Get ready, people.
With the release of Enviga, a new calorie- burning tea from the Coca-Cola/Nestle partnership known as Beverage Partners Worldwide, the functional beverage movement has gone mainstream.
The rubber is meeting the road. How should you react? Are you going to have to stock up on products that flush the system, fill the tank, shine up the human hood?
What changes will be wrought in your cooler by the Enviga Effect?
Well, for starters, you’ve got to weave through a lot of traffic chasing after Enviga for the calorie burning space. Already, Elite Fx, the company that first marketed a calorie-burning formula in Celsius, has ramped up its advertising and is pressing for increased distribution, claiming that the release of the Coke/Nestle calorie-burning tea legitimizes the category they pioneered. PepsiCo has its own plans to release Tava, a soda that also supposedly ramps up calorie burning via the mineral Chromium. Snapple, which has a growing green tea brand, will add label language indicating that it, too, boosts the metabolism. Companies like Fuze and Airforce NutriSoda, both of which have products with appetite-suppressing super-Citrimax, are ready to push for more space.
It’s important to note that all of these products are only chasing one thing: thin.
Here’s the skinny: thin is the Killer App in the food and drink business. If people think a drink will help them lose weight, they’ll buy it. A recent survey by the drug company Glaxo- SmithKline PLC showed that 33 percent of Americans who are trying to lose weight have tried dietary supplements with no proven benefit. AC Nielsen recently reported that 15 percent of U.S. households have bought weight loss products in the last year. The market is there for a mainstream product that purports to have a slimming effect.
But at the same time, if it doesn’t work, there are plenty of other products – be they beverages or other consumer goods – that are available to take their place in the weight loss market. That’s the game that Coke and Nestle started playing when they showed the Enviga card.
Despite the potential gold mine awaiting an effective weight loss beverage, when it comes to functionality, Enviga had better not be the only card in the deck, according to Kaumil Gajrawala, a beverage analyst with UBS.
“It’s a long-term trend,” Gajrawala says. “Coke has said publicly that they want to better leverage their research and development to develop more of these kinds of products. You’re seeing it across all CPGs (Consumer Packaged Goods) as well. Cheerios has labels that relates to how it affects your heart. Someone else just launched a chocolate bar that’s supposed to be good for your heart. So they’re all going in pretty deep.”
That’s not to say you should expect to stock racks of functional sodas; according to Gajrawala, that particular beverage category is drowning in too many line extensions already. But in those categories whose shelf presence is already growing – tea, water, sports drinks – functionality is going to accompany them hand in hand.
“Efficacy will become important,” says Debbie Wildrick, the beverage portfolio manager at 7-Eleven. “Consumers already have given the industry ‘permission’ to put additives in their beverage, but it’s not enough to have just a splash of a special ingredient in the drink. Consumers want more from enhanced beverages and will expect to feel a difference after consuming these products.”
Natural and New Age food manufacturers realize what consumers want: at the Expo East Convention in October, tea and juice lines like Pure Fruit were defined as much by what they are expected to do as by their flavor. Fuze Beverages, which has recently taken nine of the top 50 supermarket SKUs in the New Age category, are nearly entirely dependent on a mix of products that promise various functions, from appetite suppression to free radical scavenging. Last year, Ito En presented the Sencha Shot, a triple strong bullet of green tea that, if antioxidant research is correct, contains the equivalent of a mortar attack on free radicals. And if Enviga takes off, expect some of those companies to introduce packaging that evokes their latent qualities as much as it does their natural or organic origins. After all, the levels of green tea catechins and caffeine present in Enviga’s “proprietary blend” of calorie burning ingredients are very similar to those present in a well-brewed green tea, in similar ratios.
Nevertheless, even proving a drink helps consumers lose weight is, while measurable, still subjective. When considering the effects of Enviga, which are smallish (the Wall Street Journal reported the calorie burn is similar to that achieved in a 15 minute walk), the customer is going to have to believe, and see, that it is working. Moving into other functional areas, it’s going to be hard to prove more. Products claiming to have longer-term benefits, like all of those that contain antioxidants, aren’t marketed as a cure for anything – their implied benefit is in what they prevent, rather than what they cause. But others, like skin improvement products, performance enhancement beverages that offer everything from tranquility, to spiritual insight, to sexual bliss, may very well have to measure up to their billing, or disappear overnight.
Nevertheless, marketers are gambling billions on the belief that a product that might work will be just as attractive to consumers as the ones that actually work.
“There are two things here,” says Gajrawala. “At the end of the day, it’s got to be a genuine benefit. Today’s consumer is able to see through anything that’s not real. But people are moving from CSD’s because they know they’re bad for you. Now, you look at Enviga, and sure, it’s carbonated, but it’s clearly a green tea product, and not only is it not bad for you but it could be good for you.”
That’s the line walked by the products at Glaceau, whose Vitaminwater – believed by many experts to have helped inspire the rush to launch more functional products – might have already grabbed the lion’s share of the potential market for functional waters. But how many more times can lightning strike in that fuzzy spot between marketed effect and sugar water?
While there’s no arguing with Glaceau’s success, there’s likely no replicating it, either – their lead is huge and they’ve already spawned lessthan- successful imitators. The market strength of Vitaminwater means that stakes have been raised. The next product whose label promises something immediate and tangible beyond basic hydration or caffeine-related alertness needs to deliver, or it could torpedo the whole category. “That’s been the problem with the New Age The next product whose label promises something immediate and tangible behond basic hydration or caffeine-related alertness needs to deliver, or it could torpedo the whole category.
since the beginning,” says Lance Collins, the CEO of Fuze. “A lot of these companies haven’t fulfilled their promise to consumers. Products that were billed as offering ‘healthy refreshment’ were just offering ‘healthy deception.’ I was a witness to all these false representations and thought I could deliver something on that promise.”
Collins says he believes marketers are getting better at creating functional beverages.
“Big companies are delivering beverages that offer benefits,” he says. “It’s better, but it’s not great. They’ve come a long way. They see what’s going on with consumers, and I guess they’re heeding the call.”
Still, that doesn’t mean that as retailers, you should grab every new functional beverage that you can.
“You can’t ignore it, because it’s something that people are looking for,” says Lauren Torres, the chief beverage analyst at HSBC. “It’s always great to be the first one out with things, like with Gatorade. Some of these categories at times do have some traction. But retailers have to be very careful – there’s always shelf space to allocate, but you have to take it very slowly to see how consumers react.”
Chances are, if there’s even a hint of helpfulness to a product, there are a whole lot of sales to come. As a retailer, remember this: a large part of the attraction of functional beverages is that they pay lip service to both convenience and health – currently two of the top three drivers of consumer food choices, according to a recent survey by the NPD Group. Nothing is more convenient than drinking something that will slim you down, wake you up, keep you from getting cancer. It beats the hard work of exercise, the time you need to sleep, the expense and detail required to keep track of one’s health.
“Consumers want more functionality, and they want it to be convenient,” Wildrick says. “Providing more enhancements that are easy to drink and more readily absorbed by the body will be important for the beverage industry in keeping up with consumer needs.”
DOWN THE ROAD
By all means, be ready to hop on the functionality train. If you’ve simply got a convenience CSD cooler, think about adding an Enviga or a Tava, or even a Celsius – products like that are attractive to drivers (especially considering the fact they have massive amounts of caffeine). And if you’ve got a broad array of products, be ready to go further. Think about the way orange juice manufacturers created new revenue streams – and soaked up space in the dairy cooler – by coming up with different fortification packages, and you’ll get an idea of the potential for expansion.
But here’s a little packaging note that needs to be kept in mind:
“This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, prevent or cure any disease.”
You’re going to see it on a lot of labels. And the number of disclaimers might eventually come to overwhelm the perceived level of benefit. In December, the FDA is meeting to start defining, in a regulatory sense, some of the products that produce functionality. If that happens, get ready to see the numbers shrink all around – including those products whose only fortification has been their own marketing claims.
Nevertheless, there’s a lot to try, and the end result could be, rather than a series of products that are part of other categories – a la Enviga or Tava – just a functional category all to itself. The demand is there, Wildrick says.
“They’ll keep looking,” she says of consumers. “Word-of-mouth and viral marketing will quickly raise awareness and trial of those drinks that customers believe live up to their claims. Products that disappoint will drop off the shelves, whereas the best performers will be the winners.”
You didn’t think we’d leave you with just one major industry current, did you? Here are some other important developments to keep track of in the year to come.
TEAS STEEPED IN ADDITIONAL GROWTH — Tea sits at the intersection of two trends: functionality and health. With its leaves serving as a natural source of flavor and of the antioxidant-supplying catechins, tea is poised for continued major growth this year. How valuable is that prospect? It’s so tempting that longtime couple Beverage Partners Worldwide – Coke and Nestle – are taking a trial separation over green, white and red teas, developing their own products independently.
MORE LIGHT IMPORTS — The only way things could have gone better for Heineken this year is if Andre Agassi could’ve rallied to win the U.S. Open with a Heineken Premium Light in his left hand. As it was, though, the product exceeded all predictions that it would exceed all predictions for success. So expect other importers to rush to market, and a bigger ad push from Beck’s. Otherwise, non-high-end imports are likely to face the same problem as domestic premium brands: the galloping grape.
THE SEARCH FOR THE MAGIC SWEETENER — Honest Tea thought they had it earlier this year with erythritol, a fermented organic cane sugar, then they scuttled their Tangerine Green tea. There’s still talk of Chinese Splenda, while ace-K continues to be blended with everything under the sun. But until someone comes up with a low-calorie way to replace real sugar’s taste, expect the juggling acts to continue.
ENERGY — Caffeine paranoia is expected to build to an early high right at around New Year’s Eve, when the consumption of energy drinks and vodka hits an all-time high, and products like Cocaine and Green Card draw even more negative media attention.
WIDESPREAD WATER ENHANCEMENT — From BooKoo to Odwalla, enhanced waters will be everywhere next year, capitalizing on the growing market exemplifi ed by Vitaminwater. And while there are plenty of products that claim functionality coming out, that market will be tiny compared to the demand for more low-calorie, fruit-flavored waters with a little vitamin enhancement and some snazzy packaging.