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Ingredient Trend Tracker

June 1, 2007

Ingredient Trend Tracker

R&D experts discuss where the industry is headed in 2007

Beverage ingredient trends are leaning toward customized functionality and exotic flavors, according to Beverage Industry’s Ingredient Roundtable participants. We asked representatives from ingredient companies across a range of fields to tell us what they have seen emerge as beverage trends, and the issues challenging beverage companies this year. Participants include: Laura Ennis, senior beverage innovation technologist at David Michael & Co., Philadelphia; Suzanne Niekrasz, director of marketing communications, and Steve Wolf, director of flavor applications, at Robertet, Piscataway, N.J.; Tim Webert, senior marketing manager, beverage category, and John Sweeney, beverage applications team leader at Cargill, Minneapolis; Jessica Jones-Dille, industry trend/NEXT team manager at Wild Flavors Inc., Erlanger, Ky.; Dave Gallagher, vice president of sales for sucralose, North America at Tate & Lyle; and Paul Dijkstra, chief executive officer at InterHealth Nutraceuticals, Benicia, Calif.
Q: What are the major trends you see going on in beverages this year, and how do they differ from years past?
Laura Ennis: There has been an increase in healthy, good-for-you and vitamin-enhanced beverages, whether juices, waters or carbonates; as well as performance-enhancing and energy beverages, especially those with amino acids. There has also been an increase in chocolate beverages that are being promoted for their health properties and antioxidants. And, obviously, products containing “superfruits” will continue to grow.
There are also more beverages targeting heart health, bone health, overall well-being and immunity/prevention, as well as those that deliver good fats. There seems to be a beverage for every health issue. We’re seeing digestive health products in dairy-based beverages coming on to the market. They are more popular in Europe at the moment, but could be growing in the U.S.
In alcohol, flavored beers and malt beverages have expanded tremendously. These products seem to be marketed to those who do not like the taste of beer, especially female consumers. Alcohol products with an energy twist are also increasing.
Suzanne Niekrasz: There are many social movements going on around the globe that are complex, always evolving, and that play out differently for brands. In beverages, the personal good-for-you health and wellness trend, with products that are more natural, lower in calories, vitamin-fortified, organic, or that offer other benefits such as energy, is aligned with a good-for-all movement that plays out through organic, Fair Trade, sustainable and environmentally responsible ingredients or products. Above all, consumers want to buy and consume products that are perceived to be good for themselves and their families. If the product offers other benefits as well, it’s an added reason to buy one over another. But as always, any product has to first pass the taste test, and if it fails there, no amount of added personal or societal benefit will sway the typical consumer to buy it again.
Natural has been on an upward trajectory since the ‘70s and ‘80s, but I’m definitely seeing an expansion into mainstream products this year. The recent food safety scares have left an echo, and people are more worried today about what they’re consuming. Artificial ingredients and long ingredient statements listing unpronounceable compounds have become big question marks, and the rapid transmission of news and views over the Internet have escalated the stakes.
In-and-out flavors, once perceived as just a trendy fad in the beverage category, seem to have matured into a long-term strategy for a number of players. Such a strategy generates buzz around a brand, and encourages people to buy it on the spot because it might be gone the next time.
Steve Wolf: Development of new products in cross-over areas such as sparkling energy beverages, herbal notes in juice beverages, tea products from unique materials, i.e. not just from Camilla chinesis. Probably blends of herbal components, which provide both health and energy-type benefits.
Jessica Jones-Dille: The major trend we’re seeing this year is a beverage flavor progression toward incorporating more direct herb, spice and floral notes in beverages. These seem to impart a freshness, healthfulness and naturalness to beverages. This certainly differs from the robust, sweet, kid-like fruit flavors that have traditionally been popular.
John Sweeney: There is a lot of interest in low-calorie, natural and organic ingredients and flavors. Based on consumer demand, I believe that energy and joint health beverages will see lots of innovation this year.
Dave Gallagher: I see all segments essentially moving to lighter products and less sweet products. What consumers are looking for are healthier products, more refreshing products. The energy category is pretty dynamic, too.
We’re seeing a focus on functional beverages — what we would see as almost customized enhancement.
We look at those as real opportunities and an area where we really stand out. At Tate & Lyle, we’ve developed several programs for beverages. One is sweetener optimization, where we take products that are sweetened with sugar or high fructose corn syrup and replace a portion of that with Splenda sucralose without compromising on taste.
The taste piece is a key component, and we have invested heavily in consumer research. Everything that we’ve looked at shows that consumers are not willing to compromise on taste.
Tim Webert: Health and wellness claims continue to expand. Key trends include organic and natural claims, antioxidants from superfruits and a continued focus on calorie reduction and satiety for adults and children. Boomers are also looking for beverages to address key health concerns, such as weight management, joint health, heart health, energy and diabetes.
Paul Dijkstra: I just saw an interesting quote from an organization that explains that more than 80 percent of Americans consume or want to consume a functional food or beverage.
It started off with vitamins, but there’s definitely a trend now to add functionality related to health concerns. The health risks related to weight [problems] are enormous, not just cardiovascular, but diabetes and joint pain as well. What you see is companies addressing the weight issue. InterHealth entered that market a few years ago. You see companies with ingredients for joints, and you see a lot of products that address cardio health. We would like to address the core, because I firmly believe that the core issue is a weight issue and that a lot of the other issues are related to the weight.
Q: Are there any issues you see beverage companies grappling with, or particular problems they are trying to solve, in 2007?
Niekrasz: Ingredients and marketing messages are front and center, with consumer groups, state attorneys general, and the many bloggers and consumers on the Internet quick to pick up on what they perceive to be inaccurate claims.
I don’t think a month has passed in 2007 without news of another product being pulled from the market or being reformulated due to pressure from consumer groups. Anheuser-Busch pulled their niche, experimental brand Spykes over a controversy about its potential appeal to underage drinkers — despite the fact that there was no evidence that kids were actually being attracted to it. All Natural 7-Up was relabeled due to a controversy over how natural high fructose corn syrup might be, and Splenda is under assault from various quarters over their “made from sugar so it tastes like sugar” marketing. Even the “Got Milk” people have had to backpedal on their healthy weight and dairy messaging.
Everyone in the industry should be wary of missteps, and aware of the power of the Internet to quickly spread information that can hurt brands.
Ennis: Organics — finding organic flavors and other ingredients that are organic compliant.
Wolf: Coming to grips with the customer’s perception of “organic” or “local” and the potential for providing this to customers appropriately. Also, the desire for both new and exotic raw materials at the same time as [consumers] fear materials from “overseas.”
Webert: The large beverage players are actively pursuing the non-carbonated soft drink space. They are being more aggressive on product claims, which was previously a focus of smaller start-up companies. More aggressive claims have led to increased scrutiny from the Food and Drug Administration and other groups. In addition, acquisitions of start-ups have enabled some of the larger players to enter the growth markets.
Jones-Dille: Companies want to create cleaner, more balanced flavor profiles while also delivering healthy ingredients and properties.
Gallagher: As the beverage category has evolved, Tate & Lyle saw the need to take a segmented approach. If you look at the entire category, you see some declines in the largest segment, carbonated soft drinks, so that’s an area where maybe there’s an opportunity to turn things around. We think sweetener optimization provides a great opportunity to address the whole health and wellness trend. Products have got to be on consumer trend, they have got to taste great, and there will always be interest in improving margins.
Q: Along the same lines, what are some of the challenges ingredient companies are dealing with this year?
Wolf: The same as they are for beverage companies: being able to meet customers’ expectations with regulatory and raw material limitations — and don’t forget increased cost of transportation.
Ennis: Masking vitamins and other enhancements that have been added to beverages, such as B vitamins, amino acids, which are often bitter, and omega-3s, which can be fishy.
Gallagher: I would say keeping pace with our customers’ innovation pace is really important. Ingredient companies need to think a lot about what they can do to understand our customers’ customer and then deliver against that innovation. Taking a consultative approach is really critical.
Jones-Dille: Ingredient companies working with developing beverages are challenged with sourcing and working with new ingredients. Creating products that are cost-effective for customers incorporating new ingredients is also a challenge in developing great-tasting new products.
Dikjstra: There is a trend now that consumers want real functionality. Just sprinkling in some ingredients without the functionality is not going to do it. When people take supplements, the dosing is very controlled. When you talk about functionality in a beverage, some people might drink two or three, some eight or nine. So how you balance the functionality and the dosing without overdosing or underdosing; that’s a critical thing.
Then, of course, you have the manufacturing challenges. [The functional ingredient] has to not affect the taste, or it should enhance the taste. It should be manufacturing-friendly. Another challenge is stability and bioavailability. There are beverages out there with a pH of 3 and beverages that have a pH of 7 to 8, so how does your ingredient work in these sort of different conditions? Is it stable? Is it stable over time? Is the ingredient bioavailable through that food form?
Q: Which of your beverage ingredients are generating the most excitement this year?
Niekrasz: Robertet has commercialized a number of high-impact natural molecules that have given our flavorists new tools to build true-fruit flavors that are so differentiating that we’ve termed them Xtreme. Our first group in the line, Xtreme Berry Flavors, with profiles such as blackberry, Concord grape and raspberry, among others, exhibit high consumer acceptability and have been met with great enthusiasm by our customers. We’re in the process of finalizing several other groups in the Xtreme line, including Orchard, Tropical, Citrus and Indulgent types.
Sweeney: Cargill products creating interest in the beverage market include Regenasure glucosamine for joint health; Corowise plant sterols for heart health; Xtend sucromalt, a fully digestible, sustained energy carbohydrate; and Zerose erythritol, a zero-calorie sweetener.
Jones-Dille: Our HITS Health Ingredients group has several antioxidant ingredients, like tea catechins, specifically targeted to beverages. We have technology to “de-bitter” these ingredients, allowing higher levels to be used. We also offer flavor and color systems that complement the profiles of our health ingredients.
Ennis: Dark berry flavors are generating a lot of excitement this year. We’re also seeing interest in ethnic flavors, pomegranate, acai and goji flavors, and dessert-types, especially for dairy-based beverages.
Gallagher: Splenda has always been interesting, and we’re finding new ways to use the product. Another is this area of sweetener optimization and delivering a great tasting product that has the right messaging, is positioned in the right category and delivered against consumers’ needs.
We also see lots of opportunity in enriching products as well. We have recently announced a new fiber platform. About 72 percent of consumers want to reduce nutritive sweeteners, but if you can deliver fiber to the product and have it taste great, it’s excellent.
Dijkstra: ChromeMate is an interesting ingredient. There was an article that just came out that said chromium can really help increase glucose uptake. You can see specific beverages and foods targeting diabetics where chromium becomes almost a standard ingredient. We have a GRAS-affirmed chromium in a liquid form and a powder form. And, of course, Super CitriMax has been our signature weight-management ingredient for quite some time — it’s GRAS-affirmed and very beverage friendly. We already have a number of food and beverage companies that have formulated their products with both ChromeMate and Super CitriMax.
Q: What beverage categories have the greatest potential for innovation in 2007, and why?
Wolf:The alcohol beverage industry is continuing to look farther ahead than others. The CSD area is looking at new flavors, but mostly just as line extensions with a short lifespan. The energy beverage area, though exciting, is getting a little too crowded.
Ennis: Powdered, single-serve packets that are added to bottled waters, specifically those that add minerals and vitamins that benefit everything from joint health, sports nutrition, memory and energy.
We’re seeing growth in enhanced waters and juices. RTD tea will expand even more. White, red and black teas are growing rapidly. We’re also expecting oolong, which has also been called blue tea, to gain some attention.
Niekrasz: I don’t think we’ve seen the end of hybrid beverages, particularly those that can build in an energy component.
Exotic flavors and flavors with Latino flair hold great promise, targeting those demographics as well as more mainstream consumers on a search for something new.  
Beauty foods — water is of course the original beverage for healthy skin, but as of today, beauty beverages haven’t emerged as a viable category in the United States. In Japan there are many beverages that address skin beauty, such as those with added collagen, but beyond very small niche brands like Borba Skin Balance Water, the U.S. market hasn’t made a move into this area — yet.
Foodservice beverages are going beyond the must-have basics to more creative drinks. It seems that many companies today are launching new coffee, tea, smoothie or frozen beverage programs to their menus, as it’s proving to be a lucrative profit center in its own right.
Webert: There is a proliferation of more unique flavors and a blurring of traditional beverage segments driven by demographic changes and consumers’ desire for variety. Latin American, Asian and African flavor trends are growing, including mango, white and red tea, chai and lemongrass. There also are more unique and complex flavor combinations such as juice teas, energy sodas and sports waters. In addition, the premium product trend is growing.
Jones-Dille: I think the greatest potential for innovation lies in children’s beverages and in enhanced waters. As a beverage marketer and a mom, I find it increasingly difficult to find great-tasting, natural, good-for-you drinks for my son that do not contain high levels of sugar and calories. Additionally, clean, light waters with added functionals and simple vitamin and minerals offer a great soda, juice, or plain water alternative to a wide range of demographic targets.
Gallagher: As an industry, customized enhancement, or getting closer to your consumer, is going to be important. The carbonated soft drink category is ripe for some innovation to turn some of these trends around. I go back to the sweetener optimization piece because that’s an interesting idea. We see it being successful in other categories and there’s no reason it can’t be successful in the CSD category.
I also think an interesting category is tea. Tea has got an inherent health halo that surrounds it. It may be interesting to see how you can take the tea category and move it — whether it morphs into some other categories and takes the health halo with it.
Dijkstra: Bottled waters are still the way to go. You see a lot of them having a flavor, but you haven’t seen a lot of them yet having real functionality, and I think that’s going to happen this year. Green tea already has some weight management implications, but RTD teas are an interesting market. I think functionality in coffee could be an interesting market trend as well. You could either buy coffee that was already infused with some functionality or you could add a sachet [of powdered ingredients] that has a functional ingredient that helps with satiety or weight management.

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