year include orange-pineapple, lime-cola and strawberry-melon.

Soft drink manufacturers use artificial flavors 62 percent of the time. One in three adds natural flavors and 4 percent use organic flavors.

Half of dairy respondents report an average 12 percent price hike in flavors during the past six months, which was passed on to customers. During the next six months, a time when 67 percent of dairies plan to buy more flavors, most hope that suppliers will keep flavor prices in check. Dairies could do more than just hope because despite the recent higher price, only 41 percent of dairies regularly price shop for flavors.

Two of three dairies are prepared to wait a week or more for suppliers to deliver flavors, and 53 percent prefer to use national flavor suppliers.

Traditional strawberry, vanilla and chocolate flavors can expect to move over; dairies are buying fruit flavors. Last year, three of four dairies bought orange and lemon flavors making them the most purchased flavors at dairies. Also popular are strawberry and fruit punch. While strawberry usage will increase this year, enthusiasm about fruit punch will likely decline.

Raspberry, vanilla, chocolate and eggnog flavors were used by 61 percent of dairies last year. Raspberry and vanilla purchasing will remain at current levels in the coming months, but chocolate and eggnog will increase in popularity.

Dairies report 68 percent of drinks are single flavors. As expected, chocolate, vanilla and strawberry will be top sellers this year, but this does not discount the fact that three of four dairies bought orange and lemon flavors last year. Strawberry-banana is expected to be the top-selling blend.

Dairies add natural flavors 42 percent of the time, and 4 percent add organic flavors. This year, 18 percent of dairies are planning to increase their use of organics. Artificial flavors are added to dairy drinks 55 percent of the time.

“Flavor trends should hold their small share of market, but regular bottled water will always be king,” says one processor. This is true; however, all the bottled water manufacturers responding to Beverage Industry’s survey report they will use flavors in some of their products.

This year, all respondents said they will increase their purchase of flavors compared with last year. The data show that prices for flavors have been stable during the past six months and this stability is expected to continue through the first half of this year.

If a consumer selects a bottle of flavored water, it is most likely to be one of the following — orange, strawberry, lemon or lime. The data suggest that raspberry was successful in 2004, and 73 percent of facilities using raspberry are planning to increase the amount they buy this year.

Two of three water bottling facilities bought fruit punch last year and use of this flavor will remain at the same level this year. Most bought grape, cherry and peach in 2004. Grape and peach purchasing will increase during the coming months, but cherry will probably remain at current levels.

Water facilities add a single flavor to water 69 percent of the time. Top-selling single flavors for 2005 are lemon, grape, lime and strawberry. For water containing flavor blends, strawberry-kiwi and mango-peach are expected to be top sellers in the months ahead.

Water bottlers add natural flavors 63 percent and only 1 percent add organic flavors. The rest, 29 percent, use artificial flavors.

Two of three energy and sports drink manufacturers report they will buy more flavors in 2005. Almost all found flavor prices stable during the past six months and expect prices to hold steady during the first half of 2005. Most of these manufacturers do not price shop for flavors.

Four of five energy and sports drinks manufacturers will wait a week or more for flavors to be delivered, and three of four use national suppliers.

Lemon and orange are, and will continue to be, the most popular flavors for energy and sports drinks. Other popular flavors include fruit punch, which must have been pretty successful because nine of 10 processors are planning to buy more this year. Grape and lime are also used by most energy and sports drinks manufacturers. The data show that lime usage will increase during the coming months — grape will also increase, but not as much as lime.

Three of four energy and sports drinks contain flavor blends. Manufacturers hope that consumers will select berry-citrus, cherry-lemon, fruit punch and strawberry-orange to meet their energy and sports needs this year.

Energy and sports drinks contain natural flavors 52 percent of the time, and 15 percent are organic flavors, which is the highest use of organic flavors in the industry. Also, one in four processors plans to increase their use of organic flavors. Artificial flavors are added to 33 percent of energy and sports drinks.

Mocha (chocolate) is the hottest coffee drink, according to survey respondents. It is also popular to add vanilla or cinnamon to coffee. In the months ahead, coffee-makers will buy more vanilla, but use of cinnamon will hold steady at last year’s levels.

The data show that adding raspberry flavor proved successful for 67 percent of coffee manufacturers. In addition, most bought strawberry, peach and orange flavors last year; however, use of these flavors will likely remain at or slightly below last year’s levels.

Coffee-makers were asked if there were any other flavors they bought last year, and reported that caramel, hazelnut and Irish cream were delicious additions to coffee.

Coffee manufacturers add single flavors to their products 70 percent of the time. Top-selling single flavors for coffee this year are predicted to be vanilla, chocolate and hazelnut. Fifty-eight percent of respondents believe vanilla will be their No. 1 flavor.

One in four coffee-makers add flavor blends to coffee. Chocolate-mint, chocolate-cinnamon, cinnamon-hazelnut and vanilla-hazelnut are the popular blends for the months ahead.

Coffee-makers use natural flavors 56 percent of the time and 7 percent add organic flavors. Interest in organics is likely to increase this year because 40 percent of coffee manufacturers are planning to increase their use of organic flavors. One in three coffee-makers add artificial flavors.

Three of four coffee manufacturers regularly price shop for flavors. Prices for flavors have been stable during the past six months. This price stability is expected to continue, or as one in five expect, decrease during the next six months. Coffee-makers use both national and local flavor suppliers in equal proportion.

Raspberry is the most popular tea flavor and will continue to be this year, according to survey respondents. Other popular flavors for tea are orange, lemon and peach, and use of these flavors will continue to grow this year.

Three of four tea-makers bought vanilla and cinnamon last year. Vanilla will greatly increase in popularity this year while cinnamon will stay at last year’s levels or slightly decrease in use. Ginger and ginseng were each purchased by 67 percent of tea-makers last year, and this year ginger looks to be a winner. Ginseng, on the other hand, will decline. Many manufacturers added pineapple and blackberry flavors to tea, with blackberry proving more popular than pineapple.

Half the flavored teas include single flavors and the other half are blends. Top-selling single flavors in tea this year are predicted to be lemon, passion fruit, peach, raspberry and vanilla. Cinnamon-citrus, cinnamon-lemon-orange, ginseng-berry, mango-passion fruit, orange-pineapple and raspberry-blueberry are some of the tea blends that might appear on store shelves in the coming months.

Tea-makers are all about natural and organic flavors. “Specifying GMO status is important; we need GMO-free flavors only,” explains one tea-maker. Organics is the general sentiment for tea-makers and almost all are increasing their use of organic flavors this year. Currently 10 percent add organic flavors to tea and 69 percent add natural ones. “Natural and organics are definitely on the increase and customers are demanding these more and more,” confirms another tea-maker.

During the past six months, half experienced a 6 percent price increase, which was not passed on to their customers. Although most hope that flavor prices remain stable during the next six months, tea-makers are not applying too much pressure on suppliers for pricing: one of three regularly price shops for flavors. Half these processors use national flavor suppliers and the other half buys locally.

Beverage Industry’s Flavor Survey was conducted by Penn and Associates Inc. Twenty-one percent of respondents report annual sales revenue more than $500 million, and employ an average of 7,600 employees where 33 are involved with the purchase of flavors. Twenty percent have revenue in the $100 million to $500 million range, and report an average of 1,012 employees where 22 are involved in the purchase of flavors. Twenty-eight percent work where annual revenue is $10 million to $100 million, and the average number of employees is 935. One in three report annual revenue less than $10 million, and an average of 306 employees.

In terms of job function, 42 percent are in sales and marketing, 20 percent are from research and development, and 13 percent are presidents/owners. Ten percent are general managers. Other job functions include production, quality control, purchasing, engineering, administration, and logistics. BI